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Federal trial could impact West Virginia medical malpractice claims

Can an insurer rescind insurance if the policy-holder lies about the illegal activities of the people at the business being insured? And if the policy is rescinded, should the insurer refund the premiums paid for the rescinded policy?

Those are just two of the questions that observers expect will be an answered in a federal trial revolving around an insurer's attempt to rescind a clinic's medical malpractice policy. The verdict might well have implications for West Virginia insurers, doctors, hospitals, clinics and patients.

The case to be heard in a federal court in Indianapolis involves Alabama insurer ProAssurance Indemnity Co. ProAssurance sold medical malpractice coverage to Indiana's Wagoner Medical Center and some of its employees in Kokomo.

ProAssurance wants to rescind the policies. No doubt part of the reason it wants to rescind the policies is because the clinic and doctors are being sued for medical malpractice after more than two dozen people died after taking illegally prescribed drugs.

ProAssurance argues that the clinic's doctors and operators made material misrepresentations and omissions about the business that render the insurance policies void.

Some of the clinic's employees have pleaded guilty in the criminal case.

The court says it wants to know if ProAssurance should have refunded premiums it received for policies it says are invalid. And the court wants to understand that if ProAssurance should have refunded those premiums, has it waited too long to do so?

Those questions can only be answered at trial, the court stated.

We will be interested in the verdict and what impact it might have on West Virginia residents interested in pursuing medical malpractice claims in Huntington or elsewhere in the state.

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