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The Collaborative Clearinghouse for Lawsuits and Other Claims Against ACE Group Insurance Companies

ACE Unit Sues Client to Void Liability Policy for Surgical Robot

November 6th, 2013 - Illinois Union Insurance Co. is trying to rescind a just-issued liability policy on a company it contends omitted information that would have led it to deny issuance of the coverage.

The ACE Group unit said it was first contacted in January by an insurance broker about a liability policy for Intuitive Surgical Inc. The Sunnyvale, California-based company makes the daVinci surgical system, an operating room robot that is less invasive than traditional surgery procedures.

According to the complaint, a San Francisco-based insurance broker told Illinois Union that his client wanted both primary and excess coverage for $15 million per occurrence and up to $50 million in aggregate.

As part of its due diligence, Illinois Union collected information on lawsuits that had been filed against Intuitive. It said it found that 25 suits had been filed against the company during the policy period covered by the insurer whose policy was lapsing on March 1, 2013.

Illinois Union claims it issued coverage, and only afterwards learned that Intuitive had during the previous policy period entered into a number of tolling agreements with attorneys for several potential claimants. A tolling agreement waives the statute of limitation and is meant to give both sides to a legal dispute time to work out an agreement.

The $1.5 million daVinci machine is not without its critics, who contend it has led to unnecessary tears in patients bodies and damaged healthy parts of their bodies. In some instances, deaths have been alleged.

Had Illinois Union known of the tolling agreements, it said it would not have issued a policy to Intuitive or would have charged a different premium.

In seeking to void the policy, Illinois Union cited California Insurance Code provisions that all parties to a contract disclose material facts. It said concealment, whether intentional or not, entitles the injured party to rescind its coverage.

 

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