An insurance claim filed after the untimely death of WinStar stallion Laoban has been denied in a Kentucky federal court.
Cypress Creek Equine bought casualty insurance on Laoban through North American Specialty Insurance. In May 2021 the horse had an allergic reaction to a shot he was given to increase his interest in breeding and almost immediately died. Three months later, NAS declined to pay a mortality insurance claim filed by Cypress, and litigation followed.
According to a court decision released Sept. 10 in the United States District Court for the Eastern District of Kentucky, and as previously reported by BloodHorse, Cypress alleged NAS violated multiple provisions of the insurance contract when it declined to pay the mortality claim. After the development of undisputed facts in the lawsuit, motions for summary judgment were filed by both parties, who briefed the court on applicable law.
Judge Gregory F. Van Tatenhove decided, as a matter of law, that Laoban's cause of death was caused by actions that voided policy coverage for three reasons.
Two of those reasons fit into a policy exclusion from coverage losses caused by “administration of drugs or medication ... unless done by or under the direction of a veterinarian and certified by him/her to have been of a preventative nature or necessitated by accident, sickness or disease of the horse.”
Cypress argued that the shot could not lead to the exclusion of coverage because it was not a "drug" or a "medication." NAS argued common usage unambiguously classifies the ingredients in the shot as a drug.
The vitamin cocktail, nicknamed the "Black Shot" by the veterinarian who administered it, was determined to have caused Laoban's almost immediate anaphylactic shock and death. It contained Vitamin C, Vitamin B12, Vitamin B Complex, and Iron Hydrogenated Dextran. Parts of the cocktail came from bottles with a past-due expiration date.
Van Tatenhove decided the shot is a drug or medication by commonly accepted definitions, writing that all the components of the shot are regulated by the U.S. Food and Drug Administration "and each has a National Drug Code," and the three vitamins had a warning label saying “Federal law restricts this drug to use by or on order of a licensed veterinarian.”
Concerning the same policy exclusion language, Van Tatenhove also found there was no dispute that the shot was not used for a "preventative" reason or "necessitated by accident, sickness or disease," thus excluding the effects of the shot from coverage. It is undisputed that the purpose of the shot was to help Laoban in the breeding shed.
A second policy exclusion precludes coverage for loss resulting from failure to provide proper "care and attention" for the horse. Cypress contended the terms refer only to neglect, food, and shelter, which Van Tatenhove rejected as unreasonable. Instead, he adopted a more expansive definition found in Black's Law Dictionary, long considered a proper source of research in legal circles.
DOWNEY: Veterinarian Agrees to Suspension in Laoban Death
"It is clear," Van Tatenhove wrote, "by both the testimony of Dr. (Natanya) Nieman, WinStar’s managing resident veterinarian, and the settlement agreement entered between Dr. (Heather) Wharton (who administered the "Black Shot") and Kentucky Board of Veterinary Examiners, that Dr. Wharton did not act with proper care."
The judge noted Dr. Wharton entered a settlement agreement suspending her license and ordering her to pay a fine.
