McGee v. United States Fidelity & Guaranty Co.

Physician McGee (plaintiff) operated on patient Hawkins's hand, promising during the consultation that Hawkins would have only a small scar, no more than a six-day hospital stay, and — going further — a "perfect hand" that was "one-hundred percent good." The surgery instead left Hawkins's hand useless after a three-month hospitalization, and Hawkins sued McGee for $10,000. McGee's malpractice insurer, United States Fidelity & Guaranty Company (USF&G) (defendant), initially defended the suit but informed McGee it would not cover any damages based on a jury finding that he had guaranteed the surgery's outcome, since the policy excluded coverage for a physician's separate contractual guarantee of results. After a hung jury, a second trial produced a $3,000 verdict for Hawkins that the trial court set aside as excessive; on appeal the New Hampshire Supreme Court reversed that ruling, and McGee settled with Hawkins for $1,400 rather than face a third trial. McGee then sued USF&G in federal court for reimbursement of that settlement plus fees and costs, and the district court ruled for USF&G.