On May 2, 2025, the Tenth Circuit Court of Appeals issued an opinion in AdHealth Limited v. PorterCare Adventist Health Systems affirming the lower court’s summary judgment ruling that a hospital’s excess liability insurance policies’ definition of “medical incident” unambiguously applies to the injuries of a single person, not the treatment of multiple people exposed to the same conditions. As a result, each claim for a “medical incident” must individually exceed the self-insurance retention (SIR) in order for there to be coverage.
In February 2018, a whistleblower notified a hospital accreditation organization that PorterCare Adventist Health Systems had inadequate surgical-sterilization procedures, and a subsequent investigation revealed several deficiencies. PorterCare proceeded to notify thousands of patients who’d undergone surgery at the hospital that they had been exposed to a risk of infections and pathogens. In the following months and years, thousands of patients sued PorterCare. Those lawsuits were consolidated into four cases: two with patients alleging surgical site infections caused by PorterCare’s inadequate procedures, and two involving about 6,000 patients who were not infected but allegedly suffered emotional distress from the exposure.
PorterCare ultimately paid in excess of $40 million to settle all four actions. In July 2020, PorterCare sought coverage from its excess liability insurer AdHealth for the full $40 million policy limits (comprised of its $25 million first layer excess policy and $15 million second layer excess policy). AdHealth issued a reservation of rights stating its position that each patient’s claim was a separate medical incident and AdHealth was only liable for individual claims exceeding PorterCare’s $2 million SIR.
AdHealth then filed a declaratory judgment action seeking a court determination that each patient’s claim constituted a single medical incident and that it had no duty to pay under the excess policy until a claim’s liability exceeded PorterCare’s $2 million SIR. PorterCare contended that the injuries to thousands of patients arose from a common cause and were therefore one medical incident.
AdHealth’s excess policies define a “medical incident,” in relevant part, as:
[A]ny act or omission … in the provision of or failure to provide professional healthcare services to the participants’ patients … which results in injury to a patient … Any such act or omission, together with all related acts or omissions in the furnishing of such services to any one person, shall be considered one medical incident.
Reading the definition in its entirety, the district court determined that a “medical incident” exists when an act or omission (1) provides health care services to a patient and that act or omission (2) results in injury to that patient. It reached this conclusion after finding that the restrictive clause plainly limits the eligible act or omission to only that which causes injury to a “patient” — singular. The district court granted summary judgment to AdHealth, and PorterCare appealed to the Tenth Circuit.
On appeal, PorterCare argued that the district court erred because the “medical incident” definition (“any act or omission … in the provision of or failure to provide professional healthcare services to the participants’ patients”) covers claims involving acts and omissions in the treatment of multiple patients and, therefore, all the sterilization patients may be grouped into a single medical incident.
Applying Colorado law, which reads contracts in their entirety and gives contract terms their plain and ordinary meaning unless a contrary intent is evident, the Tenth Circuit considered the last part of the “medical incident” definition to be determinative of the issue. The appellate court read the second half of the definition (“Any such act or omission, together with all related acts or omissions in the furnishing of such services to any one person, shall be considered one medical incident”) as unambiguously providing excess medical-incident liability coverage for individual claimants. The court also pointed out that PorterCare could have bought a different policy that grouped liability from multiple claims into a single medical incident. Accordingly, because each patient’s claim was deemed a separate “medical incident” as defined by the excess policies, the Tenth Circuit affirmed summary judgment in favor of AdHealth.
