Prison Health Services Must Indemnify Vermont against Wrongful Death Claims

by Mark Wilson

On December 20, 2013, the Vermont Supreme Court held that Corizon Health, Inc. – formerly Prison Health Services, Inc. (PHS) – was required to defend the State against a wrongful death action brought by a prisoner’s estate.

In January 2007, PHS entered into a $24 million contract with Vermont to provide prisoner medical care. The contract required PHS to defend the State against any claims arising from PHS’ acts or omissions.

On August 14, 2009, Ashley Ellis began serving a 30-day sentence. Due to an eating disorder, she weighed just 90 pounds and “suffered from hypokalemia, a life-threatening condition linked to dangerously low potassium levels.” Prior to admission, prison officials were alerted that Ellis “was taking a potassium supplement called K-Clor to treat the hypokalemia.” When Ellis entered the facility, PHS was short staffed, had no potassium supplement in stock and did not obtain any.

On the morning of August 16, 2009, a guard found Ellis “nonresponsive in her cell.” Neither PHS staff nor guards could “locate a cardiopulmonary-resuscitation (CPR) mouth guard, delaying resuscitation attempts.” Ellis died and the cause of death was found to be “a hypokalemic-induced cardiac arrhythmia resulting from a lack of potassium.”

Before a lawsuit was filed, PHS quietly settled with Ellis’ estate. The settlement “included a Covenant Not to Sue, in which the administrator agreed not to bring any claims against PHS, including any claims against the State for which PHS could owe a duty of defense or indemnification.”

In July 2011, Ellis’ estate sued the State and several employees in state court. The claims were “strategically tailored ... to remove PHS actors from the suit.”

The State then sought a declaration that PHS was required to defend the State against the Ellis estate’s claims. The trial court sua sponte granted PHS’ judgment on the pleadings, finding that the duty to defend was not triggered, since Ellis’ suit did not allege PHS wrongdoing.

The Vermont Supreme Court reversed, concluding “that PHS has a duty to defend the State” because “the estate’s grievances arise from negligent conduct by both the State and PHS.” Noting that the “Covenant Not to Sue” was not before it, the Court refused to “address PHS’ argument that the” agreement fulfilled its “duty to defend.” See: Vermont v. Prison Health Services, Inc., 2013 VT 119 (VT 2013).

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