Schimmel v. Norcal Mutual Insurance

Opinion

NICHOLSON, J.

There is currently no tort liability in California for refusal to renew a professional liability insurance policy for reasons in violation of public policy. Whether such liability should be imposed is a matter for the people of California to decide, either by initiative or through the Legislature. We may not legislate on the subject in their stead.

Procedure

NORCAL Mutual Insurance Company insured Drs. Leon Schimmel and Charles Stice and their professional corporation (collectively, Schimmel) in their practice of medicine. Concluding the practice presented unacceptable risks, however, NORCAL terminated Schimmel’s insurance at the end of a

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policy term. Schimmel sued NORCAL and Northern California Physician’s Council (NORCAP), a physician’s group that provided reviews concerning insurance for NORCAL, for “bad faith and unfair dealing.” The parties appeared for trial. However, following an extended offer of proof by Schimmel at trial, the trial court ruled Schimmel had no cause of action and entered judgment in favor of NORCAL and NORCAP because the termination of insurance was a nonrenewal at the end of a policy term.

Schimmel appeals. Since Schimmel’s case against NORCAP falls with his case against NORCAL, we will refer only to NORCAL.

Facts

The parties have spent years in litigation concerning this controversy. Consequently, the facts here pertinent are aged. The NORCAL policy provided coverage from the “retroactive date,” November 1,1975, to 12:01 a.m. on the expiration or cancellation date of the policy. Although they make no attempt to support the assertion by reference to the record, the parties agree the policy expired by its terms on January 1, 1987. On November 19, 1986, NORCAL sent Schimmel a notice it was terminating Schimmel’s professional liability insurance. The notice stated: “This letter will serve to confirm that your professional liability insurance policy will be canceled effective January 1, 1987 at 12:01 A.M. Pacific Standard Time. This action is being taken due to the following reason: [<]□ The scope of your practice presents an unacceptable risk to NORCAL.” The effective date and time of the cancellation coincided with the end of the policy term.