November 3, 2026 by matray

The New York Court of Appeals ruled that a hospital’s self-insurance plan provided malpractice coverage for an employed physician, but that the coverage was excess to the physician’s primary insurance, requiring the hospital and the physician’s excess insurer to share settlement costs beyond the primary policy’s limits.

Case: Kolli v. Kaleida Health, No. 72, 10/22/2026, published.

Facts and procedural history: In 2011, Dr. Venkateswara Kolli treated a patient as part of his duties pursuant to an on-call, per diem physician employment agreement with Kaleida Health.

When the patient later filed a medical malpractice action against Kolli and Kaleida, Kolli filed an insurance claim with his primary medical malpractice insurer, the MLMIC Insurance Co., as well as his excess insurer, the Healthcare Professionals Insurance Co.

After Kolli died in 2020, the medical malpractice action settled. Kaleida, MLMIC, and HPIC agreed to fund the settlement while reserving their rights to determine insurance coverage and priority of coverage.

The executor of Kolli’s estate then filed a declaratory judgment action to determine those coverage issues.

The estate argued Kaleida provided Kolli with insurance coverage under Kaleida's self-insurance plan and that MLMIC is entitled to be reimbursed by Kaleida for expenses it incurred defending Kolli.

Kaleida contended HPIC was obligated to provide first layer excess coverage pursuant to the policy HPIC issued to Kolli.

HPIC moved for summary judgment dismissing all claims against it and seeking reimbursement of its contribution towards the settlement. The estate also moved for summary judgment, as did Kaleida.

Niagara County Supreme Court Justice Edward Pace granted the motions of HPIC and the estate, and denied Kaleida’s motion. Pace concluded HPIC's coverage constituted excess coverage and declared that the full amount of the settlement must be paid by Kaleida and MLMIC in proportion to their respective policy limits.

Kaleida appealed.

The Appellate Division’s 4th Department found Kolli was entitled to coverage under Kaleida's self-insurance plan.

“Kaleida failed to meet its burden of establishing that its construction is the only fair construction,” the Appellate Division said, finding the language in Kaleida's self-insurance plan could reasonably be interpreted to limit coverage when Kolli treated his private practice patients at Kaleida, but not to limit coverage where, as in the underlying action, he treated a patient at Kaleida as part of his on-call duties pursuant to his employment agreement.

Since Kaleida’s self-insurance plan protected against physicians' medical malpractice liability, the Appellate Division said it constituted "other insurance policy or equivalent coverage" under MLMIC's policy.

The Appellate Division also said Kaleida's coverage was excess to MLMIC's policy, as Kaleida's self-insurance plan provides that physicians "shall be assumed to be maintaining primary medical practice insurance."

The Appellate Division said MLMIC’s $1.3 coverage limit applied, and Kaleida and HPIC are responsible as excess insurers for the remaining portion of the settlement, with Kaleida responsible for 91.67% and HPIC responsible for 8.33%.

Analysis: The New York Court of Appeals agreed Kolli was covered pursuant to the unambiguous terms of Kaleida's self-insurance plan and Kaleida's employment agreement with him.

The court rejected Kaleida's contention that its self-insurance plan falls outside the "other insurance" clauses in the policies issued by MLMIC and HPIC. The court said it was an insurance policy as it protected physicians against risks, and contained terms regarding priority of coverage and coverage exclusions.

Moreover, the "other insurance" clauses contained within the MLMIC and HPIC policies expressly encompassed "insurance equivalent[s]" or "equivalent coverage," the court said. So even if the self-insurance plan was not "insurance," it was at a minimum an "equivalent" thereto, the court said.

The court further agreed that Kaleida's coverage is excess to MLMIC's coverage, and that Kaleida and HPIC are responsible for excess coverage on a pro rata basis.

Disposition: Affirmed.

To read the court’s decision, click here.