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HomeMy WebLinkAbout04-6265 CARLISLE AREA HEALTH AND WELLNESS FOUNDATION, a PA nonprofit corporation and successor-in- interest by corporate reorganization to CARLISLE HOSPITAL AND HEALTH SERVICES, Plaintiff V. ZURICH AMERICAN INSURANCE COMPANY, a/k/a ZURICH NORTH AMERICA, Defendant IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION - LAW NO. 2004 - ', L 4'S- WRIT OF SUMMONS TO ZURICH AMERICAN INSURANCE COMPANY, a/k/a ZURICH NORTH AMERICA: You are hereby notified that Carlisle Area Health and Wellness Foundation has commenced an action against you. Prothonotary or Clerk By: Depu? Date: December 14, 2004 r-J C) c., a c Cr. F:\FILES\DATAFILE\Hospital3047\Documents\1093-pra. I Created: 1011104 2T03PM Revised. 12114/04 0 09PM CARLISLE AREA HEALTH AND WELLNESS FOUNDATION, a PA nonprofit corporation and successor-in- interest by corporate reorganization to CARLISLE HOSPITAL AND HEALTH SERVICES, Plaintiff V. ZURICH AMERICAN INSURANCE COMPANY, a/k/a ZURICH NORTH AMERICA, Defendant IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION - LAW/ NO. 2004 - ), 0 PRAECIPE TO THE PROTHONOTARY OF CUMBERLAND COUNTY: Please issue a Writ of Summons against Zurich American Insurance Company, a/k/a Zurich North America, 1818 Market Street Ste 3202, Philadelphia, Pennsylvania, 19103 as Defendant in the above-captioned action and return the same together with Plaintiff's First Request for Production of Documents in Preparation for the Filing of a Complaint, to our office for service upon Defendant. MARTSON DEARDORFF WILLIAMS & OTTO Date: December 14, 2004 1 l By Carl C. Risch, Esquire I.D.Number: 75901 Hillary A. Dean, Esquire I.D. No. 92878 Ten East High Street Carlisle, PA 17013 (717) 243-3341 Attorneys for Plaintiffs ?aZ CAI F:\FILES\DATAFILE\Flospital3047\Docummts\ 1093-discovery. I Created 10/1/04 2:08PM Revised: 12/14/04 11 31 A M CARLISLE AREA HEALTH AND WELLNESS FOUNDATION, a PA nonprofit corporation and successor-in- interest by corporate reorganization to CARLISLE HOSPITAL AND HEALTH SERVICES, Plaintiff V. ZURICH AMERICAN INSURANCE COMPANY, a/k/a ZURICH NORTH AMERICA, Defendant IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION - LAW NO. 2004 - PLAINTIFF'S FIRST REQUEST FOR PRODUCTION OF DOCUMENTS IN PREPARATION FOR THE FILING OF A COMPLAINT TO: ZURICH AMERICAN INSURANCE COMPANY, a/k/a ZURICH NORTH AMERICA, Defendant AND NOW, this 14' day of December, 2004, pursuant to Pa. R.C.P. 4009, as amended, comes the Plaintiff by its Attorneys, MARTSON DEARDORFF WILLIAMS & OTTO, 10 East High Street, Carlisle, Pennsylvania, and requests Defendant to produce for inspection, examination and copying, at the above office, not later than thirty (30) days after service of this Request the following documents: 1. Please supply us with a copy of the entire claims file and all relevant documents related or associated with the insurance claim of Karen Lesher, 1007 Trenton Avenue, Pittsburgh, PA 15221 (Insurer Claim No. 2530068240-01). 2. Please provide the contract for insurance, as well as any and all policies and documents pertaining to or involving the Plaintiff in the above action. Date: December 14, 2004 MARTSO EARDORFF WILLIAMS & OTTO By Carl C. Risch, Esquire I.D. No. 75901 Hillary A. Dean, Esquire I.D. No. 92878 Ten East High Street Carlisle, PA 17013 (717) 243-3341 Attorneys for Plaintiff CERTIFICATE OF SERVICE I hereby certify that a copy of the foregoing Discovery Request was served this date by attaching a copy to the Praecipe for Writ of Summons filed with the Cumberland County Court of Common Pleas, Pennsylvania, and was served this date via certified mail, return receipt requested, by depositing same in the Post Office at Carlisle, PA, postage prepaid, addressed as follows: Zurich American Insurance Company 1818 Market Street Ste 3202 Philadelphia, PA 19103 MARTSON DEARDORFF WILLIAMS & OTTO By, 0 4])? U A J Hilla A. Dean ry 9quire Dated: December 14, 2004 f-13 t^, C7 c -L y r, L.? a FWILESDATAPILE%Hospita1304)\D ments?.1033-aTTSm. wpd Created- 1/24105 2.00PM Revised- 1124105 228PM CARLISLE AREA HEALTH AND WELLNESS FOUNDATION, a PA nonprofit corporation and successor-in- interest by corporate reorganization to CARLISLE HOSPITAL AND HEALTH SERVICES, Plaintiff IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION - LAW NO. 2004 - 6265 V, ZURICH AMERICAN INSURANCE COMPANY, a/kla ZURICH NORTH AMERICA, Defendant AFFIDAVIT OF SERVICE OF WRIT OF SUMMONS AND PLAINTIFF'S FIRST REQUEST FOR PRODUCTION OF DOCUMENTS IN :PREPARATION FOR THE FILING OF A COMPLAINT COMMONWEALTH OF PENNSYLVANIA ) : SS. COUNTY OF CUMBERLAND I hereby certify that a copy ofthe Writ of Summons and Plaintiff's First Request for Production of Documents in Preparation for the Filing of a Complaint was mailed to Zurich American Insurance Company, The Zurich Towers, 1400 American Lane Tower 1,19' Floor, Schaumburg, Illinois 60196- 1056, and to Zurich American Insurance Company, 1818 Market Street, Ste. 3202, Philadelphia, Pennsylvania 19103, by certified mail, return receipt requested. Attached are the Post Office return receipts signed and dated January 13, 2005 and January 18, 2005. MARTSON DEARDORFF WILLIAMS & OTTO By ? (jillary A. Dean, H uire Attorney ID No. 92878 Ten East High Street Carlisle, PA 17013 (717) 243-3341 Sworn to and subscribed before m Aiis January 24 2005 Notary Public NOTARIAL SEAL VICTORIA L. OTTO NOTARY PUBLIC CARLISLE 00R0. CNOERLAND COUNTY MY COMMISM14 WIRES DEC 2 2006 .? 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May`a' ?OGTQY` f'J, ?SE''IOtlY Go196-?os6 IL X PA All &Raaelwd by a tt.1VIN"111"• ?0~MM 0BWMWMd pspow [ Ram pled O ttt.sed Map 0 CAM 4. Reshtoted Wmr 091" Fee) 0 No,, 0 yes a. Ardole Number 7003 1010 00016 1189 0958 ftn serviog tt 1g25Q"2-WfW PROOF OF SERVICE I hereby certify that a copy of the foregoing Affidavit of Service of Writ of Summons and Plaintiff's First Request for Production of Documents in Preparation for the Filing of a Complaint was served this date by depositing same in the Post Office at Carlisle, PA, certified mail, return receipt requested, postage prepaid, addressed as follows: Zurich American Insurance Company The Zurich Towers 1400 American Lane Tower 1, 19th Floor Schaumburg, IL 60196-1056 Zurich American Insurance Company 1818 Market Street Ste 3202 Philadelphia, PA 19103 MARTSON DEARDORFF WILLIAMS & OTTO By 1 ?( illary A. Dear? squire Attorney I.D. No. 92878 Ten East High Street Carlisle, PA 17013 (717) 243-3341 Attorneys for Petitioner Dated: January 24, 2005 f '1. ^LZ W N KAPLIN STEWART MELOFF REITER & STEIN, P.C. By: KEVAN F. HIRSCH, ESQUIRE - Attorney I.D. No. 37383 MOHAMMAD A. GHIASUDDIN, ESQUIRE - Attorney I.D. No. 83925 350 Sentry Parkway, Building 640 P.O. Box 3037 Blue Bell, PA 19422-0765 Phone (610) 260-6000 Fax (610) 260-1240 Attorneys for Defendant, Zurich American Insurance Company aWa Zurich North America CARLISLE AREA HEALTH AND COURT OF COMMON PLEAS WELLNESS FOUNDATION, a PA nonprofit CUMBERLAND COUNTY, PA corporation and successor-in-interest by corporate reorganization to CARLISLE HOSPITAL AND HEALTH SERVICES Plaintiff V. ZURICH AMERICAN INSURANCE COMPANY a/k/a ZURICH NORTH AMERICA Defendants No. 04- t atf S PRAECIPE for RULE to FILE COMPLAINT TO THE PROTHONOTARY : Kindly enter a Rule on the Plaintiff to file a Complaint within twenty days or risk entry of judgment of non pros. KAPLIN STEWART MELOFF REITER & STEIN, P.C. BY: MOHAMMAD A. GHIASUDDIN, ESQUIRE Dated: 14,f'-'Sei /a, a 00 5 Attorney for Defendant, Zurich American Insurance Company a/k/a Zurich North America RULE to FILE COMPLAINT AND NOW, this L2t? day of September, 2005, a Rule is entered on the Plaintiff to file a Complaint in this matter within twenty (20) days hereof, or suffer th entry of a judgment of non pros. PRO ONOT BY: ALS/7198/131709576 1 09/12/2005 1025 AM KAPLIN STEWART MELOFF REITER & STEIN, P.C. By: KEVAN F. HIRSCH, ESQUIRE - Attorney I.D. No. 37383 MOHAMMAD A. GHIASUDDIN, ESQUIRE - Attorney I.D. No. 83925 350 Sentry Parkway, Building 640 P.O. Box 3037 Blue Bell, PA 19422-0765 Phone (610) 260-6000 Fax (610) 260-1240 Attorneys for Defendant, Zurich American Insurance Company a/k/a Zurich North America CARLISLE AREA HEALTH AND WELLNESS FOUNDATION, a PA nonprofit corporation and successor-in-interest by corporate reorganization to CARLISLE HOSPITAL AND HEALTH SERVICES Plaintiff V. ZURICH AMERICAN INSURANCE COMPANY a/k/a ZURICH NORTH AMERICA Defendants COURT OF COMMON PLEAS CUMBERLAND COUNTY, PA No. 04r- 4,4-5 CERTIFICATE OF SERVICE The undersigned hereby certifies that a copy of the foregoing Praecipe for Rule to File Complaint was caused to be sent by first class mail, postage prepaid by the undersigned on the date stated below, to the addressees stated below: Carl C. Risch, Esquire Hillary A. Dean, Esquire Martson Deardorff Williams & Otto Ten East High Street Carlisle, PA 17013 KAPLIN STEWART MELOFF REITER & STEIN, P.C. BY:7/ C ! MOHAMMAD A. GHIASUDDIN, ESQUIRE Dated: (q 2 u,; ' Attorney for Defendant, Zurich American Insurance Company aWa Zurich North America ALS/7198/131709592_1 09/12/2005 10:26 AM Carl C. Risch, Esquire Attorney I.D. No. 75901 Hillary A. Dean, Esquire Attorney I.D. No. 92878 MARTSON DEARDORFF WILLIAMS & OTTO 10 East High Street Carlisle, PA 17013 (717) 243-3341 Attorneys for Plaintiffs CARLISLE AREA HEALTH AND IN THE COURT OF COMMON PLEAS OF WELLNESS FOUNDATION, a PA CUMBERLAND COUNTY, PENNSYLVANIA nonprofit corporation and successor-in- interest by corporate reorganization to CIVIL ACTION - LAW CARLISLE HOSPITAL AND HEALTH SERVICES, Plaintiff NO. 04-6265 V. ZURICH AMERICAN INSURANCE COMPANY, a/k/a ZURICH NORTH AMERICA, Defendant NOTICE You have been sued in court. If you wish to defend against the claims set forth in the following pages, you must take action within twenty (20) days after this Complaint and Notice are served, by entering a written appearance personally or by attorney and filing in writing with the court your defenses or objections to the claims set forth against you. You are warned that ifyou fail to do so, the case may proceed without you and a judgment may be entered against you by the court without further notice for any money claimed in the Complaint or for any other claim or relief requested by the Plaintiffs. You may lose money or property or other rights important to you. YOU SHOULD TAKE THIS PAPER TO YOUR LAWYER AT ONCE. IF YOU DO NOT HAVE A LAWYER, GO TO OR TELEPHONE THE OFFICE SET FORTH BELOW. THIS OFFICE CAN PROVIDE YOU WITH INFORMATION ABOUT HIRING A LAWYER. IF YOU CANNOT AFFORD TO HIRE A LAWYER, THIS OFFICE MAY BE ABLE TO PROVIDE YOU WITH INFORMATION ABOUT AGENCIES THAT MAY OFFER LEGAL SERVICES TO ELIGIBLE PERSONS AT A REDUCE FEE OR NO FEE: Cumberland County Bar Association 32 South Bedford Street Carlisle, PA 17013 (717) 249-3166 F III I9 T)M Al 11,1 h,,,0047 Dncmnents 1091 rom ('rv'aieA. 10 2 05 ' 45W H?isreP. 101 05 124PM Carl C. Risch, Esquire Attorney I.D. No. 75901 Hillary A. Dean, Esquire Attorney I.D. No. 92878 MARTSON DEARDORFF WILLIAMS & OTTO 10 East High Street Carlisle, PA 17013 (717) 243-3341 Attorneys for Plaintiffs CARLISLE AREA HEALTH AND WELLNESS FOUNDATION, a PA nonprofit corporation and successor-in- interest by corporate reorganization to CARLISLE HOSPITAL AND HEALTH SERVICES, Plaintiff IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION - LAW NO. 04-6265 V. ZURICH AMERICAN INSURANCE COMPANY, a/k/a ZURICH NORTH AMERICA, Defendant COMPLAINT Plaintiff is a Pennsylvania nonprofit corporation and successor-in-interest by corporate reorganization and name change to Carlisle Hospital and Health Services and has a business address of 274 Wilson Street, Carlisle, Cumberland County, Pennsylvania, 17013. 2. Defendant Zurich American Insurance Company a/k/a Zurich North America is an Insurance Company with a business address of 1818 Market Street, ste. 3202, Philadelphia, Pennsylvania, 19103. 3. At all times relevant hereto, Defendant transacted, and continues to transact business in the Commonwealth of Pennsylvania and rendered services to Plaintiff related to an insurance policy through activities and communications carried out by Defendant's employees, officers, agents, and representatives. 4. Plaintiff selected Defendant to provide insurance services to Plaintiff. Plaintiff and Defendant entered into an agreement which enumerated and defined the responsibilities of Defendant in the administration of the plan, including but not limited to, the defense against claims against Plaintiff. Pursuant to the agreement, Plaintiff paid premiums to Defendant for the provision of insurance services and defense on behalf of the Plaintiff. 5. The parties' agreement included a retroactive premium adjustment, in which the parties' shared risk of loss. Defendant could retroactively bill Plaintiff after a claim against Plaintiff was either defended or settled as the policy included no set premium. 6. On or around May, 1997, Karen Lesher, who was an employee of Plaintiff, was allegedly injured while working as a nurse at Plaintiff's hospital. 7. On or around 1997, Ms. Lesher brought a claim against Plaintiff for worker's compensation benefits. 8. On or around the year 2004, Defendant settled the suit Ms. Lesher brought against Plaintiff for $90,000.00. 9. Defendant then retroactively charged Plaintiff approximately $174,000.00 in retroactive premium adjustments, subject to some credits. 10. Defendant failed to provide Plaintiff with any reasonable or other justification as to why it settled the Ms. Lesher's claim for $90,000.00 instead of defending the claim. 11. Defendant failed and refused to investigate bringing a defense on Plaintiffs behalf, failed and refused diligently to pursue a defense on Plaintiff's behalf, and improperly, arbitrarily and negligently expended in excess of $90,000.00, which substantial portion thereof should have been withheld and retained pending an assertion of a defense on behalf of the Plaintiff. COUNTI Breach of Contract 12. The facts and statements of paragraphs I through 1 I above are hereby incorporated by reference. 13. By virtue of the foregoing and by its premature settlement of Ms. Lesher's claims, and by forcing Plaintiff to pay out on a retroactive premium adjustment, and by failing to defend Plaintiff pursuant to the parties' agreements, understandings and trade practices, Defendant has breached its contractual undertakings and obligations to Plaintiff. WHEREFORE, Plaintiff requests that this Court enter a Declaratory Judgment that Plaintiff is not indebted to Defendant for any amount under the contract for insurance, and such other and further relief as the court may deem just and proper. COUNT 11 Breach of Fiduciary Obheations and Breach of Covenants of Good Faithand Fair Dealine 14. The facts and statements of paragraphs 1 through 13 above are hereby incorporated by reference. 15. Defendant served as and was a professional administrator and a fiduciary of the policy during the term of the agreement, through its exercise of discretionary authority in managing the policy, including the exercise of authority and control over management and defense of claims against its insured. As such, Defendant was a fiduciary of the plan, and further, was obligated to deal fairly and in good faith in regards to all claims brought against Plaintiff Further, in entering into and perfonning under the above referenced agreement, Defendant was subject to the covenants, duties and obligations of good faith and fair dealing. 16. Defendant breach its fiduciary obligations and duty of good faith and fair dealing as follows: (a) Arbitrarily, capriciously, and in bad faith, failing to defend it's insured in order to later charge Plaintiff retroactive premiums on Plaintiff's insurance policy; (b) Claiming an unwarranted and wholly excessive retroactive premium adjustment against Plaintiff; (c) Failing to provide any reasonable basis for it's refusal to defend Plaintiff against Ms. Lesher's claims; and (d) In general, by self-dealing to the substantial detriment of Plaintiff and in violation of the provisions of the agreement and the parties' agreements, understandings, and customs of the trade with respect to the duties of the insurance company to defend it's insured. 17. By its aforesaid conduct, breaches, violations and failures, Defendant failed to discharge its professional and fiduciary duties to Plaintiff with the care, skill, prudence and diligence under the circumstances as required by a prudent person or entity acting in a like capacity and familiar with such matters. is. By its aforesaid conduct, breaches, violations and failures, Defendant violated and failed to discharge adequately its professional and fiduciary duties. 19. Defendant's aforesaid breaches of its duty of good faith and fair dealing and violations of its professional and fiduciary responsibilities. WHEREFORE, Plaintiff requests that this Court enter a Declaratory Judgment that Plaintiff is not indebted to Defendant for any amount under the contract for insurance, and such other and further relief as the court may deem just and proper. MARTSON EARDORFF WILLIAMS & OTTO By Carl C. Risch, Esquire Attorney I.D. No. 75901 Hillary A. Dean, Esquire Attorney I.D. No. 92878 10 East High Street Carlisle, PA 17013 (717) 243-3341 Date: October 3, 2005 Attorneys for Plaintiff 10-03-'05 14.21 FROM-CAM 717-960-9992 T-096 P001/001 F-228 VERTFICATLO- M. Elizabeth Clever, who is Executive Director of Carlisle Area Health and Wellness Foundation and acknowledges that she has the authority to execute this Verification in behalf of Carlisle Area Health and Wellness Foundation certifies that the foregoing Complaint is based upon information which has been gathered by my counsel in the preparation of the lawsuit. The language of this Complaint is that of counsel and not my own. 1 have read the document and to the extent that the Complaint is based upon information which 1 have given to my counsel, it is true and correct to the best of my knowledge, information and belief. To the extent that the content of the Complaint is that of counsel, I have relied upon counsel in making this Verification. This statement and Verification are made subject to the penalties of 18 Pa. C.S. Section 4904 relating to unswom falsification to authorities, which provides that if I make knowingly false averments, I may be subject to criminal penalties. Carlisle Area Health and Wellness Foundation M. lizab Clever CERTIFICATE OF SERVICE I, Mary M. Price, an authorized agent for Martson Deardorff Williams & Otto, hereby certify that a copy of the foregoing Complaint was served this date by depositing same in the Post Office at Carlisle, PA, first class mail, postage prepaid, addressed as follows: Mohammad A. Ghiasuddin, Esquire KAPLIN STEWART MELOFF REITER & STEIN, P.C. 350 Sentry Parkway, Building 640 P.O. Box 3037 Blue Bell, PA 19422-0765 MARTSON DEARDORFF WILLIAMS & OTTO By etHilgh , ? LMTEStreet Carlisle, PA 17013 (717) 243-3341 Dated: October 3, 2005 C y ? l'1 C..) rtJ C? <.> m .r. - i KAPLIN STEWART Kevan F. Hirsch, Esquire - Attorney I.D. No. 37383 Mohammad A. Ghiasuddin, Esquire - Attorney I.D. No 350 Sentry Parkway, Building 640 P.O. Box 3037 Blue Bell, PA 19422-0765 Phone (610) 260-6000 Fax (610) 260-1240 83925 Attorneys for Defendant, Zurich American Insurance Company CARLISLE AREA HEALTH AND WELLNESS FOUNDATION, a PA nonprofit corporation and successor-in-interest by corporate reorganization to CARLISLE HOSPITAL AND HEALTH SERVICES Plaintiff V. ZURICH AMERICAN INSURANCE COMPANY a/k/a ZURICH NORTH AMERICA Defendants COURT OF COMMON PLEAS CUMBERLAND COUNTY, PA No. 04-6265 PRELIMINARY OBJECTIONS OF DEFENDANT ZURICH AMERICAN INSURANCE COMPANY TO PLAINTIFF'S COMPLAINT Defendant, Zurich American Insurance Company ("Zurich"), by its undersigned attorneys, hereby preliminarily objects to Plaintiff's Complaint and states as follows: 1. Plaintiff initiated this action by filing a Writ of Summons on or about December 14, 2005. 2. On or about January 11, 2005, Plaintiff served Zurich with a Request for Production of Documents in Preparation of a Complaint. 3. On or about June 3, 2005, Zurich produced over 2500 pages of documents in response to Plaintiff s discovery request. 4. On or about September 14, 2005, Zurich filed a Rule against Plaintiff to file a Complaint. MAG/7198/13/723568 1 10/20/2005 01:24 PM 5. On or about October 3, 2005, Plaintiff filed its Complaint in this matter, a copy of which is attached hereto as Exhibit "A." 1. PRELIMINARY OBJECTION TO COUNT I OF THE COMPLAINT PURSUANT TO PA.R.C.P. 1028 (a)(4) (DEMURRER) 6. Count I of the Complaint attempts to state a breach of contract claim against Zurich. See Complaint at ¶T 12-13. 7. As pleaded, the Complaint does not set forth a legally sufficient breach of contract action, because it: a. fails to identify the agreement(s) allegedly breached by Zurich; b. fails to identify the contractual terms allegedly breached by Zurich; and c. fails to identify any acts or omissions on the part of Zurich that allegedly constitute breach of contract. 8. Accordingly, Count I of the Complaint should be dismissed with prejudice pursuant to Pa. R.C.P. 1028(a)(4). WHEREFORE, Defendant Zurich American Insurance Company respectfully requests that its Preliminary Objections be granted and that Count I of Plaintiff's Complaint be dismissed with prejudice. II. PRELIMINARY OBJECTION TO COUNT II OF THE COMPLAINT PURSUANT TO PA.R.C.P. 1028(a)(4) (DEMURRER) 9. Zurich incorporates paragraphs 1 through 8 above by reference as if set forth in full herein. 2 MAG/7198/13/723568 1 10/20/2005 01:24 PM 10. At Count II of its Complaint, Plaintiff purports to bring an action for breach of "fiduciary obligations" and "covenants of good faith and fair dealing." See Complaint at ¶¶14- 19. 11. Under Pennsylvania Law, there can be no separate cause of action for breach of duty of good faith and fair dealing where the allegations of such claims are identical to claims made under a separate cause of action. See Fraser v. Nationwide Mut. Ins. Co., 135 F.Supp.2d 623 (E.D. Pa. 2001) (vacated in part on other grounds); Northview Motors, Inc. v. Chrysler Motors Corp., 227 F.3d 78 (3d Cir. 2000). 12. Further, the implied duty of good faith and fair dealing cannot override the express terms of a contract. See North View Motors, 227 F. 3rd at 91. 13. Additionally, while Plaintiff alleges that Zurich had certain "fiduciary duties" to Plaintiff and was a "fiduciary of the plan" (see Complaint at 115), Plaintiff fails to aver the source(s) of any such fiduciary obligations, nor does Plaintiff identify the "plan" of which Zurich is allegedly a fiduciary. 14. Pennsylvania does not recognize a separate tort-law cause of action against an insurer for negligence and breach of fiduciary duty; rather, such claims must be brought in contract. See Greater N.Y. Mut. Ins. Co. v. North River Ins. Co., 872 F.Supp. 1403, 1406, 1409 (E.D.Pa.1995), affd, 85 F.3d 1088 (3d Cir.1996) (citing D'Ambrosio v. Pennsylvania Nat'l Mut. Cas. Ins. Co., 494 Pa. 501, 507-08, 431 A.2d 966, 969-70 (1981)) 15. Furthermore, Plaintiff does not identify the acts or omissions of Zurich that Plaintiff contends constitute breach of such duties and/or covenants. 3 MAG/7198/13/723568 1 10/20/2005 01:24 PM 16. Accordingly, Count II is legally insufficient and should be dismissed with prejudice pursuant to Pa.R.C.P. 1028 (a)(4). WHEREFORE, Defendant Zurich American Insurance Company respectfully requests that its Preliminary Objections be sustained and that Count II of the Complaint be dismissed with prejudice. III. PRELIMINARY OBJECTION TO COUNTS I AND II OF THE COMPLAINT PURSUANT TO PA.R.C.P. 1028(a)(2) and 1028(a)(3) (FAILURE TO CONFORM TO RULE OF COURT and INSUFFICIENT SPECIFICITY) 17. Zurich incorporates paragraphs 1 through 16 above by reference as if set forth in full herein and, in the alternative to its demurrers, seeks an order requiring Plaintiff to file a more specific Complaint. 18. Plaintiff's Complaint makes references to a "policy" "plan" and "agreement", but does not specify whether such item(s) are in writing and does not attach the same to its Complaint. 19. Pennsylvania Rule of Civil Procedure 1019(i) requires that where a cause of action is based upon an agreement, the Complaint must state whether the agreement is in writing. 20. Pennsylvania Rule of Civil Procedure 1019(h) provides that where a writing is material to a claim, the writing must be attached to the Complaint. 21. Because the Complaint fails to sufficiently identify any agreements upon which it relies and fails to attach any writings that are material to its claims, Plaintiff should be required to file a more specific pleading stating whether its claims are based upon written agreements and attaching copies of any such writings, pursuant to Pa. R.C.P. 1028(a)(2). 4 MAG/7198/13/723568 1 10/20/2005 01:24 PM 22. Further, despite the fact that Zurich has produced over 2500 pages of documents to Plaintiff, the Complaint does not set forth the factual basis for Plaintiff s claims. 23. Count I is not sufficiently specific, as Plaintiff fails to identify the agreement(s) allegedly breached by Zurich, the contractual terms allegedly breached by Zurich, or the acts or omissions on the part of Zurich allegedly constituting breach of contract. 24. Likewise, Count II of the Complaint is not sufficiently specific. Although Count II nominally brings a claim for breach of "fiduciary obligations" and "covenants of good faith and fair dealing," Plaintiff does not identify the source(s) of any such obligations and/or covenants. 25. While the Complaint makes ambiguous references to a "policy" "plan" and "agreement," the Complaint does not further describe or identify any such items. See Complaint at ¶¶ 4 and 15. 26. Additionally, Plaintiffs Complaint does not identify the actions that Plaintiff contends Zurich took or failed to take that constitute breaches of such duties, nor does the Complaint sufficiently apprise Zurich of the terms and conditions of any policies, plans or agreements which Plaintiff contends created obligations on the part of Zurich. 27. The Complaint does not sufficiently apprise Zurich of the nature of the claims asserted by Plaintiff, nor the material facts upon which Plaintiff's claims are allegedly based. Absent a more specific pleading, Zurich will be prejudiced in attempting to answer the Complaint. 5 MAG/7198/13/723568 1 10/20/2005 01:24 PM 28. Accordingly, Plaintiff should be directed to file a more specific pleading pursuant to Pa.R.C.P. 1028 (a)(3). WHEREFORE, Defendant Zurich American Insurance Company respectfully requests, in the alternative to its demurrers, that its Preliminary Objections be sustained and that Plaintiff be directed to file a more specific pleading and attach copies of any written agreement(s) allegedly forming the basis of Plaintiff's claims. KAPLIN STEWART Kevan F. Hirsh, Esquire Mohammad A. Ghiasuddin, Esquire Attorneys for Defendant, Zurich American Insurance Company Date: October 21, 2005 6 MAG/7198/13/723568 1 10/20/2005 01:24 PM EXHIBIT "A" Carl C. Risch, Esquire Attorney I.D. No. 75901 Hillary A. Dean, Esquire Attorney I.D. No. 92878 MARTSON DEARDORFF WILLIAMS & OTTO 10 East High Street Carlisle, PA 17013 (717) 243-3341 Attorneys for Plaintiffs OCT - 5 2005 CARLISLE AREA HEALTH AND WELLNESS FOUNDATION, a PA nonprofit corporation and successor-in- interest by corporate reorganization to CARLISLE HOSPITAL AND HEALTH SERVICES, Plaintiff V. ZURICH AMERICAN INSURANCE COMPANY, a/k/a ZURICH NORTH AMERICA, Defendant IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION -LAW NO. 04-6265 NOTICE You have been sued in court. If you wish to defend against the claims set forth in the following pages, you must take action within twenty (20) days after this Complaint and Notice are served, by entering a written appearance personally or by attorney and filing in writing with the court your defenses or objections to the claims set forth against you. You are warned that if you fail to do so., the case may proceed without you and a judgment may be entered against you by the court without further notice for any money claimed in the Complaint or for any other claim or relief requested by the Plaintiffs. You may lose ihoney or property or other rights important to you. YOU SHOULD TAKE THIS PAPER TO YOUR LAWYER AT ONCE. IF YOU DO NOT HAVE A LAWYER, GO TO OR TELEPHONE THE OFFICE SET FORTH BELOW. THIS OFFICE CAN PROVIDE YOU WITH INFORMATION ABOUT HIRING A LAWYER. IF YOU CANNOT AFFORD TO HIRE A LAWYER, THIS OFFICE MAY BE ABLE TO PROVIDE YOU WITH INFORMATION ABOUT AGENCIES THAT MAY OFFER LEGAL SERVICES TO ELIGIBLE PERSONS AT A REDUCE FEE OR NO FEE: Cumberland County Bar Association 32 South Bedford Street THE COPY FROM RECORD Carlisle, PA 17013 to TestlMonY whereof, I here unto set Iny hVA (717) 249-3166 and the seal of Bald Court rd Cat#sle. p&.? rr,f ,? ,da?r .?.. Proth"Ocan?-r - Y F::FILFSIDATAFII.G.Hosphnl3047%DotumentsJ093.eom Cresied: 10.205 7:4SPM Revised: 10,305 0:24PM Carl C. Risch, Esquire Attorney I.D. No. 75901 Hillary A. Dean, Esquire Attorney I.D. No. 92878 MARTSON DEARDORFF WILLIAMS & OTTO 10 East High Street Carlisle, PA 17013 (717) 243-3341 Attorneys for Plaintiffs CARLISLE AREA HEALTH AND WELLNESS FOUNDATION, a PA nonprofit corporation and successor-in- interest by corporate reorganization to CARLISLE HOSPITAL AND HEALTH SERVICES, Plaintiff IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA : CIVIL ACTION -LAW : NO. 04-6265 V. ZURICH AMERICAN INSURANCE COMPANY, a/k/a ZURICH NORTH AMERICA, Defendant COMPLAINT 1. Plaintiff is a Pennsylvania nonprofit corporation and successor-in-interest by corporate reorganization and name change to Carlisle Hospital and Health Services and has a business address of 274 Wilson Street, Carlisle, Cumberland County, Pennsylvania, 17013. 2. Defendant Zurich American Insurance Company a/k/a Zurich North America is an Insurance Company with a business address of 1818 Market Street, st'e. 3202, Philadelphia, Pennsylvania, 19103. 3. At all times relevant hereto, Defendant transacted, and continues to transact business in the Commonwealth of Pennsylvania and rendered services to Plaintiff related to an insurance policy through activities and communications carried out by Defendant's employees, officers, agents, and representatives. 4. Plaintiff selected Defendant to provide insurance services to Plaintiff. Plaintiff and Defendant entered into an agreement which enumerated and defined the responsibilities of Defendant in the administration of the plan, including but not limited to, the defense against claims against Plaintiff. Pursuant to the agreement, Plaintiff paid premiums to Defendant for the provision of insurance services and defense on behalf of the Plaintiff. 5. The parties' agreement included a retroactive premium adjustment, in which the parties' shared risk of loss. Defendant could retroactively bill Plaintiff after a claim against Plaintiff was either defended or settled as the policy included no set premium. 6. On or around May, 1997, Karen Lesher, who was an employee of Plaintiff, was allegedly injured while working as a nurse at Plaintiffs hospital. 7. On or around 1997, Ms. Lesher brought a claim against-Plaintiff for worker's compensation benefits. 8. On or around the year 2004, Defendant settled the suit Ms. Lesher brought against Plaintiff for $90,000.00. 9. Defendant then retroactively charged Plaintiff approximately $174,000.00 in retroactive premium adjustments, subject to some credits. 10. Defendant failed to provide Plaintiff with any reasonable or other justification as to why it settled the Ms. Lesher's claim for $90,000.00 instead of defending the claim. 11. Defendant failed and refused to investigate bringing a defense on Plaintiffs behalf, failed and refused diligently to pursue a defense on Plaintiff's behalf, and improperly, arbitrarily and negligently expended in excess of $90,000.00, which substantial portion thereof should have been withheld and retained pending an assertion of a defense on behalf of the Plaintiff. COUNTI Breach of Contract 12. The facts and statements of paragraphs 1 through 11 above are hereby incorporated by reference. 13. By virtue of the foregoing and by its premature settlement of Ms. Lesher's claims, and by forcing Plaintiff to pay out on a.retroactive premium adjustment, and by failing to defend Plaintiff pursuant to the parties' agreements, understandings and trade practices, Defendant has breached its contractual undertakings and obligations to Plaintiff. WHEREFORE, Plaintiff requests that this Court enter a Declaratory Judgment that Plaintiff is not indebted to Defendant for any amount under the contract for insurance, and such other and further relief as the court may deem just and proper. i, COUNT II Breach of Fiduciary Obligations and Breach of Covenants of Good Faithand Fair Dealing 14. The facts and statements of paragraphs 1 through 13 above are hereby incorporated by reference. 15. Defendant served as and was a professional administrator and a fiduciary of the policy during the term of the agreement, through its exercise of discretionary authority in managing the policy, including the exercise of authority and control over management and defense of claims against its insured. As such, Defendant was a fiduciary ofthe plan, and further, was obligated to deal fairly and in good faith in regards to all claims brought against Plaintiff. Further, in entering into and performing under the above referenced agreement, Defendant was subject to the covenants, duties and obligations of good faith and fair dealing. 16. Defendant breach its fiduciary obligations and duty of good faith and fair dealing as follows: (a) Arbitrarily, capriciously, and in bad faith, failing to defend it's insured in order to later charge Plaintiff retroactive premiums on Plaintiff's insurance policy; (b) Claiming an unwarranted and wholly excessive retroactive premium adjustment against Plaintiff; (c) Failing to provide any reasonable basis for it's refusal to defend Plaintiff against Ms. Lesher's claims; and (d) In general, by self=dealing to the substantial detriment of Plaintiff and in violation of the provisions of the agreement and the parties' agreements, understandings, and -customs of the trade with respect to the duties of the insurance company to defend it's insured. 17. By its aforesaid conduct, breaches, violations and failures, Defendant failed to discharge its professional and fiduciary duties to Plaintiff with the care, skill, prudence and diligence under the circumstances as required by a prudent person or entity acting in a like capacity and familiar with such matters. 18. By its aforesaid conduct, breaches, violations and failures, Defendant violated and failed to discharge adequately its professional and fiduciary duties. 19. Defendant's aforesaid breaches of its duty of good faith and fair dealing and violations of its professional and fiduciary responsibilities. WHEREFORE, Plaintiff requests that this Court enter a Declaratory Judgment that Plaintiff is not indebted to Defendant for any amount under the contract for insurance, and such other and further relief as the court may deem just and proper. MARTSON.DEARDORFF WILLIAMS & OTTO By ??-Y- 4' Carl C. Risch, Esquire Attorney I.D. No. 75901 Hillary A. Dean, Esquire - Attorney I.D. No. 92878 19 East High Street Carlisle, PA 17013 (717) 243-3341 Date: October 3, 2005 Attorneys for Plaintiff 10-03-'05 14;21 FROM-CABWF 717-960-9992 T-096 P001/001 F-228 VERIFI, C? N M. Mizabeth Clever, who is Executive Director of Carlisle Area Health and Wellness Foundation and acknowledges that sbe has the authority to execute this Verification in behalf of Carlisle Area Health and Wellness Foundation certifies that the foregoing Complaint is based upon inaforrtiWon which has been gathered by my counsel in the preparation of the lawsuit. The language of this Complaint is that of counsel and not my own. I have read the document and to the extent that the Complaint is based upon i0onnation which 1 have given to my counsel; it is true and correct to the best ofmy knowledge, information and belief To the extent that the content of the Complaint is that of counsel, I have relied upon coumol in making this Verification. This statement and Verification are made subject to the penalties of 18 Pa- C.S. Section 4904 relating to unsworn falsification to authoritics, which provides that if I make knowingly false averments, I may be subject to criminal penalties. Carlisle Area Health and Wellness Foundation M_ laab Clever CERTIFICATE OF SERVICE I, Mary M. Price, an authorized agent for Martson Deardorff Williams & Otto, hereby certify that a copy of the foregoing Complaint was served this date by depositing same in the Post Office at Carlisle, PA, first class mail, postage prepaid, addressed as follows: Mohammad A. Ghiasuddin, Esquire KAPLIN STEWART MELOFF REITER & STEIN, P.C. 350 Sentry Parkway, Building 640 P.O. Box 3037 Blue Bell, PA 19422-0765 MARTSON DEARDORFF WILLIAMS & OTTO By-? Mary. Price Ten Wt High Street Carlisle, PA 17013 (717) 243-3341 Dated: October 3, 2005 KAPLIN STEWART Kevan F. Hirsch, Esquire - Attorney I.D. No. 37383 Mohammad A. Ghiasuddin, Esquire - Attorney I.D. No. 350 Sentry Parkway, Building 640 P.O. Box 3037 Blue Bell, PA 19422-0765 Phone (610) 260-6000 Fax (610) 260-1240 83925 Attorneys for Defendant, Zurich American Insurance Company CARLISLE AREA HEALTH AND COURT OF COMMON PLEAS WELLNESS FOUNDATION, a PA nonprofit CUMBERLAND COUNTY, PA corporation and successor-in-interest by corporate reorganization to CARLISLE HOSPITAL AND HEALTH SERVICES : Plaintiff V. ZURICH AMERICAN INSURANCE COMPANY a/k/a ZURICH NORTH AMERICA Defendants : No. 04-6265 CERTIFICATE OF SERVICE The undersigned hereby certifies that a copy of the foregoing Preliminary Objections to Plaintiffs Complaint was caused to be sent by first class mail, postage prepaid by the undersigned on the date stated below, to the addressees stated below: Carl C. Risch, Esquire Hillary A. Dean, Esquire Martson Deardorff Williams & Otto Ten East High Street Carlisle, PA 17013 KAPLIN STEWART Date: October 21, 2005 Mohammad A. Ghiasuddin, Esquire Attorneys for Defendant, Zurich American Insurance Company MAG/7198/13/723568_1 10/20/2005 01:24 PM [ 1 r S3 _? f _. ( _j `.s \.e.% ".. I w KAPLIN STEWART Kevan F. Hirsch, Esquire - Attorney I.D. No. 37383 Mohammad A. Ghiasuddin, Esquire - Attorney I.D. No 350 Sentry Parkway, Building 640 P.O. Box 3037 Blue Bell, PA 19422-0765 Phone (610) 260-6000 Fax (610) 260-1240 83925 Attorneys for Defendant, Zurich American Insurance Company CARLISLE AREA HEALTH AND WELLNESS FOUNDATION, a PA nonprofit corporation and successor-in-interest by corporate reorganization to CARLISLE HOSPITAL AND HEALTH SERVICES Plaintiff V. ZURICH AMERICAN INSURANCE COMPANY a/k/a ZURICH NORTH AMERICA COURT OF COMMON PLEAS CUMBERLAND COUNTY, PA Defendants : No. 04-6265 ARGUMENT FOR PRAECIPE TO THE PROTHONOTARY: Kindly list for argument the Preliminary Objections of Defendant, Zurich American Insurance Company, to Plaintiff's Complaint. KAPLIN STEWART Kevan F. Hirsh, Esquire Mohammad A. Ghiasuddin, Esquire Attorneys for Defendant, Zurich American Insurance Company Date: October 21, 2005 MAG/7198/13/727159 1 10/20/2005 04:06 PM KAPLIN STEWART Kevan F. Hirsch, Esquire - Attorney I.D. No. 37383 Mohammad A. Ghiasuddin, Esquire - Attorney I.D. No. 350 Sentry Parkway, Building 640 P.O. Box 3037 Blue Bell, PA 19422-0765 Phone (610) 260-6000 Fax (610) 260-1240 83925 Attorneys for Defendant, Zurich American Insurance Company CARLISLE AREA HEALTH AND WELLNESS FOUNDATION, a PA nonprofit corporation and successor-in-interest by corporate reorganization to CARLISLE HOSPITAL AND HEALTH SERVICES Plaintiff V. ZURICH AMERICAN INSURANCE COMPANY a/k/a ZURICH NORTH AMERICA ; COURT OF COMMON PLEAS CUMBERLAND COUNTY, PA Defendants : No. 04-6265 CERTIFICATE OF SERVICE The undersigned hereby certifies that a copy of the foregoing Argument Praecipe for Defendant's Preliminary Objections to Plaintiff's Complaint was caused to be sent by first class mail, postage prepaid by the undersigned on the date stated below, to the addressees stated below: Carl C. Risch, Esquire Hillary A. Dean, Esquire Martson Deardorff Williams & Otto Ten East High Street Carlisle, PA 17013 KAPLIN STEWART Date: October 21, 2005 Mohammad A. Ghiasuddin, Esquire Attorneys for Defendant, Zurich American Insurance Company MAG/7 1 98/1 3/727 1 59 l 10/20/2005 04:06 PM ?.i' `?? ??? J7 r^'" Carl C. Risch, Esquire Attorney I.D. No. 75901 Hillary A. Dean, Esquire Attorney I.D. No. 92878 MARTSON DEARDORFF WILLIAMS & OTTO 10 East High Street Carlisle, PA 17013 (717) 243-3341 Attorneys for Plaintiffs CARLISLE AREA HEALTH AND WELLNESS FOUNDATION, a PA nonprofit corporation and successor-in- interest by corporate reorganization to CARLISLE HOSPITAL AND HEALTH SERVICES, Plaintiff V. ZURICH AMERICAN INSURANCE COMPANY, a/k/a ZURICH NORTH AMERICA, Defendant IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION - LAW NO. 04-6265 NOTICE You have been sued in court. If you wish to defend against the claims set forth in the following pages, you must take action within twenty (20) days after this Complaint and Notice are served, by entering a written appearance personally or by attorney and filing in writing with the court your defenses or objections to the claims set forth against you. You are warned that if you fail to do so, the case may proceed without you and a judgment may be entered against you by the court without further notice for any money claimed in the Complaint or for any other claim or relief requested by the Plaintiffs. You may lose money or property or other rights important to you. YOU SHOULD TAKE THIS PAPER TO YOUR LAWYER AT ONCE. IF YOU DO NOT HAVE A LAWYER, GO TO OR TELEPHONE THE OFFICE SET FORTH BELOW. THIS OFFICE CAN PROVIDE YOU WITH INFORMATION ABOUT HIRING A LAWYER. IF YOU CANNOT AFFORD TO HIRE A LAWYER, THIS OFFICE MAY BE ABLE TO PROVIDE YOU WITH INFORMATION ABOUT AGENCIES THAT MAY OFFER LEGAL SERVICES TO ELIGIBLE PERSONS AT A REDUCE FEE OR NO FEE: Cumberland County Bar Association 32 South Bedford Street Carlisle, PA 17013 (717) 249-3166 F.\PILES\DATAFILEU ospitai3049\Documents\1091.First Amended Complaint Crested. 10/2/05 7.45PM Rcvked? 11/8/05 1149AM Carl C. Risch, Esquire Attorney I.D. No. 75901 Hillary A. Dean, Esquire Attorney I.D. No. 92878 MARTSON DEARDORFF WILLIAMS & OTTO 10 East High Street Carlisle, PA 17013 (717) 243-3341 Attorneys for Plaintiffs CARLISLE AREA HEALTH AND WELLNESS FOUNDATION, a PA nonprofit corporation and successor-in- interest by corporate reorganization to CARLISLE HOSPITAL AND HEALTH SERVICES, Plaintiff V. ZURICH AMERICAN INSURANCE COMPANY, a/k/a ZURICH NORTH AMERICA, Defendant IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION - LAW NO. 04-6265 FIRST AMENDED COMPLAINT 1. Plaintiff is a Pennsylvania nonprofit corporation and successor-in-interest by corporate reorganization and name change to Carlisle Hospital and Health Services and has a business address of 274 Wilson Street, Carlisle, Cumberland County, Pennsylvania, 17013. 2. Defendant Zurich American Insurance Company a/k/a Zurich North America is an Insurance Company with a business address of 1818 Market Street, ste. 3202, Philadelphia, Pennsylvania, 19103. 3. At all times relevant hereto, Defendant transacted, and continues to transact business in the Commonwealth of Pennsylvania and rendered services to Plaintiff related to an insurance policythrough activities and communications carried out by Defendant's employees, officers, agents, and representatives. 4. Plaintiff selected Defendant to provide insurance services to Plaintiff. Plaintiff and Defendant entered into an agreement which enumerated and defined the responsibilities of Defendant in the administration of the plan, including but not limited to, the defense against claims against Plaintiff. Pursuant to the agreement, Plaintiff paid premiums to Defendant for the provision of insurance services and defense on behalf of the Plaintiff. 5. The parties' agreement included a retroactive premium adjustment, in which the parties' shared risk of loss. Defendant could retroactively bill Plaintiff after a claim against Plaintiff was either defended or settled as the policy included no set premium. 6. On or around May, 1997, Karen Lesher, who was an employee of Plaintiff, was allegedly injured while working as a nurse at Plaintiff's hospital. 7. On or around 1997, Ms. Lesher brought a claim against Plaintiff for worker's compensation benefits. 8. On or around the year 2004, Defendant settled the suit Ms. Lesher brought against Plaintiff for $90,000.00. 9. Defendant then retroactively charged Plaintiff approximately $174,000.00 in retroactive premium adjustments, subject to some credits. 10. Defendant failed to provide Plaintiff with any reasonable or other justification as to why it settled the Ms. Lesher's claim for $90,000.00 instead of defending the claim. 11. Defendant failed and refused to investigate bringing a defense on Plaintiff's behalf, failed and refused diligently to pursue a defense on Plaintiff's behalf, and improperly, arbitrarily and negligently expended in excess of $90,000.00, which substantial portion thereof should have been withheld and retained pending an assertion of a defense on behalf of the Plaintiff. COUNTI Breach of Contract 12. The facts and statements of paragraphs 1 through 11 above are hereby incorporated by reference. 13. By virtue of the foregoing and by its premature settlement of Ms. Lesher's claims, and by forcing Plaintiff to pay out on a retroactive premium adjustment, and by failing to defend Plaintiff pursuant to the parties' agreements, understandings and trade practices, Defendant has breached its contractual undertakings and obligations to Plaintiff. 14. Defendant had a specific express and implied contractual duty to defend Plaintiff and to act in good faith in settling the claim with the knowledge that the amount of said settlement could trigger an retroactive premium adjustment borne primarily by Plaintiff. WHEREFORE, Plaintiff requests that this Court enter a Declaratory Judgment that Plaintiff is not indebted to Defendant for any amount under the contract for insurance, and such other and further relief as the court may deem just and proper. COUNT II Breach of Fiduciary Obligations and Breach of Covenants of Good Faithand Fair Dealine 15. The facts and statements of paragraphs 1 through 14 above are hereby incorporated by reference. 16. Defendant served as and was aprofessional administrator and a fiduciary ofthepolicy during the term of the agreement, through its exercise of discretionary authority in managing the policy, including the exercise of authority and control over management and defense of claims against its insured. As such, Defendant was a fiduciary of the plan, and further, was obligated to deal fairly and in good faith in regards to all claims brought against Plaintiff. Further, in entering into and performing under the above referenced agreement, Defendant was subject to the covenants, duties and obligations of good faith and fair dealing. 17. Defendant breach its fiduciary obligations and duty of good faith and fair dealing as follows: (a) Arbitrarily, capriciously, and in bad faith, failing to defend it's insured in order to later charge Plaintiff retroactive premiums on Plaintiffs insurance policy; (b) Claiming an unwarranted and wholly excessive retroactive premium adjustment against Plaintiff, (c) Failing to provide any reasonable basis for it's refusal to defend Plaintiff against Ms. Lesher's claims; and (d) In general, by self-dealing to the substantial detriment of Plaintiff and in violation of the provisions of the agreement and the parties' agreements, understandings, and customs of the trade with respect to the duties of the insurance company to defend it's insured. 18. By its aforesaid conduct, breaches, violations and failures, Defendant failed to discharge its professional and fiduciary duties to Plaintiffwith the care, skill, prudence and diligence under the circumstances as required by a prudent person or entity acting in a like capacity and familiar with such matters. 19. By its aforesaid conduct, breaches, violations and failures, Defendant violated and failed to discharge adequately its professional and fiduciary duties. 20. Defendant's aforesaid breaches of its duty of good faith and fair dealing and violations of its professional and fiduciary responsibilities. WHEREFORE, Plaintiff requests that this Court enter a Declaratory Judgment that Plaintiff is not indebted to Defendant for any amount under the contract for insurance, and such other and further relief as the court may deem just and proper. MARTSO DEARDO F WILLIAMS & OTTO By Carl C. Risch, Esqui Attorney I.D. No. 75901 Hillary A. Dean, Esquire Attorney I.D. No. 92878 10 East High Street Carlisle, PA 17013 (717) 243-3341 Date: November 8, 2005 Attorneys for Plaintiff f. VERIF[CATIW U Mizabeth Clever, who is &ccutiw Motor of Carlisle ,Axes Health and Wdlvm Fo"ation and acknowledges that sbe Im tbs aud2odty to etacute this VexWeation in behalf of Carlisle Area rfealth and wellness Foundation certifies that the foregoing Complaint is based upon infixmatiortwWabhasbeengetheredbyuycowndinthepreparationefthelawsWt Thelanguage ofthlsCoraplafraisthatofco=elatudnotmyown. Ihavereadthedoeumentandtotbs eattenttbat the Complaint is based apon Wormation which 1 have given to my counsel, :it is true and correct to the best ofmy knowledge, information and belief To the extent that the content of the Comiplaim is that of wansel, l have relied uyon counsel in malting this Verification. This staieuaent andYerifica6onaremadesubjeattothepenallies of lE Pa C.S. Section?t90+1 rWxting to u mm iaWcaiion to authorities, which provides that if I make kno'wii+gly false averments, Imay be subject to critninal penalties. Carlisle Area Health and Wellness Foundation M. ic„ h'."b Clever CERTIFICATE OF SERVICE I, Mary M. Price, an authorized agent for Martson Deardorff Williams & Otto, hereby certify that a copy of the foregoing Complaint was served this date by depositing same in the Post Office at Carlisle, PA, first class mail, postage prepaid, addressed as follows: Mohammad A. Ghiasuddin, Esquire KAPLIN STEWART MELOFF REITER & STEIN, P.C. 350 Sentry Parkway, Building 640 P.O. Box 3037 Blue Bell, PA 19422-0765 MARTSON DEARDORFF WILLIAMS & OTTO By ? tti (?tMary "rice Ten Ea High Street Carlisle, PA 17013 (717) 243-3341 Dated: November 8, 2005 Ci -71 CID 4i co `? b TO: PLAINTIFF KAPLIN STEWART Kevan F. Hirsch, Esquire - Attorney I.D. No. 37383 Mohammad A. Ghiasuddin, Esquire - Attorney I.D. No 910 Harvest Drive P.O. Box 3037 Blue Bell, PA 19422-0765 Phone (610) 260-6000 Fax (610) 260-1240 YOU ARE HEREBY NOTIFIED TO FILE A WRITTEN RESPONSE TO THE ENCLOSED NEW MATTER AND COUNTERCLAIM WITHIN TWENTY (20) DAYS FROM SERVFE HEREOF OR A JUDGMENT MAY B.E ENTERI?AkkTIIT Y" • -1-:7 BY: A ORNEY NOTICE TO PLEAD 83925 Attorneys for Defendant, Zurich American Insurance Company CARLISLE AREA HEALTH AND COURT OF COMMON PLEAS WELLNESS FOUNDATION, a PA nonprofit CUMBERLAND COUNTY, PA corporation and successor-in-interest by corporate reorganization to CARLISLE HOSPITAL AND CIVIL ACTION- LAW HEALTH SERVICES Plaintiff V. No. 04-6265 ZURICH AMERICAN INSURANCE COMPANY a/k/a ZURICH NORTH AMERICA Defendants ANSWER WITH NEW MATTER AND COUNTERCLAIM OF DEFENDANT ZURICH AMERICAN INSURANCE COMPANY Defendant, Zurich American Insurance Company (hereinafter "ZAIC"), submits its Answer to Plaintiff's First Amended Complaint together with New Matter and Counterclaim, and states as follows: 1. Admits, upon information and belief. 2. Denies as stated. Rather, ZAIC is an insurer, with its main offices located in Shaumburg, Illinois. Zurich North America is a trade name for a group of companies that includes ZAIC. i 3. Denies as stated. Rather, ZAIC regularly conducts business in Pennsylvania. Further, ZAIC rendered services pursuant to a policy of insurance issued to Carlisle Area Health and Wellness Foundation's predecessor-in-interest, Carlisle Hospital and Health Services (hereinafter both referred to as "Carlisle"). ZAIC denies that its "officers" rendered services to Carlisle. 4. Admits in part, denies in part. ZAIC admits that its predecessor, American Guarantee and Liability Insurance Company, provided a written policy of insurance to Carlisle, identified as Policy Number WC 9100664-01 (hereinafter the "Policy"). A true and correct copy of the Policy is attached hereto as Exhibit "A." The Policy represents the complete terms of the parties' insurance agreement. ZAIC denies Carlisle's characterization of the agreement to the extent said characterization is inconsistent with the terms of the Policy. Further, ZAIC denies that it was responsible for the administration of a "plan." Further still, although Carlisle was responsible for paying premiums pursuant to the Policy, it is denied that Carlisle has paid all premiums due under the Policy. 5. Denies. The corresponding paragraph pertains to a writing which speaks for itself, and accordingly no response is required. To the extent Carlisle's characterization of the writing is inconsistent with the terms thereof, ZAIC denies said characterization. By way of further response, Carlisle agreed to pay premiums that were rated retrospectively pursuant to the Policy. 6. Admits. 7. Admits. 2 8. Admits. 9. Denies as stated. Rather, the retrospective premium due and owing to ZAIC from Carlisle is $152,201.00, as set forth in ZAIC's Counterclaim below. 10. Denies. ZAIC denies that it did not "defend the claim" and further denies that it failed to provide Carlisle with any reasonable or other justification as to why it settled Ms. Lesher's claim for $90,000.00. To the contrary, ZAIC properly consulted with Carlisle with regard to the defense and settlement of Ms. Lecher's claim. 11. Denies. Each and every averment of the corresponding paragraph is specifically denied. To the contrary, ZAIC defended Ms. Lesher's claim in a reasonable, diligent, professional manner, and acted appropriately in settling Ms. Lesher's claim for $90,000.00 based on the merits of Ms. Lesher's claim and the potential exposure to Carlisle if the case proceeded to trial. As to "Count I-Breach of Contract" 12. ZAIC incorporates by reference paragraphs 1-I1 above as if set forth in full herein. 13. Admits in part, denies in part. ZAIC admits only that it demanded and continues to demand that Carlisle pay the premiums that are due and owing. The remainder of the corresponding paragraph consists of conclusions of law and accordingly is deemed denied. By way of further response, ZAIC denies that is breached any obligations to Carlisle. 14. Denies. The statements set forth in the corresponding paragraph consist of conclusions of law and accordingly are deemed denied. By way of further response, ZAIC 3 denies that it undertook any obligations to Carlisle beyond those required by the Policy and applicable regulations, and ZAIC further denies that it breached any obligations to Carlisle. WHEREFORE, ZAIC demands judgment in its favor and against Carlisle. As to "Count II-Breach of Fiduciary Obligations and Breach of Covenants of Good Faith and Fair Dealing" 15. ZAIC incorporates by reference paragraphs 1-14 above as if set forth in full herein. 16. Denies. The statements set forth in the corresponding paragraph consist of conclusions of law and accordingly are deemed denied. By way of further response, ZAIC is not a "fiduciary" to Carlisle, nor was it the "administrator" or "fiduciary" of a "plan" on behalf of Carlisle. Rather, ZAIC was an insurer pursuant to the terms of the Policy. ZAIC denies that it undertook any obligations to Carlisle beyond those required by the Policy. 17. Denies. The statements set forth in the corresponding paragraph consist of conclusions of law and accordingly are deemed denied. By way of further response, ZAIC denies that it undertook any obligations to Carlisle beyond those required by the Policy, and ZAIC further denies that it breached any obligations to Carlisle. a. Denies. ZAIC specifically denies each and every averment of the corresponding paragraph. To the contrary, at all times ZAIC acted in good faith in defending Carlisle. b. Denies. ZAIC specifically denies each and every averment of the corresponding paragraph. To the contrary, the premium adjustment was warranted and not excessive. C. Denies. ZAIC specifically denies each and every averment of the corresponding paragraph. To the contrary, ZAIC defended Ms. Lesher's claim, and provided a reasonable basis to settle Ms. Lesher's claim. 4 5. Carlisle's claims are barred and/or limited by the terms of the Policy. 6. Carlisle's claims are barred and/or limited because ZAIC satisfied its obligations under the Policy. 7. Carlisle has not sustained any damages as a result of any actions or inactions of ZAIC. 8. Carlisle's claims are barred and/or limited by Carlisle's own breaches of contract. 9. Carlisle's claims are barred and/or limited by ZAIC's right to setoff/recoupment. COUNTERCLAIM I. ZAIC, through its predecessor-in-interest American Guarantee and Liability Insurance Company, provided a written policy of insurance to Carlisle identified as Policy Number WC 9100664-01 (hereinafter the "Policy"), with an effective date beginning on April 20, 1996. A true and correct copy of the Policy is attached hereto as Exhibit "A." 2. The premiums for the Policy selected by Carlisle were retrospectively rated on an annual basis in accordance with the rating provisions and formula set forth in the Policy. The premiums due from Carlisle are adjusted yearly based on, inter alia, converted losses, costs and expenses incurred or to be incurred by ZAIC in handling, defending and paying claims against Carlisle during the previous period. See Exhibit "A", Policy at Part Five, "Retrospective Premium Endorsement." 3. ZAIC provided services to Carlisle required by and pursuant to the Policy. 6 4. By invoice dated January 24, 2004, ZAIC billed Carlisle for the premium due and owing under the sixth adjustment, totaling $172,712.00. As set forth on the invoice, this premium amount was adjusted as of October 31, 2003. Along with the invoice, ZAIC sent Carlisle a detailed calculation of the retrospective premium adjustment along with an itemization of the losses incurred. True and correct copies of the January 24, 2004 invoice together with the retrospective premium adjustment information and loss detail are attached hereto as Exhibit "B." 5. By invoice dated January 5, 2005, ZAIC billed Carlisle for the seventh adjustment of the premium due from Carlisle, reducing the total amount by $22,511.00. True and correct copies of the January 5, 2005 invoice and accompanying retrospective premium adjustment information are attached hereto as Exhibit "C." 6. After the seventh adjustment, the total amount of the premium due and owing under the Policy from Carlisle to ZAIC is $152,201.00. 7. ZAIC has made repeated demands upon Carlisle to pay the outstanding retrospective premium, but Carlisle has unjustifiably refused to make payment. COUNT I-Breach of Contract 8. ZAIC incorporates by reference paragraphs 1-7 of its Counterclaim as if set forth in full herein. 9. Pursuant to the Policy, Carlisle agreed to pay retrospectively rated premiums in accordance with the rating system and formula set forth therein. 10. The total amount of the retrospective premium currently due and owing from Carlisle to ZAIC under the terms of the Policy is $152,201.00. 7 11. Carlisle's failure and continued refusal to pay the retrospective premium due and owing constitutes breach of contract. 12. ZAIC is entitled to recovery from Carlisle in the amount of $152,201.00, plus pre- judgment interest. WHEREFORE, ZAIC demands judgment in its favor and against Carlisle in the amount of $152,201.00, together with costs, pre judgment interest and such further relief as the Court may deem appropriate. COUNT 11-Account Stated 13. ZAIC incorporates by reference paragraphs 1-12 of its Counterclaim as if set forth in full herein. 14. The retrospectively rated premium method under the Policy establishes a book account of Carlisle with ZAIC which is adjusted annually. 15. ZAIC's January 24, 2004 and January 5, 2005 invoices forwarded to Carlisle on or about those dates reflect the status and state of the book account by Carlisle. 16. The invoices constitute a book account. 17. As set forth in the invoices, Carlisle owes ZAIC the sum of $152,201.00. 18. ZAIC has demanded payment from Carlisle. 19. Carlisle has not made payment and refuses to make payment. 20. ZAIC is entitled to recovery from Carlisle in the amount of $152,201.00, plus pre- judgment interest. 8 WHEREFORE, ZAIC demands judgment in its favor and against Carlisle in the amount of $152,201.00, together with costs, pre judgment interest and such further relief as the Court may deem appropriate. COUNT III-Uniust Enrichment (pleaded in the alternative) 21. ZAIC incorporates by reference paragraphs 1-20 of its Counterclaim as if set forth in full herein. 22. Upon Carlisle's request, ZAIC defended the Lesher Claim on behalf of Carlisle. 23. ZAIC incurred substantial expenses in defending the Lesher Claim. 24. ZAIC did not undertake Carlisle's defense of the Lesher Claim gratuitously. Rather, as Carlisle knew, ZAIC expected payment from Carlisle. 25. Carlisle benefited from ZAIC's defense and settlement of the Lesher Claim. 26. Despite repeated demands, Carlisle has refused and continues to refuse to make payment to ZAIC for said benefit. 27. It would be unjust and inequitable to allow Carlisle to retain the benefit of ZAIC's services without adequate compensation for the reasonable value of those services. 28. The reasonable value of the benefit conferred upon Carlisle by ZAIC is $152,201.00, plus interest. 29. To the extent it is somehow precluded from recovery on Counts I or II of its Counterclaim above, ZAIC is entitled to recovery from Carlisle on the theory of unjust enrichment. 9 WHEREFORE, ZAIC demands judgment in its favor and against Carlisle in the amount of $152,201.00, plus pre judgment interest from October 31, 2003 and such further relief as the Court may deem appropriate. KAPLIN STEWART 2 *' 5 / '-- Kevan F. Hirsh, Esquire Mohammad A. Ghiasuddin, Esquire Attorneys for Defendant, Zurich American Insurance Company Date: October 25, 2007 10 VERIf ICAT!ON I, LheA undersigned, sut?jec t to the penalties of 18 Pa. Cons. Stat. Ann- § 4904 relating to unswoni Calsiticat:iou to authorities. aver that I am authorized to and do make this Verification on behalf of the Defendant, Zi ich American Insurance Company, and that all facts asserted in the fore.zoingy Answer with i'*tew flatter and Counterclaim ;art: true and i-ect to the lest of ni knowledge, infionnattoil and belief yx t Tilts y Date ZURICH Workers' Compensation and Employers Zurich North America insurance is provided by the company designated on the Information Page. (A stock insurance company. herein called the Company.) WC 00 00 00 A (Ed. 4-92) WORKERS' COMPENSATION AND EMPLOYERS' LIABILITY INSURANCE POLICY PLEASE READ THE POLICY CAREFULLY. QUICK REFERENCE BEGINNING ON PAGE INFORMATION PAGE GENERAL SECTION................... ......... ............_............. ._.2 A. .......... The Policy ......... .............. ................. ............... -.-.2 B. Who Is Insured........... ........ ..........._... ............... ...-2 C. Workers' Compensation Law.._._..... ........................ .....2 D. State ..... ........_..._................................................... .....2 E. Locations ..... ..... _ ___ -.....................--_-..........._...... .....2 PART ONE-WORKERS' COMPENSATION INSURANCE A. How This Insurance Applies .................................... ..... 2 B. We Will Pay- ---- ....._ .................. ............ ......... ........ ..... 2 C. We Will Defend ........................................................ ..... 2 D. We Will Also Pay--------- ........._ ............._.................. .....2 E. Other Insurance ...... ....... ................ ............. ... _ 2 F. Payments You Must Make... . ._. ....... .. ...................... ..... 3 G. Recovery From Others ............ ................. ............... .....3 H. Statutory Provisions... ................_......... _................ .... .3 PART TWO-EMPLOYERS' LIABILITY INSURANCE A. How This Insurance Applies .......................................... 3 B. We Will Pay .... ......... ....................... .--..................3 C. Exclusions ........ ........... ____ ................... ............. .....4 D. We Will Defend ................. ........ ...................... .............. 4 E We Will Also Pay .........................................................4 F. Other Insurance...._ .......................................................4 BEGINNING ON PAGE G. Limits Of Liability ........................................................4 H. Recovery From Others.. ......... ... _ .... ... . .................. 5 I. Actions Against Us .... .......... ........................ .......... ........ 5 PART THREE--OTHER STATES INSURANCE ............................5 A. How This Insurance Applies... .............. ... .......... 5 ..B. Notice ..... ........ .................. .-..................... ................. ..... 5 PART FOUR-YOUR DUTIES IF INJURY OCCURS..... ..............5 PART FIVE-PREMIUM .... ........... ...... ......... . _........ ............ ..........5 A. Our Manuals ........__ ..... .................. ........ ................. ..... 5 B. Classifications .......................................... ......................6 C. Remuneration... .... .............. ..... ___........ ...... --.............6 D. Premium Payments ................. ...... ......... ........... ..........6 E. Final Premium .............. ............ _........... ........ ............. 6 F. Records.. . ...................... __ ............... ...-............. .....6 G. Audit ..... ..._._............ ........... ............ . ... .... _............ ....6 PART SIX-CONDITIONS... ................................... ......................6 A. Inspection... .................................. ...... __ _ .......... _ .......6 B. Long Term Policy ..................................... ......................6 C. Transfer Of Your Rights And Duties ......... ......................6 0. Cancelation .............................................. ......................7 E. Sole Representative_. ........................._.. ......................7 IMPORTANT: This Quick Reference is not part of the Workers' Compensation and Employers' Liability Insurance Policy and does not provide coverage. Refer to the Workers' Compensation and Employers' Liability Insurance Policy itself for actual contractual provisions. WC 102 (4-92) WC 00 00 00 A (Ed. 4-92) Copyright 1991 National Council on Compensation Insurance. Page 1 of 7 AMERICAN GUARANTEE AND LIABILITY INSURANCE COMPANY PARTICIPATING WORKERS' COMPENSATION AND EMPLOYERS' LIABILITY INSURANCE POLICY In return for the payment of the premium and subject to all terms of this policy, we agree with you as follows: GENERAL SECTION A. The Policy This policy includes at its effective date the Infor- mation Page and all endorsements and Sched- ules listed there. It is a contract of insurance be- tween you (the employer named in item 1 of the Information Page) and us (the insurer named on the Information Page). The only agreements relat- ing to this insurance are stated in this policy. The terms of this policy may not be changed or waived except by endorsement issued by us to be part of this policy. Workers' Compensation Law means the workers' or workmen's compensation law and occupational disease law of each state or territory named in item 3A of the Information Page. It includes any amendments to that law which are in effect during the policy period. It does not include any federal workers' or workmen's compensation law, any federal occupational disease law or the provisions of any law that provide nonoccupational disability benefits. D. State B. Who Is Insured State means any state of the United States of You are insured if you are an employer named in America, and the District of Columbia, item 1 of the Information Page. If that employer is E. Locations a partnership, and if you are one of its partners, This policy covers all of your workplaces listed in you are insured, but only in your capacity as an items 1 or 4 of the Information Page; and it covers employer of the partnership's employees. all other workplaces in item 3.A states unless you C. Workers' Compensation Law have other insurance or are self-insured for such workplaces. PART ONE-WORKERS' COMPENSATION INSURANCE A. How This Insurance Applies This workers' compensation insurance applies to bodily injury by accident or bodily injury by dis- ease. Bodily injury includes resulting death. 1. Bodily injury by accident must occur during the policy period. 2. Bodily injury by disease must be caused or aggravated by the conditions of your employ- ment. The employee's last day of last expo- sure to the conditions causing or aggravating such bodily injury by disease must occur dur- ing the policy period. B. We Will Pay We will pay promptly when due the benefits re- quired of you by the workers' compensation law. D. We Will Also Pay We will also pay these costs, in addition to other amounts payable under this insurance, as part of any claim, proceeding or suit we defend: 1. reasonable expenses incurred at our request, but not loss of earnings; 2. premiums for bonds to release attachments and for appeal bonds in bond amounts up to the amount payable under this insurance; 3. litigation costs taxed against you; 4. interest on a judgment as required by law until we offer the amount due under this insurance; and 5. expenses we incur. E. Other Insurance C. We Will Defend We have the right and duty to defend at our ex- pense any claim, proceeding or suit against you for benefits payable by this insurance. We have the right to investigate and settle these claims, proceedings or suits. We have no duty to defend a claim, proceeding or suit that is not covered by this insurance. We will not pay more than our share of benefits and costs covered by this insurance and other in- surance or self-insurance. Subject to any limits of liability that may apply, all shares will be equal until the loss is paid. If any insurance or self-insurance is exhausted, the shares of all re- maining insurance will be equal until the loss is paid. WC 102 (4-92) Page 2 of 7 Copyright 1991 National Council on Compensation Insurance. WC 00 00 00 A (Ed. 4-92) F. Payments You Must Make You are responsible for any payments in excess of the benefits regularly provided by the workers' compensation law including those required be- cause: 1. of your serious and willful misconduct; 2. you knowingly employ an employee in viola- tion of law; 3. you fail to comply with a health or safety law or regulation; or 4. you discharge, coerce or otherwise discrimi- nate against any employee in violation of the workers' compensation law. If we make any payments in excess of the bene- fits regularly provided by the workers' compensa- tion law on your behalf, you will reimburse us promptly. G. Recovery From Others We have your rights, and the rights of persons entitled to the benefits of this insurance, to re- cover our payments from anyone liable for the in- jury. You will do everything necessary to protect those rights for us and to help us enforce them. H. Statutory Provisions These statements apply where they are required by law. 1. As between an injured worker and us, we have notice of the injury when you have no- tice. 2. Your default or the bankruptcy or insolvency of you or your estate will not relieve us of our duties under this insurance after an injury oc- curs. 3. We are directly and primarily liable to any person entitled to the benefits payable by this insurance. Those persons may enforce our duties; so may an agency authorized by law. Enforcement may be against us or against you and us. 4. Jurisdiction over you is jurisdiction over us for purposes of the workers' compensation law. We are bound by decisions against you under that law, subject to the provisions of this policy that are not in conflict with that law. 5. This insurance conforms to the parts of the workers' compensation law that apply to: a. benefits payable by this insurance; b. special taxes, payments into security or other special funds, and assessments payable by us under that law. 6. Terms of this insurance that conflict with the workers' compensation law are changed by this statement to conform to that law. Nothing in these paragraphs relieves you of your duties under this policy. PART TWO-EMPLOYERS' LIABILITY INSURANCE A. How This Insurance Applies This employers' liability insurance applies to bodily injury by accident or bodily injury by disease. Bodily injury includes resulting death. 1. The bodily injury must arise out of and in the course of the injured employee's employment by you. 2. The employment must be necessary or inci- dental to your work in a state or territory listed in item 3.A of the Information Page. 3. Bodily injury by accident must occur during the policy period. 4. Bodily injury by disease must be caused or aggravated by the conditions of your employ- ment. The employee's last day of last expo- sure to the conditions causing or aggravating such bodily injury by disease must occur dur- ing the policy period. 5. If you are sued, the original suit and any re- lated legal actions for damages for bodily in- jury by accident or by disease must be brought in the United States of America, its territories or possessions, or Canada. B. We Will Pay We will pay all sums you legally must pay as damages because of bodily injury to your employ- ees, provided the bodily injury is covered by this Employers' Liability Insurance. The damages we will pay, where recovery is permitted by law, include damages: 1. for which you are liable to a third party by rea- son of a claim or suit against you by that third party to recover the damages claimed against such third party as a result of injury to your employee; 2. for care and loss of services; and 3. for consequential bodily injury to a spouse, child, parent, brother or sister of the injured employee; provided that these damages are the direct con- sequence of bodily injury that arises out of and in WC 102 (4-92) WC 00 00 00 A (Ed. 4-92) Copyright 1991 National Council on Compensation Insurance Page 3 of 7 the course of the injured employee's employment by you; and 4. because of bodily injury to your employee that arises out of and in the course of employ- ment, claimed against you in a capacity other than as employer. C. Exclusions This insurance does not cover: 1. liability assumed under a contract. This ex- clusion does not apply to a warranty that your work will be done in a workmanlike manner; 2. punitive or exemplary damages because of bodily injury to an employee employed in vio- lation of law, 3. bodily injury to an employee while employed in violation of law with your actual knowledge or the actual knowledge of any of your executive officers; 4. any obligation imposed by a workers' com- pensation, occupational disease, unemploy- ment compensation or disability benefits law or any similar law, 5. bodily injury intentionally caused or aggra- vated by you; 6. bodily injury occurring outside the United States of America, its territories or posses- sions and Canada. This exclusion does not apply to bodily injury to a citizen or resident of the United States of America or Canada who is temporarily outside these countries; 7. damages arising out of coercion, criticism, demotion, evaluation, reassignment, disci- pline, defamation, harassment, humiliation, discrimination against or termination of any employee, or any personnel practices, poli- cies, acts or omissions; 8. bodily injury to any person in work subject to the Longshore and Harbor Workers' Compen- sation Act (33 USC Sections 901-950), the Nonappropriated Fund Instrumentalities Act (5 USC Sections 8171-8173), the Outer Conti- nental Shelf Lands Act (43 USC Sections 1331-1356), the Defense Base Act (42 USC Sections 1651-1654), the Federal Coal Mine Health and Safety Act of 1969 (30 USC Sec- tions 901-942), any other federal workers' or workmen's compensation law or other federal occupational disease law, or any amendments to these laws; employee due to bodily injury arising out of or in the course of employment, or any amend- ments to those laws; 10. bodily injury to a master or member of the crew of any vessel; 11. fines or penalties imposed for violation of fed- eral or state law; and 12. damages payable under the Migrant and Seasonal Agricultural Worker Protection Act (29 USC Sections 1801-1872) and under any other federal law awarding damages for viola- tion of those laws or regulations issued there- under, and any amendments to those laws. D. We Will Defend We have the right and duty to defend, at our ex- pense, any claim, proceeding or suit against you for damages payable by this insurance. We have the right to investigate and settle these claims, proceedings and suits. We have no duty to defend a claim, proceeding or suit that is not covered by this insurance. We have no duty to defend or continue defending after we have paid our applicable limit of liability under this insurance. E. We Will Also Pay We will also pay these costs, in addition to other amounts payable under this insurance, as part of any claim, proceeding or suit we defend: 1. reasonable expenses incurred at our request, but not loss of earnings; 2. premiums for bonds to release attachments and for appeal bonds in bond amounts up to the limit of our liability under this insurance; 3. litigation costs taxed against you; 4. interest on a judgment as required by law until we offer the amount due under this insurance; and 5. expenses we incur. F. Other Insurance We will not pay more than our share of damages and costs covered by this insurance and other in- surance or self-insurance. Subject to any limits of liability that apply, all shares will be equal until the loss is paid. If any insurance or self-insurance is exhausted, the shares of all remaining insurance and self-insurance will be equal until the loss is paid. G. Limits Of Liability 9. bodily injury to any person in work subject to Our liability to pay for damages is limited. Our limits the Federal Employers' Liability Act (45 USC of liability are shown in item 3.6 of the Information Sections 51-60), any other federal laws obli- Page. They apply as explained below. gating an employer to pay damages to an WC 102 (4-92) Page 4 of 7 Copyright 1991 National Council on Compensation Insurance. WC 00 00 00 A (Ed. 4-92) 1. Bodily Injury by Accident- The limit shown for "bodily injury by accident-each accident" is the most we will pay for all damages covered by this insurance because of bodily injury to one or more employees in any one accident. A disease is not bodily injury by accident un- less it results directly from bodily injury by accident. 2. Bodily Injury by Disease. The limit shown for "bodily injury by disease-policy limit" is the most we will pay for all damages covered by this insurance and arising out of bodily injury by disease, regardless of the number of em- ployees who sustain bodily injury by disease. The limit shown for "bodily injury by disease- each employee" is the most we will pay for all damages because of bodily injury by disease to any one employee. Bodily injury by disease does not include dis- ease that results directly from a bodily injury by accident. 3. We will not pay any claims for damages after we have paid the applicable limit of our liability under this insurance. H. Recovery From Others We have your rights to recover our payment from anyone liable for an injury covered by this insur- ance. You will do everything necessary to protect those rights for us and to help us enforce them. 1. Actions Against Us There will be no right of action against us under this insurance unless: 1. you have complied with all the terms of this policy; and 2. the amount you owe has been determined with our consent or by actual trial and final judgment. This insurance does not give anyone the right to add us as a defendant in an action against you to determine your liability. The bankruptcy or insol- vency of you or your estate will not relieve us of our obligation under this Part. PART THREE-OTHER STATES INSURANCE A. How This Insurance Applies 1. This other states insurance applies only if one or more states are shown in item 3.C of the Information Page. 2. If you begin work in any one of those states after the effective date of this policy and are not insured or are not self-insured for such work, all provisions of the policy will apply as though that state were listed in Item 3.A of the Information Page. 3. We will reimburse you for the benefits required by the workers' compensation law of that state if we are not permitted to pay the benefits directly to persons entitled to them. 4. If you have work on the effective date of this policy in any state not listed in Item 3.A of the Information Page, coverage will not be af- forded for that state unless we are notified within thirty days. B. Notice Tell us at once if you begin work in any state listed in item 3.C of the Information Page. PART FOUR-YOUR DUTIES IF INJURY OCCURS Tell us at once if injury occurs that may be covered by this policy. Your other duties are listed here. 1. Provide for immediate medical and other services required by the workers' compensation law. 2. Give us or our agent the names and addresses of the injured persons and of witnesses, and other information we may need. 3. Promptly give us all notices, demands and legal papers related to the injury, claim, proceeding or suit. 4. Cooperate with us and assist us, as we may re- quest, in the investigation, settlement or defense of any claim, proceeding or suit. 5. Do nothing after an injury occurs that would inter- fere with our right to recover from others. 6. Do not voluntarily make payments, assume obli- gations or incur expenses, except at your own cost. PART FIVE-PREMIUM A. Our Manuals apply the changes to this policy if authorized by All premium for this policy will be determined by law or a governmental agency regulating this in- our manuals of rules, rates, rating plans and surance. classifications. We may change our manuals and WC tot (4-92) WC 00 00 00 A (Ed. 4-92) Copyright 1991 National Council on Compensation Insurance. Page 5 of 7 B. Classifications Item 4 of the Information Page shows the rate and premium basis for certain business or work clas- sifications. These classifications were as-signed based on an estimate of the exposures you would have during the policy period. If your actual expo- sures are not properly described by those classifi- cations, we will assign proper classifications, rates and premium basis by endorsement to this policy. C. Remuneration Premium for each work classification is deter- mined by multiplying a rate times a premium ba- sis. Remuneration is the most common premium basis. This premium basis includes payroll and all other remuneration paid or payable during the policy period for the services of 1. all your officers and employees engaged in work covered by this policy; and 2. all other persons engaged in work that could make us liable under Part One (Workers' Compensation Insurance) of this policy. If you do not have payroll records for these persons, the contract price for their services and mate- rials may be used as the premium basis- This paragraph 2. will not apply if you give us proof that the employers of these persons lawfully secured their workers' compensation obliga- tions. D. Premium Payments You will pay all premium when due. You will pay the premium even if part or all of a workers' com- pensation law is not valid. E. Final Premium The premium shown on the Information Page, Schedules and endorsements is an estimate. The final premium will be determined after this policy ends by using the actual, not the estimated, pre- mium basis and the proper classifications and rates that lawfully apply to the business and work covered by this policy. If the final premium is more than the premium you paid to us, you must pay us the balance. If it is less, we will refund the balance to you. The final premium will not be less than the highest minimum premium for the classifications covered by this policy. If this policy is canceled, final premium will be de- termined in the following way unless our manuals provide otherwise. 1. If we cancel, final premium will be calculated pro rata based on the time this policy was in force. Final premium will not be less than the pro rata share of the minimum premium. 2. If you cancel, final premium will be more than pro rata; it will be based on the time this policy was in force, and increased by our short rate cancelation table and procedure. Final pre- mium will not be less than the minimum pre- mium. F. Records You will keep records of information needed to compute premium. You will provide us with copies of those records when we ask for them. G. Audit You will let us examine and audit all your records that relate to this policy. These records include ledgers, journals, registers, vouchers, contracts, tax reports, payroll and disbursement records and programs for storing and retrieving data. We may conduct the audits during regular business hours during the policy period and within three years af- ter the policy period ends. Information deve-loped by audit will be used to determine final premium. Insurance rate service organizations have the same rights we have under this provision. PART SIX-CONDITIONS A. Inspection We have the right, but are not obliged to inspect your workplaces at any time. Our inspections are not safety inspections. They relate only to the in- surability of the workplaces and the premiums to be charged. We may give you reports on the conditions we find. We may also recommend changes. While they may help reduce losses, we do not undertake to perform the duty of any per- son to provide for the health or safety of your em- ployees or the public. We do not warrant that your workplaces are safe or healthful or that they comply with laws, regulations, codes or stan- dards. Insurance rate service organizations have the same rights we have under this provision. B. Long Term Policy If the policy is longer than one year and sixteen days, all provisions of this policy will apply as though a new policy were issued on each annual anniversary that this policy is in force. C. Transfer Of Your Rights And Duties Your rights or duties under this policy may not be transferred without our written consent. If you die and we receive notice within thirty days after your death, we will cover your legal repre- sentative as insured. WC 102 (4-92) Page 6 of 7 Copyright 1991 National Council on Compensation Insurance WC 00 00 00 A (Ed. 4-92) V. Cancelation 1. You may cancel this policy. You must mail or deliver advance written notice to us stating when the cancelation is to take effect. 2. We may cancel this policy. We must mail or deliver to you not less than ten days advance written notice stating when the cancelation is to take effect. Mailing that notice to you at your mailing address shown in item 1 of the Information Page will be sufficient to prove notice. 3. The policy period will end on the day and hour stated in the cancelation notice. 4. Any of these provisions that conflicts with a law that controls the cancelation of the insur- ance in this policy is changed by this state- ment to comply with that law. E. Sole Representative The insured first named in item 1 of the Informa- tion Page will act on behalf of all insureds to change this policy, receive return premium and give or receive notice of cancelation. WC 102 (4-92) WC 00 00 00 A (Ed. 4-92) Copyright 1991 National Council on Compensation Insurance. Page 7 of 7 Participating Provision. You shall participate in our earnings, to such extent and upon such conditions as shall be determined by our Board of Directors in accordance with law and as made applicable to this policy, provided you have complied with all of the terms of this policy with respect to the payment of premium. In Witness Whereof, we have caused this policy to be executed and attested, and, if required by state law, this policy shall not be valid unless countersigned by our authorized representative. In, C.? Secretary President 0 ZURICH N o Zurich North America Q Zurich Towers g 1400 American o g Schaumburg, IL ti °0 60196-1056 www.zurichna.com POLIGYWRITING INDEX INSURANCE F, R. THIS COVERAGE PART PROVIDED BY. AMEL CAN GUATtAXIEE AND LIABILITY INSUR$DTCE' COrIPgNR COMPANY CODE: o3 ACCOUNT NUMBED POLICY NUMBER PtIOUS POLICY NUMBER EFFECTIVE DATE - EXP4RATION DATE 21)24.65114 WC 9160664-01 )mw 04-20-96 04-20-97 NAMEDINSURED FARLT5t:E IMSPITAL MISCELLANEOUS INFORMATION PAYMENT PLAN MONTHLY 00EPATOO1.0. RSOLJ.n UNDERWRITER I.D. COUNTERSIGNATURE R COIAM,SORY AUTO WORK. COAAP: FEDERAL I.D. #:23 2141105/ AOD(TINaCATOR A UPC OWE. 0000 SIC CODE 8062 HOSPITALS, LAICAL/SURGICAL TRANSACTION INFORMATION S. TYPE NEW BUSINESS a. SE.. # 001 PROCESSED 09-ZS-§G S. DATE 04-20-96 PSEMENT # ,REIN REASON LINE OF BUSINESS/COMMISSIONS: LINE OF 81361NESS COMMISSION % WORIOMS• COMIENSATION FULL ANNUAL PREMIUM $ 124,941-60 BILLED PREMIUM S 324,941,40 NAMED INSURED MAILING ADDRESS PRODUCER INFORMATION CODE 50204-aol CARLISLE SOSPF?AL MAHSR & MCLENHAN, INC. 600 GRANT ST STE 5500 246 PARKM STREET Cer2ls1e PA 19013 PITTSBURGH PA 15219-2885 ASSEMBLY INFORMATION STAMPSISTICKERS AUDITABLE MAILING INSTRUCTIONS POLICYWRITINO INDEX PAGE 2 AO COUNT NUtv1BER POLICY NUBLR PREWOU-9 POLICY NUMBER EFFECTIVE DATE- EXPIRATION PATE L 2455114 WC 9k0066k-Q1 N)W 04-ZO-96 04-26-87 COMPUTER PRODUCED FORMS U-WC-D-314-A U-WC-321-A U-WC 3 20:-A U-WC-315-A U-WC-319-A WC 00 0.3 02 WC 00 04 02 WC 00 04 03 -WC 00 04 14 WC 00 05 03 A WC 66 05 08 WC 3.7 06 01 WC 37 06 02 WC 37 06. 03A 07-94 WORKERS COMPENSATION INFORMATION PAGE 07-94 NAMED INSURED SCHEDULE 07-94 SCHEDULE OF FORM$ AND ENDORSEMENTS 07-94 CLASS:IFZCATION. SCHEDULE 07-94 SCHEDULE OF LOCATIONS ADL 04-84 DESIGNATED WO.RKPLACES.EXCLU5:TON ENDT ADL 04-8.4 ANNIVERSARY RATLNG DATE ENDORSEMENT ADL 04-84 EXPERIENCK RATING MOD FACTOR ENDORSEMENT ADL 07-90 NOTIFICATION OF CHANGE IN OWNERSHIP ENDT AOL 12-91 RETROSPECTIVE PREMIUM ENDT-ONE NEAR PLAN 04-84 RETROSPECTIVE PREM ENDT AVIATION EXCL 04-84 SPECIAL PENN ENDT-INSPECTION OF MANUALS 04-84 PA PENNSYLVANIA NOTICE 08-95 PA PENN ACT 86-1986 ENDT NON-FILL-IN FORMS REQUIRED - MANUALLY ATTACH ZURICH-AMERICAN INSURANCE GROUP WORKERS COMPENSATION. AND EMPLOYERS: LIABILITY COMMERCIAL INSURANCE INSURANCE POLICY - INFORMATION PAGE Servicing Office: Insurance for this coverage par.1 provided by MANHATTAN AMERICAN GUARANTEE AND LIABILITY NEW YORK CITY, NY 10005 INSURANCE COMPANY 1. Policy Number we 9100664-01 Renewal of Number NEW Named Insured and Mailing Address Producer and Mailing Address CARLISLE HOSPITAtL MARSH & MCLENNAN, INC. (SEE: ENDORSEMENT U.-WC-321-A) 600 GRANT ST STE 5500 246 PARKER STREET P-01 BOX 310 Carlisle PA 17013 Producer Code 50204-801 Other workplaces not shown above: See Schedule o'f Locations FEIN: 23-2141105 NCCI Company No. 114 52 New Renewal 0 hewrite of Prior Policy No. This information page, with policy provisions and endorsements, if any, completes this policy. Insured iS:C0RP0RAT ION 2. Policy Period: From 04-20-96 to.04-20-97 at 12:01 A.M. Standard Time at insured's mailing address, insured's Identification number(s): 370005584, FEIN 23214.1105 3. A. Workers. Compensation Insurance: Part One of the policy applies to the Workers' Compensation Law of the states listed here: PA S. Employers Liability Insurance: Part Two of the policy applies to the work in each state listed in item 3.A The Limits of Liability under Part Two are: Bodily Injury by Accident 1,000,000 each Accident Bodily Injury by Disease 1,000"000 policy Bodily Injury by Disease 1,000,000 each employee C_ Other States Insurance; Part Three of the policy applies to the states, N:aoy, listed. here; O. This policy Includes these endorsements and schedules:: See Schedule of Forms and Ertcloirsements 4. The premium for this policy will be determined by our Manuals of Rules, Classifications, Rates and Rating Plans. All information required on the following Classification Schedule is subject to verification and Change by audit. See Classification Schedule TOTAL ESTIMATED STANDARD PREMIUM $ 324, 801.00 PREMIUM DISCOUNT $ It indicated below, adjustments ' EXPENSE CONSTANT $ 140 . D 0 of premium shall be maQe . PREMIUM FOR ENDORSEMENTS $ a] Annually, ? Monthly TAXES AND SURCHARGES $ ? Semi-Annually ? Thia is a Three TOTAL ESTIMATED ANNUAL PREMIUM $ 324,941.00 ? uarterly Year Fixed Rate MINIMUM PREMIUM $ 1 r a7 5.00 Policy DEPOSIT PREMIUM $ 324,941.00 Agent or Producer Countersigned by Resident Licansed Agent Date WC 00 00 01A U•WGD-314-A (07-94) Page 1 of 1 <ZURICH-AMERICAN INSURANCE GROUP COMMERCIAL INSURANCE NAMED INSUaED SCHEDULE _ Policy Number: WC 9 L00664- 01 NAMED INSURED CARLISLE HOSPITAL CARLISLE HOSPITAL AND HEALTH SERVICES UDR.., INC. D:Bk.LIEECARE VENTURES, INC. PARNER STREET CORPORATION RWC CORPORATION GSJ' CORPORATION FE MANAGEMENT CORPORATION HEALTHCARE BILLING SYSTEM., 1NC. CARLISLE ALS,,INC. MEDIC 63 MANAGED CARE SERVICES MAINSTAY OF CENTRAL .:PENNSYLVANIA WC.. CARLISLE RETIREMENT COMMUNITY CORPORATION DBA CUMBERLAND: CROSSINGS PERRY H8ALTH CENTER CARLISLE CARDIOLOGY, INC. LINVG321-A (07-94) Page i T ZURICH-AMERICAN COMMERCIAL INSURANCE INSURANCE GROUP SCHEDULE OF FORMS AND ENDORSEMENTS Policy Number: WC 9100664-01 Form Number &: Edition Date Form Name QRKERS' COMPENSATION FORMS AND ENDOPSFMENTS -WC-D-314-A 07-94 WORKERS COMPENSATION INFORMATION PACE -WC-321-A 07-94 NAMED INSURED SCHEDULE -WC-.320-A 07-94 SCHEDULE OF FORMS AND ENDORSEMENTS -WC-315-A 07-94 CLASSIFICATION SCHEDULE -WC-319-A 07-94 SCHEDULE. OF. LOCATIONS C OO 03 62 04-84 DESIGNATED WoRKPL?CES: EXCLUSION ENDT C 00 04 02 04-84 ANNIVERSARY RATII(d DATE ENDORSEMENT C 00 04 03 o4-84 Ex1?ERIENICE RATING MOD FACTOR ENOMSEMEN C 00 04 14 07-90 . NOTIF-14 TION OP.CHANGE 1.4 OWNERSHXP ENDT C 00 05 03 A 12-91. RETROSPECTIVE PREMIUM ENDT-ONE-YEAR PLAN C 00 05.08 04-84 RETROSPECTIVE PREM ENDT AVIATION EXCL C 37 06 01 04-84 SPECIAL PENN ENDT-INSPECTION OF MANUALS C 37 06 02 0.4-8.4 PA P:ENN'SYT?TANIA. NOTICE . C 37 06 ()3A 08-95 86-1986 ENDT, PA PENN ACT -WC-160-A 04-92 .. WORKERS COMP'& EMPLOYERS LIAB INS POLICY U-WC320-A (07-94) Page 1 1' ZURICH-AMERICAN INSURANCE GROUP COMMERCIAL INSURANCE WORKERS COMPENSATION CLASSIFICATION SCHEDULE Insurance for this coverage part provided by; AMERICAN GUARANTEE AND LIABILITY INSURANCE COMPANY PdicyNumbec WC 9100664-01 ITEM 4. CLASSIFICATION OF OPERATIONS PREMIUM BASIS RATES Entry in this item, except As specifically provided elsewhere in d C Total Estimated: P Estimated IOC. Ws policy, does not modify any of the other 'pr avisions of this e o AnnUal er $ 100, of Ann u81 policy. - No, Remuneration Reawneration Premium PEI?fNSY(,1!ANIA 001 HOME HEACTH CARE - PROFESSIONAL STAFF 942 643,337 3.78 $ 24,318:.0.0 001 COMMUNITY PURSING SERVICES- 943 303,233 16.93 $ 51,337.0o NONPROFESSIONAL STAFF 061 CLINICS-OVTPATIENT SERVICES: ONLY 957 1,015,827 .40 $ 41663.60 001. HOSPITALS-ALL EMPLOYEES, INeLUt)rNra 961 26,286,426 2.-23 $ 586,187_0.6 OFFICE BUT EXCLUDING WORKFARE PROGRAM EMPLOYEES AND EMPLOYEES PEkpo tne_ HONE HEALTH CARE SERVICES (T01 LIFE CARS/RETIREMENT COMMUNITIES WCTH gt4 1,754,340 5,65 $ 99 L1 d' 00 LESS THAN 50 PERC[iNT or 9RDS LTCENCED AS INTERMEDIATE CARE OR HIGHER, PREMIUM FOR INCREASER LIMITS PART TWO i 5 25,296.00 EXPERIENCE MO6IP1aATr0N .411 $ - 96.5,470_:00 EXPENSE CONSTANT $ 140.60 _PVM_?YLVAHIA UH 24, 9 41. GO U-WO.315-A (01-94) Page 1 *ZURICH-AMERICAN INSURANCE GROUP COMMERCIAL: INSURANCE SCHEDULE OF LOCATIONS flolicyNUmtaer, WC 9100664-01 Location No. Location(s) 001 246 PARKER STREET P.O.; BOX .310 U-WC319-A (07-94) WORKERS COMPENSATION AND EMPLOYERS LIABILITY INSURANCE POLICY WC: 00 03 02 (Ed, 4-84) DESIGNATED WORKPLACES EXCLUSION ENDORSEMENT The policy does not cover work conducted at or from Tlta:endorsenrent changes the policy to:vM.jah it is attached and is effective on the ;date issued unless otheroeise stated. (The information below is required only when this endorsement is issued suosequent to preparation of the poitoy.) Endorsement Effective Porcy No. Endorsement No. insured Insurance Company Countersigned 6y Premium $ WC 00 03 02 (Ed. 8-84) Copyright 1903 National Council on Compensation Insurance. WORKERS COMPENSATION AND EMPLOYERS LIA131LITY INSURANCE POLICY WC 00, 04 02 (Ed. 484) ANNIVERSARY RATING DATE ENDORSEMENT The premium and rates for this policy, and the experience rating modification factor, if any, inay change on your an- niversary:m iAg date shown In the Schedule. Schedule Anniversary Hating Date _ __ (Month) _ (Day) Thls endorsement changes the policy to wfIich it is attached and is effective on the date Issued unless otherwise stated. (The information below is required only when this endorsement is issued subsequent to preparatiaa of the policy.) Endorsement E1[6ctive Polley No. Endorsement No. Insured Insurance Company Countersigned By Premium $ WC 00 04 02 (Ed. 4-84) Copyright 1983 National Council on CompensMion Insurance. WORKERS COMPENSATION AND EMPLOYERS LIABILITY INSURANCE POLICY WC 00 04 03 (Fd. "84) EXPERIENCE. RATING MODIFICATION FACTOR ENDORSEMENT The premium for the policy will be adjusted by an experience rating modification factor. The factor was not available when the policy was issued.. The factor, if any, shown on the Information Page: is an estimate, We will issue an en- dorsement to show the proper factor, If different from the factor shown, when It Is calculated. This endorsement changes the policy to which it is attached and is effective on the data issued unless otherwise stated. (The information below is required only when this endorsement is issued subsequent to preparation of the policy Endorsement Effective Policy No_ Endorsement No. Insured Insurance Company Countersignod By Premium $ WC 00 04 03 (Ed. 04-84) Copyright 1983 National Council. on Compensation Insurance. WORKERS COMPENSATION AND EMPLOYERS LIAR(UTY INSURANCE POLICY WC' 00 04 14 (Ed. 07-90) NOTIFICATION OF CHANGE IN OWNERSHIP ENDORSEMENT Experience rating is mandatory for all eligible insureds. The experience rating modification factor, it any, applicable to this policy, may change it there is a change in your ownership or in that of one or more of the entities eligible to be :combined with you for experience rating purposes. 'Change In ownership includes sales,, purchases, other transfers, mergers, consolidations, dissolutions, formations of a new entity and other changes provided for in the applicable experience rating plan manual. You. must:report any change in ownership to us in writing within 90 days of such change. Failure to report such changes within this period may result in revision of the experience. rating modification: factor used to determine your premium. This endorsement changes the policy to which it is attached ands effective on the date issued unless otherwise stated. Ohe information below is required only when this endorsothm is issued subsequent to -preparation of the policy.) Endorsement Effective Policy No. Endorsement No, Insured Insurance. Company Countersigned By Premium $ WC 00 04 14 (Ed. 07-90) Copyright 1990 National Council on Compensation Insurance. WORKERS COMPENSATION AND EMPLOYERS LIABILITY INSURANCE POLICY WC 00 05 03 A RETROSPECTIVE PREMIUM ENDORSEMENT ONE YEAR PLAN (Ed- 12-91) This endorsement is added to Part Five (Premium) because you chose to have the cost of the insurance rated retrospectively. This endorsement explains the rating plan and how the retrospective premium will be determined. This endorsement applies in the states listed in the Schedule. It determines the retrospective premium for the insurance provided during the rating plan period by this policy and any policy listed in the Schedule. The rating plan period is the one-year period beginning with the effective date of this endorsement- The amount of retrospective premium depends on five standard elements and two elective elements. A. Retrospective Premium Standard Elements The five standard elements are explained here. 1. Standard premium is the premium we would charge during the rating plan period if you had not chosen retrospective premium rating, but with two exceptions. Standard premium does not include the expense constant charge or the premium discount credit. 2. Basic premium is less than standard premium. It is standard premium multiplied by a percentage called the basic premium factor. The basic premium factor varies depending on the total amount of standard premium. The Schedule shows a range of basic premium factors for differing amounts of estimated standard premium. The actual basic premium factor will be determined after the standard premium is determined. If earned standard premium is not within the range of the estimated standard premiums shown in the Schedule, the basic premium will be recalculated. 3. Incurred losses are all amounts we pay or estimate we will pay for losses, interest on judgments, expenses to recover against third parties, and employers liability loss adjustment expenses- 4 A converted loss is an incurred loss multiplied by a percentage called the loss conversion factor. The loss conversion factor is shown in the Schedule. 5. Taxes are a part of the premium we collect. Taxes are determined as a percentage of basic premium and converted losses. The percentage is called the tax multiplier. It varies by state and by Federal and non-Federal classifications. The tax multipliers are shown in the Schedule. B. Retrospective Premium Elective Elements Two other elements are included in retrospective premium if you elected to include them. They are the excess loss premium for the loss limitation and the retrospective development premium. They are explained here. 1. The election of a loss limitation means that the amount of incurred loss to be included in the. retrospective premium is limited to an amount called the loss limitation. The loss limitation applies separately to each person who sustains bodily injury by disease and separately to all bodily injury arising out of any one accident. The charge for this loss limitation is called the excess loss premium. Excess loss premium is a percentage of standard premium multiplied by the loss conversion factor. The percentage is called the excess loss premium factor. Taxes are added to excess loss premium just as they are for other elements of retrospective premium. Excess loss premium factors vary by state, by classification, and by the amount of the loss limitation If you chose this elective element, the loss conversion factor, the loss limitation, the excess loss premium factors, and the states where they apply are shown in the Schedule. Copyright 1983, 1991 National Council on Compensation Insurance. Page 1 of 4 WORKERS. COMPENSATION AND EMPLOYERS t,IAR(LUTY INSURANCE POLICY WG 04 45 03 A (Ed. 12-91) 2. The retrospective development element is used to help stabilize premium adjustments. The premium for this element is charged with the first three calculations of retrospective premium, and is called the retrospective development premium. It is a percentage of standard premium multiplied by the loss conversion factor. The percentage of standard premium is called the retrospective development factor. Taxes are added to retrospective development premium just as they are for other elements of retrospective premium. Retrospoctive devefopment -factors vary by state, by electing a loss llmitation, and by first, second, and third calculations of retrospective premium. It you chose this elective element, the retrospective development factors are shown in the' Schedule- C: Retrospective Premium Formula tnsurattce: policies listed in the Schedule will be combined with this policy to calculate the retrospective premium. If they policies provide insuran0. -tot more than. one. insured, the retrospective premium will be determined for all insureds combined, not separately for each insured. 1. Retrospective premium is the. sum of basic premium, converted losses, and taxes, plus the excess loss premium and retrospective development premium elective elements if you chose them. 2. The retrospective premium will not be less: than the minimum nor more than the maximum retrospective premium. The "nimum and maximum retrospective premiums are determined by applying, the minimum and maximum factors shown in the Schedule to the standard premium. 3., if this endorsement applies to more than one policy or state, the standard premium will be the sum of the standard premiums for each policy and state. D. Premium Calculations and Payments I _ We will calculate the retrospective premium using all loss information we have as of a date six months after the rating_plan period ends and annually thereafter. We will have the calculation verified by the appropriate rate service organization at your request. We may make a special valuation of the ;retrospective premium as of any date that you are declared bankrupt or insolvent, make an assignment for the benefit of creditors, are involved in reorganization, receivership, or liquidation, or dispose of all your interest in work covered by the insurance- You will pay the amount due us if the retrospective premium is more,than the total standard premium as of the special valuation date. 2:. After .4 calculation of retrospective prerniurn; you and we may agree that it is the-final calculation.. No other calculation will be matte unless there is clerical error itt the final calculafion. 3. After each calculation of retrospective premium, you Witt pay promptly the amount due us, or we will refund the amount -clue you. Each insured is responsitife. tot the payment of all standard premium and retrospective premium calculated underthis endorsement. E. Work fn Other States If any of the policies provide: insurance in a staite not listed in the Table of States, and if you begin work in that state during the rating pion period, this endorsement wflt apply to that insurance if this rating plan applies in that slate on an Interstate basis. The retrospective premium standard elements, and the elective elements you chose, will be determined by our manuals for that state, and added to the Schedule by endorsement. F. Cancelation 1. If any Insurance subject to this endorsement Is canceled, the effective date of cancelatlon will become the end of the rating plan period for all insurance: subject: to this endorsement unless we agree with you, by endorsement, to continue the rating plan period. Copyright 1943, 1991 National; Council op: Compensation Insurance. Page 2 of 4 WORKERS COMPENSATION: AND EMPLOYERS LIABILITY INSURANCE POLICY WC 00 05 03 A (Ed. 12-91) 2. If we cancel for nonpayment: of premium, the maximum retrospective premium will be based on the standard premium for the rating plan period, increased pro rata to 365 days. 3. If you cancel, the standard premium for the rating plan period will be increased by our short rate table: and procedure. This. short :rate premium will be the minimum. retrospective premium and will be used to determine the basic premium. The short rate premium will be used to determine the excess loss premium and retrospective development premium if you chose these elective elements. The maximum retrospective premium will be based on the standard premium for the rating plan period, increased pro rata to :W days. 4. Section F:3. will not:apply if-you cancel because: a. all work covered by the insurance is completed; b_ all interest in the, business covered by the insurance is sold; or, c. you retire from all business covered by the insurance. Schedule 1. Other policies subject tv this Retrospective Premium Endorsernent 2. Loss Limitation: $ 111 3. Loss Conversion Factor 131 Minimum Retrospective Premium Factor 111 Maximum Retrospective Pierril-Um Factor 1.1 X 4: The:ttiasic prgMiutn factors shli v i here are based on estimates of standard premium. If the actual standard premium is within the range of estimated standard premiums :shown here, the basic premium factor will be obtained by lin0ar interpolation to the nearest one=tenth of I%. It the actual standard premium is not within the range of estimated standard premiums, the basic premium factor will be: recalculated. 54%0 100% 150%0 Estimated standard premium: $1.001 $ 150 $ 200 Basle premium factor: 150000 20000 Copyright 1983, 1991 National Council oft Compensation insurance. Page 3 of 4 WORKER$. COMPENSATION AND EMPLOYERS LIABILITY INSURANCE POLICY WC 00 05 03 A (Ed. 12-91) 5. The. tax. multipliers, excess loss premium factors, and retrospective development factors, and the states where they apply, are shown in the Table of States. TABLE OF STATES Excess Loss Premium Factors State Federal ` Tax Multiplier State federal " " Retrospective Development Factan state Glasses (01h+er than Cf 11 Classes) ptdy} I Glasses (ether than ( "F' Classes) Only) 1 St 2nd 3rd This enddrsemet t :changes the policy to which it is attached and is effective on the date issued unless otherwise. stated. (The infortnation below is required only when this endorsement is issued subsequent to preparation of the policy.) Endorsement Effective Insured Insurance Company WC 00 05 03 A {Ed. 12.91? Policy No- Premium $ Countersigned By Endorsement No. Copyright 1983, 1991 National Council on Compensation Insurance. Page 4 of 4 WORKERS COMPENSATION AND EMPLOYERS LIABILITY INSURANCE POLICY WC 00 05 09 (Ed. 4-84) RETROSPECTIVE PREMIUM ENDORSEMENT AVIATION EXCLUSION Premium and incutre. s Irises .arising out of an aviation ciassifieatiott listed in the Schedule are excluded from retrospec- tive rating. Schedule this endorsetne7if changes the;policy to which it is attached and is effective on the date issued unless otherwise stated. (The information below is required only when this endorsemeto is Issued sutlsaquent to preparation of the policy.) Endorsement €ffactive Policy No, Endorsement No. Insured Premium $ Insurance cempany Counlersigned By _ WC 00 05 08 (Ed_ a>s4) CopyrlgtN 19x3 National Coundl on Compensation insurance. WORKERS COMPENSATION AND EMPLOYERS LIABILITY INSURANCE POLICY WC 37 06 01 (Ea- 4.84) SPECIAL PENNSYLVANIA ENDORSEMENT - INSPECTION OF MANUALS The manuals of rules, rating plans; and classifications are approved pursuant to the provisions of Section 6,54 of the In- sueAnde Company Law of May 17, 1921, P.L. 682, as amended, and are on file With the Insurance Commissioner of the Commonwealth of Pennsylvania. This endorsement changes the,polioy to wh oh it is attached and Is effeotive on the date Issued unless otherwise stated. (Th'e' informAtton below is tegalred onty when this endorsement is issued subsequent to preparation of the policy.) pndarsernent Effective Policy No. endorsement No. Insured Countersigned By Premium $ WC 37 06 01 (Ed. 4-84) Copyright 1"4'Permsylvanla Compensatlon bating Bureau, WOaKIIRS COMPENSA-nON AND EMPLOYERS LIABILITY INSURANCE POUCY WC. 37 06 02 (Ed. *" PENNSY. LVANIA. NOTICE An Insuran.Ge C.csir any, its agents, employees, or ;service ontmeters acting W its behalf.- may provida services to reduce pod lnfuiry, death: or loss: Tl ess services: may inelud.e a??y a the foltowing or related services inekient to the the.likellfn of application for, issuance, renewal or continuation of, a policy of insurance; 1. surveys; conslritatiort or-adyi;ce or 3; inspections: The 'Insurance Const-ttation Services Exemption Aet' of Penro. dvania :provides that the Insurance Company, its agents, employees or sent Contractors acting on its .tieil7A is not ftUo for damages from injury, `death or loss occurring as a y . by arty person to the furnishing of :or`ttie #alure to furnish these sertices? result an. act or omission The Act does "Ot.apply N the njory, death ooF loss occurred during the actual performance .of the services and: was caused by the negligence of the Insurance Company, Its agents, employees or service contractors; 2. to consuitaton serves.required to be performed untler a`wntten:service .contract riot related to a policy of insurance; or 3. if any acts ordrnis$ions of the IM utance Company; its agents, erW , ees or service contractfar"s are:judiciallydeter- mined to. constitutg a crime, ;actual malice, or gross negllgenee_ This eridoksement changes the.poiioy to which it is.attac#ied wid is Medwe:on the data :Issued unless otherwise stated. (They worm*" below, is tenured 9* when Ibis emdorseniont:tc issl+ed subsequent to peepaidoool Rte. polio;) Endmoment Etfec6vs Poiicy No. eFddrsemenf No. .Insured Imurance Company WC `a7 06 02 Counfersigned By Premium $ (rz-.d. +04) tiagp Iffit IW4.Petmsyi7?t W& QM*Pens**M-Ra*V Bum" WORKERS .COMPENSATION-AND EMPLOYERS UABIUTY INSURANCE POLICY WC 3T06. *03 A (Ed. W. 9. S) PENNSYLVANIA ACT 86-1:9$:6 END.01RSEMENT NONRENEWAI, NOTICE.OF INCREASE OF PREMIUM, AND RETURN OF UNEARNED PREMIUM This:endorsement applies only to-the insurance provided by the policy because Pennsylvania is shown in item 3.A. of the Information Page.. The pof Icy conditions are amended by adding the following. regarding nonrenewal, notice Of increase in premiiurn, and return of unearned preiinrurn: Nonrenewal t. We may elect not to. renew the policy. We will man to eUb aimed insured, by first class mail. not iless than 60 days advance*_notice stain when the: non- renewal Will take effect. Wills g that notice to you at your mailing address last .known to us will. tie --suffi- cient to prove notice.. 2. Our notico :pf nonrenewal will state our specific rea- sons for not tenevvirig- 3. If we: have -indicated our willingness to renew; we will not send you a notice,0f no-nmenewal. However; the policy will stlif terminate on its explratlon date if: 3. If :a policy has been written or is to be written on a retrospection :ratirig plan basis,. the notice of increase in premium provisioin of this. endorsement does not apply, Return of Unt&ned Premium 1. If this policy is canceled and there. is une ,reed: premi- um due you: a. if the Company cancels, the unearned premium: Will be. rettitmed to you within 1.0 business days after the effective date of cancelation. b. If you eancel,'the unearned premium. gill be returned within 30 days after the- effective date of caiieelation. a: you notify us or the again or broker who procured. this policy that you do not want the policy :re- newed; or 2. b. you fail to pay:all premiums when due; .or c. you obtain other insurance as a replacement of the policy. Notice -of increase in Premium 1. We will provide you with not less than 30 days ad- vame, notice of an increase in renewal :prerriium. of this policy, i€ it as our intent to offer such renewal. 2. The. above notifiicaticin re, ire".. t will be satisfied i w+ie haver miueal a renewal policy- thore than 3D days prior to its effective date. Because. this policy was written on- the basis! of an estirtiated pirdmiurn and is subject to a prnhium au= dl[, the unearned pretRiWrn S.pe,died in .a and lb-: above, if any, :shah be returned on an estimated ba- sis: Upon our rximpletlon of computation of the 0( act premium,, an additional return premium or chalrge will be made to you withiCt 1S days of the final com= putation. a. These return of unearned premium provisions shall not apply if this policy is written on a. retrospective rating plan :basis. This ertdrsrsemerit charl?es ttie policy to iivhi?t it is attached and is effective on the.data issued unless tthentitse stated, (The information Wow Is required only when this. endorsement Wittued subsequent to :prepairatiori of the polcy:I): Endotsernent Effective Insured Insurance. Company VVC 37:06 03 A. (Ed. -M9511 Policy. No, :Er domment No. Premium $ Countersigned By cQpydom 1"5 Pennsylvania comper?aomi aong sweats. ACCOL111t u??imar Invol.cc ZURICH t. ,artkl 246 i':Irker 6=trt'ct ti:rr :. t ?.1 Car l`te. 1` 1. ? 1'1'( PLI C, Suite. 3€ 1) -J,. VA- 15222-440(l Risk Manager Risk :% 1.1-alter PAUC If NORTH AMERICA For Qtacstinn? Rtm:ardiatf, tltr Pr(glram Writti•n_ C'IiI.C:Xt:C), ft,, 6()67 j „r €leae%fiflai5 Regarding the AdjuStzale;:att Calculation: f°c r f)Ia ati€?Eas F2egarding Collections Issues. is tN,, a'1t0V 4 ?y lL Yew ?y ? -.?/. LLJ •??/ ? MiWf f `+ Ilrtly r-? Now 0-4 A 'r r}r.? z w 2 D w i LLI ui OL 0 F-- Z W j}r W d © elf W 0 D Z of w 0... ?.rr i, z C l ?. 1Y - -- T`- - i .. r c' f f x ? x?v .st y ?v? 7 7: - ri .64 v r. d r s 1• {, = Jr „' :f:- ?. ? f: -r. y. ,.%. .r- ;+ _ r:. - .. f• ;?,'- i -.. ;f, F. t/. .. .f- .e^'. J: :.1 1 ?/` eF. 1`. ?i- l- ! r. f,• •f.' ./: I ?!` 'f ?I; J - .F. vf+ •f- •? i Q /?: U- ,?'.. - _ ,?, - J.? .f f t }; 4G . , t. .,.^. J-. .F'. / " . 3. :'ma`r f. +1=: d• il" ?,. 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C" t Y S' •^- ?. f r• r -? 1 Y q-.. (..- yy .n .?:: r !, F r ..: or J- r< ,r -r_ r f; s r' J ! +X' J fF tr s, x Ir. 1 fd re ti r^3 tl r: `i r <; rr t`:, f1 _Y ^1 ?a ^J .`1 r l ^I r t i [ r . s .'d f. x - r? - r _ Y- S .? r k f _ r!r f ? ? u e rk 3 _ ~•? ?f, tji 1 4j r r v/ f ref c-- r?t ?f r+r; sfs f' f f r? r? ? r rr< „, ? y r IY?? 'T + * r ? ? ? ? Y ? C . r i Cam: ZURICH C ;)rlislr tli l its t did^iD3?4 t€ ' tiRc,7 146 Parker Street Mars'ls USA t'ittst,tsr xti. PA, 1521-2-,4406 Risk Nlaflagcr Dist: Matta-er ZURICH NORTH ANTERICA. For QuestiOns Re-Ardin , the Program Written- 860-2.5T"6571 5 It..Y' I'II It. CIRCLE CHICAGO, IL. 60674 For Questions Regarding the Adjustment Calculation: arc- S4 5,3 4 -2 -J K, . Rtiikk For Questions Regarding Collections Issues: J t° I: r i fi J 605-9692 A h' ENIME? (" YiW Z?aR3 r?-At?ttYFl s1 T*t : t°rf a {_ rUf P INVOICE UAr ? r tu u, u ..+ ... OPP Lift" C?l C?l :, CIN y:. r ti K "1 0 r'l LL z ti y D Li ? + xi 0 / U ,J C- > Q r ` ! z te ? _ 0 LLJ MYw' *10 v iMN !4; f? n V' .'i * ri war r? Z ? ? X E ? t p f S ? I 3 ? Y'.. ,: Yt Y i _ t •Uw ? Rrx A ate. I I ?f 3? it E E f r`# N • r r1<. ? .r Le'i' ! F Ir 12 n ! i J ! V 64 i € ^J?• ? w re ? fe?tt" ? i jj ?• I w/ E wn et 4 I .3Y E 41 ,e f t r y KAPLIN STEWART Kevan F. Hirsch, Esquire - Attorney I.D. No. 37383 Mohammad A. Ghiasuddin, Esquire - Attorney I.D. No 910 Harvest Drive P.O. Box 3037 Blue Bell, PA 19422-0765 Phone (610) 260-6000 Fax (610) 260-1240 83925 Attorneys for Defendant, Zurich American Insurance Company CARLISLE AREA HEALTH AND COURT OF COMMON PLEAS WELLNESS FOUNDATION, a PA nonprofit : CUMBERLAND COUNTY, PA corporation and successor-in-interest by corporate reorganization to CARLISLE HOSPITAL AND CIVIL ACTION- LAW HEALTH SERVICES Plaintiff V. No. 04-6265 ZURICH AMERICAN INSURANCE COMPANY : a/k/a ZURICH NORTH AMERICA Defendants CERTIFICATE OF SERVICE The undersigned hereby certifies that a copy of the foregoing Answer with New Matter and Counterclaim was caused to be sent by first class mail, postage prepaid by the undersigned on the date stated below, to the addressees stated below: George B. Faller, Jr., Esquire Carl C. Risch, Esquire Martson Law Offices 10 East High Street Carlisle, PA 17013 KAPLIN STEWART Date: October 25, 2007 Mohammad A. hiasuddinsquire Attorneys for Defendant, Zurich American Insurance Company t : Z I d 9(', 1,D' LvtiZ F \FILES\Clients\Hospital3047\Documnts\3047H.1093.pra2\mas r a Created: 03/07/00 09:48:31 AM Revised: 02/28/08 03:39:09 PM 3047H.1093 George B. Faller, Jr., Esquire I.D. No. 49813 MARTSON DEARDORFF WILLIAMS OTTO GILROY & FALLER MARTSON LAW OFFICES 10 East High Street Carlisle, PA 17013 (717) 243-3341 Attorneys for Plaintiff CARLISLE AREA HEALTH AND WELLNESS FOUNDATION, a PA nonprofit corporation and successor-in-interest by corporate reorganization to CARLISLE HOSPITAL AND HEALTH SERVICES Plaintiff IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA NO. 2004-6265 CIVIL ACTION-LAW V. ZURICH AMERICAN INSURANCE COMPANY a/k/a ZURICH NORTH AMERICA Defendants : JURY TRIAL DEMANDED PRAECIPE TO SETTLE, DISCONTINUE AND END TO THE PROTHONOTARY OF CUMBERLAND COUNTY: Kindly mark the above-referenced matter as settled, discontinued and ended. MARTSO N LAW OFFICES By Gebf`geB. FalWr, Jr., Esquire I.D. No. 49813 Ten East High Street Carlisle, PA 17013 (717) 243-3341 Dated: February 29, 2008 Attorneys for Plaintiff CERTIFICATE OF SERVICE I, Melissa A. Scholly, an authorized agent for MARTSON LAW OFFICES, hereby certify that a copy of the foregoing Praecipe was served this date by depositing same in the Post Office at Carlisle, PA, first class mail, postage prepaid, addressed as follows: Mohammad A. Ghiasuddin, Esquire KAPLIN STEWART Union Meeting Corporate Center 910 Harvest Drive P.O. Box 3037 Blue Bell, PA 19422-0765 MARTSON LAW OFFICES By f L- ck- c Melissa A. Scholly 10 East High Street Carlisle, PA 17013 (717) 243-3341 Dated: February 29, 2008 r»-,