Chen

In this case of first impression, we examine the scope, application and limitations of Insurance Code section 1280.7. That statute defined and authorized a specific mechanism for the creation by physicians of cooperative corporations and trusts in order to provide, by means of interindemnity contracts, indemnity and defense coverage for medical malpractice claims. The statute authorized the establishment of a trust to be funded by member contributions and assessments which would be utilized, along with the income derived therefrom, to provide malpractice defense and indemnity coverage.

Section 1280.7, however, imposed certain limitations on that coverage. Such limitations, as are relevant here, related to the requirement of a time sensitive good standing membership of any physician seeking coverage for an asserted malpractice claim. The record clearly demonstrates that such requirement was not met in this case. Therefore, the coverage required to support the order of a trial court approving the payment of a claim from trust funds is not present. As a result, we hold that the pending petition for a writ of mandate, directing the trial court to vacate its order approving…