Downtown Lawyer

Fireman’s Fund Insurance Company v. Care Management, Inc., No. 09-662.

In June 2006, Care Management, Inc. (“Care Management”), was sued for negligence, medical malpractice, and wrongful death. In September 2008, Care Management’s attorney notified Care Management’s insurers that the case was set for trial on October 7, 2006, provided them with a copy of the complaint, and inquired about coverage. This letter was the insurers’ first notice of the claim.

On October 29, 2008, the insurers filed a declaratory judgment action against Care Management in federal court. The insurers later filed a motion for summary judgment, which prompted the trial court to enter a certification order to the Arkansas Supreme Court because in many cases the Eighth Circuit Court of Appeals has interpreted Arkansas law as not requiring an insurer to show prejudice from the delay in notice. In its most recent opinion, however, the Eighth Circuit noted that state law was unclear.

The Arkansas Supreme Court explained that whether a showing of prejudice is necessary depends on whether the notice requirement is a condition precedent for coverage. If the notice requirement is a condition precedent, then the insured must strictly comply with it or forfeit coverage. The insurance company does not have to show any prejudice from the insured’s failure to provide timely notice. If the notice requirement is not a condition precedent, on the other hand, the insurer must show prejudice from the insured’s failure.