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The justices' 3-2 decision reversed a lower court judge's interpretation of Greenwood Health Center's insurance policy in favor of the families. The high court instead found in favor of Boston-based Lexington Insurance Co., a subsidiary of American International Group Inc.
"It just seems completely inadequate," Van Starkweather, an attorney for one victim's family, said about the lower coverage figure. "I'm disappointed. It was a close decision. Three justices went with AIG. Two justices went with the victims."
A lawyer for Lexington Insurance declined to comment Monday.
The fire at Greenwood Health Center on Feb. 26, 2003, broke out after psychiatric patient Leslie Andino set her bed on fire while flicking a cigarette lighter. Officials at the time said it was the 10th deadliest nursing home fire in U.S. history. Andino was charged with 16 counts of arson murder, but was found incompetent to stand trial and committed to a psychiatric hospital.
Relatives of 13 of the 16 victims sued the nursing home's operator for cash damages, saying it failed to adequately supervise Andino. Hartford Superior Court Judge Marshall K. Berger Jr. ruled in 2009 that Greenwood's insurance policy with Lexington provided $250,000 in coverage for each plaintiff and the policy's maximum coverage was $10 million.
But Lexington Insurance appealed Berger's decision, saying that the $10 million was the total coverage for all seven nursing homes run by Greenwood's operator and that each home was insured up to $1 million.
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