Plaintiff receiver sued defendants, 47 physician members of a physicians interindemnity trust (PIT) for refusal to pay assessments levied upon them by the receiver. The Los Angeles County Superior Court, California, entered judgment against the members for the unpaid assessments. The members appealed.
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Overview
Hundreds of physicians and surgeons had formed PIT, pursuant to Cal. Ins. Code § 1280.7, to provide an alternative to medical malpractice insurance. However, the financial condition of PIT deteriorated to the point that it could no longer operate, and PIT was placed into receivership. The instant court held that the members could not rescind their PIT contracts. PIT membership provided the members with many benefits. The members were able to represent to hospitals, clinics, and other entities that they had coverage for medical malpractice. Without such coverage, the members would have been denied hospital privileges and medical group memberships. Rescission would have harmed other PIT members and would have prejudiced patients who had medical malpractice claims. It was inappropriate to permit the members to obtain the benefits of their membership for three years after PIT’s collapse, yet avoid membership responsibilities through rescission. The assessments were properly imposed and were not improper collections in “advance of loss.” The members were contractually obligated to pay for the assessments levied upon them after their memberships were terminated.
Outcome
The court affirmed the judgment.