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RLLI Section 46
1. Doctor Jones is aware that she probably committed malpractice this year by failing properly to diagnose a patient, Pat, with cancer. Pat has not yet sued, but it is likely that the patient will do so. Doctor Jones can not think of any defense to the claim: she was under the influence of illegal drugs at the time she was evaluating Pat. There is some question about the extent of Pat's damages, however. Even if the cancer had been diagnosed properly, it is unlikely Pat would have lived for long. Moreover, Pat's lost income seems pretty speculative: she had been making money via a "Kickstarter" that was selling fancy shoes for women but revenues in that business are highly unpredictable. Pat now seeks "claims made" liability insurance from InsCo. She fully discloses her misconduct with Pat and says she is willing to pay an extremely high premium to get coverage. InsCo investigates and determines that Pat would likely have died within a few weeks even if the cancer had been properly diagnosed. It agrees to insure Jones for a premium of $200,000. When Jones is in fact sued by Pat's estate, InsCo defends on grounds that it was illegal to insure Jones for a known loss. What result?
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