STATE OF TENNESSEE, ex rel,         )
Doug Sizemore, Commissioner of
Commerce and Insurance for the
State of Tennessee,
                                    )
                                    )
                                    )
                                                    FILED
                                    )
                                                      February 5, 1999
       Petitioner,                  )       Appeal No.
                                    )       01-A-01-9706-CH-00253
                                                     Cecil W. Crowson
v.                                  )
                                                    Appellate Court Clerk
                                    )       Davidson Chancery
UNITED PHYSICIANS INSURANCE         )       No. 92-1120-I(II)
RISK RETENTION GROUP,               )
                                    )
       Respondent,                  )
                                    )
RE:                                 )
                                    )
Insured: Billy C. Johnson, M.D.     )
Claimant: Blendora Ann Echols       )



                     COURT OF APPEALS OF TENNESSEE


 APPEAL FROM THE CHANCERY COURT FOR DAVIDSON COUNTY

                         AT NASHVILLE, TENNESSEE


          THE HONORABLE CAROL L. McCOY, CHANCELLOR


RENARD A. HIRSCH, SR.
ROBIN L. HARRIS
Smith & Hirsch
619 Woodland Street
Nashville, Tennessee 37206
      ATTORNEYS FOR JEANNE BARNES BRYANT
       RECEIVER FOR UNITED PHYSICIANS INSURANCE
       RISK RETENTION GROUP



MARTIN SIR
221 Fourth Avenue, North
Fifth Floor
Nashville, Tennessee 37219
       ATTORNEY FOR APPELLANT,
        ESTATE OF BLENDORA ECHOLS


                         AFFIRMED AND REMANDED


                                  WALTER W. BUSSART, SPECIAL JUDGE
                                           OPINION
             This is an appeal from a memorandum and order of the chancellor
affirming and adopting the Special Master's report pursuant to Rule 53 of the
Tennessee Rules of Civil Procedure. The issue is whether the lower court erred
in this action. Our review is de novo upon the record accompanied by a
presumption of correctness as to the findings of fact by the chancellor.
Tenn.R.App.P.13(d).
                                                  FACTS
             The facts here are best presented by a chronology as follows:
05/20/91 Dr. Billy Johnson pe rformed a laprosco pic cauterization on Blen dora Echo ls.
05/22/91 Ms. Echols died.
06/17/91 Dr. Johnson executed an application for a "claims made" insurance policy with United Physicians
         Insurance Risk Retention Group ("UPI"). Dr. Johnson checked "yes" in response to a question
         regarding prior incidents and claims.
06/30/91 Dr. Johnson's malpractice insurance policy with Physicians National Risk Retention Group ("PNI")
         expired.
07/01/91 Effective date of UPI policy. (The retroactive effective date was 7/1/90).
07/16/91 Dr. Johnson received formal notice of a malpractice claim brought by Ms. Echols' estate
         ("Claima nt"). The n otice was ma de pursua nt to Virginia C ode sectio n 8.01-58 1.
02/21/92 A Virginia co urt awarde d Claiman t $769,3 29.53. P NI paid a percenta ge of the legal expenses and
         judgmen t.
04/10/92 Elaine A. McR eynolds, Co mmissione r of Comm erce and I nsurance, filed a petition req uesting the
         Davidson County Chancery Court appoint her as receiver of UPI.
05/01/92 The court appointed Jeanne Barnes Bryant, director of Receiverships for the Insurance Division of
         the Department of Commerce and Insurance ("the Receiver"), as Special Deputy Receiver for the
         purpose of rehabilitating UPI.
07/01/92 Dr. Johnson's UPI policy expired.
07/16/92 Chancellor C. Allen High issued an order of liquidation against UPI.
07/24/92 The Receiver mailed notice to UPI's insureds informing them of the 8/25/92 incident reporting
         deadline. The Receiver did not send a copy of the notice to Dr. Johnson.
08/21/92 Cancellation date of U PI's policies.
08/25/92 Incident reporting deadline.
    3/93 Claimant's attorney, Thomas J. Schilling, claimed he did not learn of the UPI policy until March 1993
04/14/93 Claimant filed a proof of claim. The Receiver denied the claim.
05/14/93 Claimant sent a formal objection to the Receiver's denial of the claim.
07/21/93 Claim filing deadline established by order of liquidation.
08/27/93 The Receiver moved the court to dismiss the claim or affirm the Receiver's denial of the claim.
09/13/93 Claimant filed a response to the m otion to dismiss.
09/15/93 The Re ceiver filed a p osition stateme nt.
02/27/95 The Re ceiver filed an amende d position sta tement.
05/01/95 Claimant filed a statement of claim.
05/02/95 The Receiver filed a second amended position statement whe rein she alleged : 1) Dr. Jo hnson did not
         list the Echols incident as a prior act on his application; 2) the matter was not reported during the
         life of the policy nor prior to the time established to report incidents; and 3) the matter was reported
         to PNI.
06/19/95 Special Master, C laudia C. B onnyman ("the M aster"), filed he r report. She found the inc ident did
         not occur prior to the effective date of the policy or before the application process. However, she
         concluded the policy did not cover the claim because Claimant did not report the claim to UPI or
         to the Rece iver until after the ex piration of the policy.
06/30/95 Claimant filed an objec tion to the rep ort.
10/07/96 The Re ceiver filed a m otion to affirm th e report.
01/23/97 Chancellor McCoy filed a memorandum and ord er. T he o rde r aff irme d an d ad opt ed t he M aste r's
         report.
02/19/97 Claimant filed a notice of ap peal.



          To reiterate, the Master concluded that the "medical incident" did not

                                                      -2-
occur prior to the effective date of the policy or before the application process.
In other words, the incident occurred during the period of time covered by the
UPI policy. However, the Master found that the policy did not cover this claim
because Claimant did not report the claim to UPI or to the Receiver until after the
expiration of the policy. The chancellor, in analyzing the report, rejected
Claimant's argument that notice was provided when Dr. Johnson answered
question #92 on his application for the UPI policy as follows:
       92.   IN CID EN T S , P O TENTIAL C LA IM S
       (A)   Are you aware o f any incidents o r facts which co uld provid e a basis for a c laim or suit
             but which have not been acted upon or resulted in legal proceedings? x yes no
       (B)   Have you notified your present insurer of any such inciden ts or circumstances?
             If no, for your own protection, please report any such incident or
             circumstances to your present carrier immediately. List any such incidents or
             circumstanc es on the rev erse side.
             x yes    no


Claimant has appealed.


       The case turns on the coverage in the UPI policy and the parties'
respective rights pursuant to this policy. See Black v. Aetna Ins. Co., 909
S.W.2d 1, 3 (Tenn.App.1995). In the absence of fraud, overreaching, or
unconscionability, we must give effect to an insurance policy if its language is
clear and its intent certain. See Quintana v. Tennessee Farmers Mut. Ins. Co.,
774 S.W.2d 630, 632 (Tenn.App.1989).


       Blendora Echols died on May 22, 1992, two days after Dr. Johnson
performed a laproscopic cauterization. Dr. Johnson must have realized at the
time that he was exposed to liability because he later conceded that his "conduct
failed to meet the standard of medical care" when he was sued by her estate.


       Less than one month after Ms. Echols' death, Dr. Johnson applied to UPI
for a claims made policy. In this application, he stated that he had never been
involved in a malpractice claim, suit, or incident. He also did not request prior
acts coverage, and in fact, signed a "prior acts waiver" which stated:
       I understand that if there are any circumstances or incidents
       which are likely to result in a claim and which are known to me
       or should have been known to me on the date of this application,
       but are not disclosed herein, any such resulting claim will not be
       covered by UPI under any policy in force.



                                                     -3-
In addition, Dr. Johnson stated in his application that he was "aware" of
"incidents or facts which could provide a basis for a claim or suit but which have
not been acted upon or resulted in legal proceedings" and that he had notified his
present insurer of these incidents or facts.


          Based on this application, UPI issued Dr. Johnson a policy that included
a rider in paragraph XII amending the prior acts coverage. This rider states, in
part:
          Furthermore, if the Insured had personal knowledge prior to
          the original inception date of the UPI policy as stated on the
          Declarations Page, no coverage shall apply; nor will it apply to
          those medical incidents, claims, or compensable events that were
          previously reported to the insurance carriers that provided
          coverage prior to UPI's coverage, even if coverage is denied.
          This coverage only applies if a premium has been paid and a
          RETROACTIVE DATE shown which predates the inception of
          the date of this policy. (emphasis in original)


          In light of these facts, it seems that the following is undisputed in the
record: (1) Dr. Johnson was aware of a medical incident, claim, or compensable
event when he first applied for coverage with UPI; (2) he reported this event to
his previous insurance carrier; (3) he did not seek prior acts coverage from UPI
and, in fact, signed a wavier explicitly waiving this coverage; and (4) he did not
report the details of the compensable event involving Ms. Echols to UPI. In light
of these facts, it is clear that UPI never contracted to cover any of Dr. Johnson's
prior acts, including those associated with Ms. Echols' death. If Dr. Johnson did
not obtain prior acts coverage from UPI, UPI can not be liable to Ms. Echols'
estate.


          Accordingly, the chancery court is affirmed and the case is remanded.
The costs are taxed against the appellant, the estate of Blendora Echols.



________________________________
                                               WALTER W. BUSSART, SPECIAL JUDGE
CONCUR:


__________________________________________


                                         -4-
HENRY F. TODD, PRESIDING JUDGE, M.S.

CONCURRING IN SEPARATE OPINION
WILLIAM C. KOCH, JR., JUDGE




                                 -5-
