International Chiropractors Insurance v. Gonstead

Citations: 238 N.W.2d 725; 71 Wis. 2d 524; 1976 Wisc. LEXIS 1251Docket: 618 (1974)

Court: Wisconsin Supreme Court; March 2, 1976; Wisconsin; State Supreme Court

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The Supreme Court of Wisconsin addressed an insurance coverage dispute involving the International Chiropractors Insurance Company and chiropractor Douglas Cox, among others. The core issue was whether Cox was insured under a malpractice policy issued to Clarence Gonstead, with whom Cox practiced. The court affirmed the trial court's ruling that there was no coverage for Cox's alleged chiropractic malpractice during treatment of Tamara Tatarchuk in July 1972. The Tatarchuks had initiated a malpractice lawsuit against Cox, to which Gonstead was later added as a defendant but subsequently dismissed.

The insurance policy in question was issued on October 1, 1971, and explicitly listed Gonstead as the sole insured, with Cox mentioned only as a technician, not as an insured party. Gonstead's application for insurance failed to clarify the business relationship with Cox, leaving a section blank. The policy defined coverage as liability for malpractice claims against the insured (Gonstead) only, excluding coverage for any liability arising from agency, partnership, or employment relationships. Since Cox was a licensed chiropractor and not categorized as an assistant or technician, the court concluded that his malpractice liability was not covered under Gonstead's insurance policy, affirming that the policy's language was clear and unambiguous in this regard.

Gonstead's malpractice insurance covers his personal liability and vicarious liability for the negligence of technicians or nurses acting under his direction while providing chiropractic services. However, the policy does not extend coverage to the Gonstead Clinic or to Cox, who is not recognized as a chiropractic technician or assistant under the relevant definitions. Although Cox was listed as an assistant in the policy application, he treated patient Tamara Tatarchuk independently, without Gonstead's direction, which excludes his treatment from coverage under Gonstead's policy.

The appellants' claims of equitable estoppel and the need for reformation of the insurance contract were not raised during the trial and cannot be introduced for the first time on appeal. Estoppel cannot be used to expand the insurance coverage beyond what was agreed upon, and the Wisconsin rule states that it cannot enlarge the terms of a policy. Furthermore, the appellants failed to demonstrate a prior oral agreement that the written policy should reflect, and any mistakes made on the application were solely Gonstead's. Cox was incorrectly identified as a chiropractic assistant, a term with specific definitions and qualifications in the field.

A chiropractic assistant's role is limited to providing support to a chiropractor without making diagnoses or performing adjustments. Gonstead failed to provide information regarding his chiropractic partnership on an application, a mistake he had the ability to rectify. The presence of a generalized knowledge of Cox's identity among individuals in the International Chiropractors Association and an insurance company did not shift the responsibility to the company. The company categorized Cox as a nurse, technician, or receptionist based on the application, but this classification was incorrect and went uncorrected by Gonstead over four years, despite the clinic's accountant referencing it in correspondence. While appellants cite a precedent allowing reformation of a policy due to the insured's lack of awareness of a mistake, this applies only when the error originates from the insurer. The court noted that the policy was straightforward and contained visible errors, placing the onus on Gonstead to review and amend it. Furthermore, there was no mutual agreement to reform the contract; Gonstead's belief that Cox was covered lacked justification, and the insurer understood it was only covering Gonstead's liabilities. The court affirmed the judgment.