Stoops

Introduction

Insurance Code section 1280.7 permits physicians and surgeons to become members of an interindemnity arrangement that creates a trust fund funded by member contributions. The income from the trust fund and assessments of the members is used to cover malpractice lawsuits.

Physicians Interindemnity Cooperative Corporation (PICC) and physicians interindemnity trust (PIT) (collectively (PITZPICC) were formed pursuant to Insurance Code section 1280.7. A trust fund was established and funded. Subsequently, the trust fund became underfunded and many members refused to pay assessments.

Appellant Dale Stoops (Stoops) was a member/physician of PIT/PICC. Because of the trust fund’s financial situation, Stoops did not receive a defense or indemnification with regard to a medical malpractice lawsuit. Stoops contended that had the other members paid the money they owed for assessments, he would have been able to receive coverage for the malpractice lawsuit. Stoops contended that he had the right to sue directly those members who failed to pay assessments. He sought to recover the funds he expended with regard to the medical malpractice lawsuit.

We agree with the trial…