Insured’s Agreement to Endorsement Adding Exclusion Is Fatal to Its Assets

Insured Saved Premium by Agreeing to Loading Exclusion & Must Defend Itself

People who are not insurance professionals think the price of insurance is more important than the coverages provided. As a result they are often willing to limit the coverage available to save a few dollars of premium. This is usually unwise and often much more expensive than the premium money saved.

In Homeland Insurance Company Of New York v. A Tec Ambulance, Inc, Michelle Rhody, Michael Bachta, And Donna Lenzi As Independent Administrator Of The Estate Of Glen Lenzi, Deceased, United States District Court Northern District Of Illinois Eastern Division, No. 15 C 11086,  (September 6, 2017) the insured ambulance company agreed to an endorsement adding an exclusion for losses caused while loading or unloading its ambulance.


While Michelle Rhody and Michael Bachta were moving Glen Lenzi (“Glen”) on a stretcher to an ambulance for A Tec Ambulance (“A-Tec”), Glen fell from the stretcher and later died. A-Tec’s insurer Homeland Insurance Company of New York (“Homeland”), seeks a declaratory judgment that it has no duty to defend or indemnify A-Tec, Rhody, or Bachta in a lawsuit by Glen’s wife, Donna Lenzi (“Donna”).

Before Glen died, his lawyer contacted A-Tec. A-Tec then contacted its insurer, Homeland. Homeland investigated and discovered that while Rhody and Bachta were taking Glen on a stretcher to the ambulance, he fell from the stretcher and hit his head. Rhody and Bachta then gathered Glen and took him to his appointment. He later developed a brain hemorrhage.

Glen died from the hemorrhage, and Donna sued A-Tec in Illinois state court, later amending her allegations to add Rhody and Bachta as defendants. In her fourth amended complaint, Donna allegeD that after Rhody and Bachta put Glen on the stretcher, he fell off on the way to the ambulance and hit his head. She also alleges that Rhody and Bachta failed to properly examine and treat Glen and failed to inform medical workers at the dialysis appointment that Glen had fallen. Donna alleges Rhody and Bachta failed to follow safety protocols and violated A-Tec policies and procedures, making them liable for medical negligence.

A-Tec’s insurance policy (the “Policy”) with Homeland provides coverage for Professional Services Wrongful Acts, which are defined as “any actual or alleged act, error or omission, or series . . . by an Insured in rendering, or failing to render, Professional Services” or “any actual or alleged act, error or omission, or series . . . by any person other than an Insured in rendering, or failing to render, Medical Services, but only for an Insured’s vicarious liability with regard to such Medical Services.”

The Policy has exclusions of coverage including that the Policy “does not apply to, and [Homeland] will not pay Loss or Defense Expenses, for any Claim based upon, arising out of, directly or indirectly resulting from, in consequence of, or in any way involving any actual or alleged: Bodily Injury or Property Damage arising out of… arising out of the ownership, maintenance, use, operation or entrustment to others of any aircraft, Auto or watercraft or the loading or unloading thereof. For purposes of this Exclusion (D)(5), “loading or unloading” includes, but is not limited to, the Insured’s handling or placement of any individual into, onto or from any such aircraft, Auto or watercraft[.]”


In Illinois the interpretation of an insurance contract like the Policy is a question of law. The Federal Court follows the law of the Illinois Supreme Court and, in the absence of such precedent, uses its best judgment to decide how the Illinois Supreme Court would construe the law. Although the duty to defend is much broader than the duty to indemnify the obligation to defend is not unlimited. The duty to defend only arises when the damages alleged in the underlying complaint fall within or potentially within the insurance policy’s coverages.

The Policy’s Exclusion (D)(5), as amended by Endorsement No. 9, states that the Policy does not cover loading and unloading of a patient. The parties do not dispute that Glen fell from the stretcher during the loading of the ambulance or that the ambulance is an Auto as defined in the Policy.

Under Illinois law, the facts of the complaint control coverage, with coverage found in multiple source cases if one source of injury is covered and arises separately and “wholly independent” of any source of injury that is not covered. If the other alleged sources of the injury are intertwined with an excluded liability, then there is no coverage, but if the events of an injury can be separated from the exclusion, then there is coverage because the covered source is not connected to the exclusion.

Contrary to the allegations of Donna, there was no “separate or independent compensable injury” because Rhody and Bachta’s alleged failings, which the underlying complaint and Defendants/Counter-Plaintiffs characterize as medical negligence, still arose from the fall and Glen’s injury was directly linked to the fall. Donna alleged that Rhody and Bachta let Glen fall and then continued to fail him in relation to the fall until Glen’s injuries grew to include death. Rhody and Bachta’s “additional wrongdoing,” and argued are independent acts that created a new injury, intertwined with the fall rather than severable.

Glen’s injuries arose from an excluded liability and are not subject to coverage because they are all intertwined with Glen’s fall during the loading of the ambulance. Therefore, Homeland is entitled to a declaratory judgment that it has no duty to defend the underlying complaint and, because the duty to defend is broader than the duty to indemnify, no duty to indemnify either.


A-Tec saved some premium when it agreed to the endorsement excluding coverage for loading patients into their ambulance and lost the ability to have an insurer defend and indemnify it from the allegations A-Tec was responsible for Glen’s death. By agreeing to the endorsement to remove coverage Homeland was willing to provide it, A-Tec placed its assets at risk.



ZALMA-INS-CONSULT © 2017 – Barry Zalma

This article and all of the blog posts on this site digests and summarize cases published by courts of the various states and the United States.  The court decisions have been modified from the actual language of the court decisions, were condensed for ease of reading, and convey the opinions of the author regarding each case.

Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant and expert witness specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 49 years in the insurance business. Mr. Zalma is the first recipient of theLEGEND-TROPHY-2 first annual Claims Magazine/ACE Legend Award.

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About Barry Zalma

An insurance coverage and claims handling author, consultant and expert witness with more than 48 years of practical and court room experience.
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