Medmal Direct Wins Lawsuit vs. Broward Medical Center
Table of Contents
Case Background
This complex civil dispute arose from a disagreement over insurance coverage stemming from underlying medical malpractice claims. The Plaintiffs were Broward Outpatient Medical Center, LLC (BOMC) and Beth Israel Outpatient Surgical Center, LLC (BISC). They brought the action against their insurer, Medmal Direct Insurance Company, in the Circuit Court of the 17th Judicial Circuit in Broward County, Florida.
The core issue centered on whether Medmal Direct owed coverage to BOMC and BISC for two separate underlying lawsuits the "Allen" lawsuit and the "Evans" lawsuit which alleged medical negligence. These underlying claims involved a specific physician, Merrill Reuter, M.D., who held a medical professional liability policy with Medmal Direct. BOMC and BISC asserted that, because Dr. Reuter was an insured party under the policy and they had an operational relationship with him, they deserved coverage and defense from Medmal Direct for the lawsuits arising from his actions. The Plaintiffs initiated this action in November 2021 seeking a judicial declaration that the policy obligated Medmal Direct to cover their defense costs and any ultimate liability in the underlying malpractice cases.
Cause
The primary cause of the lawsuit was Medmal Direct’s denial of coverage to the Plaintiffs for the malpractice claims. The Plaintiffs contended that the insurance policy's language concerning "Who Is an Insured" unambiguously extended coverage to facilities like BOMC and BISC when they faced claims arising from the professional services of an insured physician, such as Dr. Reuter, while acting within the scope of his duties for the facilities. The facilities argued that this refusal to defend and indemnify constituted a breach of contract by the insurer. The Plaintiffs also raised claims of equitable estoppel, alleging that the insurer’s representations or actions led them to reasonably believe they possessed coverage.
Injury
The Plaintiffs claimed injuries were purely financial. They suffered direct monetary harm because they were forced to hire their own attorneys and pay the defense costs for the underlying medical malpractice lawsuits (Allen and Evans). Furthermore, they faced the risk of suffering substantial financial damage if they were found liable in those malpractice cases without the protection of Medmal Direct’s insurance policy. They sought to recover all defense costs already incurred, the costs of bringing this lawsuit, and a declaration that Medmal Direct must pay any future judgment amounts.
Damages Sought
The Plaintiffs sought to recover a money judgment for damages caused by the insurer's breach of contract, specifically all defense costs and attorney's fees incurred to date. More critically, they sought a declaratory judgment compelling Medmal Direct to acknowledge its duty to defend and indemnify them in the underlying medical malpractice suits. The initial complaint established that the amount in controversy exceeded $30,000.00.
Key Arguments and Proceedings
Legal Representation
Plaintiff(s): Broward Outpatient Medical Center, LLC | Beth Israel Outpatient Surgical Center, LLC A/K/A Beth Israel Surgical Center
Counsel for Plaintiff(s): Steven L. Lubell | Gordon Lea
Defendant(s): Medmal Direct Insurance Company
Counsel for Defendant(s): Gary I Khutorsky | Stephanie H Carlton | Ronald Kammer
Key Arguments or Remarks by Counsel
The trial centered on the policy’s language and the timing of the notice. The Plaintiffs' counsel argued that the facilities were covered under the policy’s definition of an "Insured" and that Medmal Direct acted in bad faith by denying the defense.
Claims
The Plaintiffs presented multiple theories to the jury to establish the insurer’s liability.
Breach of Contract The Plaintiffs asserted that Medmal Direct breached the insurance contract by wrongfully refusing to provide coverage and defense for the Allen and Evans lawsuits. They claimed that the policy clearly covered the facilities for the specific types of claims involved.
Waiver of Notice Requirement As an alternative theory, the Plaintiffs argued that even if they did not provide a formal claim notice during the policy period, Medmal Direct, through its conduct, had waived its right to enforce the policy's strict notice requirements, thereby entitling the Plaintiffs to coverage.
Equitable Estoppel The Plaintiffs also claimed that Medmal Direct should be stopped from denying coverage based on the principle of equitable estoppel. This claim suggested that Medmal Direct made certain factual representations that led the facilities to reasonably rely on the expectation of coverage, and that this reliance caused the facilities prejudice when coverage was later denied.
Defense
Medmal Direct filed a detailed Answer, generally denying that it breached the policy or that it had a duty to defend the Plaintiffs. The insurer asserted numerous Affirmative Defenses to bolster its position.
First, Medmal Direct contended that the policy explicitly excluded coverage for damages arising from fraud or dishonesty, arguing that the underlying malpractice suits alleged acts of fraud that fell outside the scope of the covered medical professional services. Second, the insurer maintained that the claims were excluded under a separate fee dispute exclusion because the underlying suits sought the repayment of fees for services that were allegedly never performed. Most fundamentally, Medmal Direct argued that the Plaintiffs failed to comply with the policy’s most basic requirement: they failed to provide claim notice during the policy period, thus negating any duty to defend or indemnify.
Jury Verdict
The jury returned a verdict on July 25, 2025, in the Circuit Court of the 17th Judicial Circuit in Broward County, Florida, delivering a complete victory to the insurer, Medmal Direct Insurance Company.
The jury rejected all of the Plaintiffs' primary theories for establishing coverage, effectively finding that Medmal Direct owed no duty to the Plaintiffs in the underlying malpractice cases.
The jury found that Medmal Direct did not receive a claim notice on behalf of BOMC during the policy period. After finding no claim notice, the jury proceeded to the waiver question and found that Medmal Direct did not waive its policy requirement to receive notice.The jury then proceeded to the claims of equitable estoppel, which required clear and convincing evidence from the Plaintiffs.The jury found that BOMC did not prove by clear and convincing evidence that Medmal Direct made a representation of material fact to BOMC, which BOMC relied on.
Based on this finding against the Plaintiffs on the first element of equitable estoppel, the jury concluded its deliberations. The jury did not proceed to determine whether the Plaintiffs' reliance was reasonable or whether they suffered prejudice. The final verdict on all counts favored the Defendant, Medmal Direct Insurance Company.
Court documents are available upon request at jurimatic@exlitem.com