THIRD DIVISION
March 5, 2003

JUSTICE WOLFSON delivered the opinion of the court:

This appeal arises from a dispute between TravelersIndemnity Company (Travelers) and American Casualty Company(American Casualty) over the priority of coverage between anexcess liability policy issued by Travelers and three primaryliability policies with "other insurance" provisions issued byAmerican Casualty. The circuit court concluded the excess policyand the primary policies should contribute pro rata to settlementof the underlying action.

Travelers appeals, contending the circuit court erredbecause the limits of the primary policies should be exhaustedbefore Travelers is required to pay under the excess policy.

We agree with Travelers. We reverse and remand.

BACKGROUND

In the underlying action, Ronald D. Potts brought a medicalmalpractice suit against two physicians and ten nurses employedat Pekin Memorial Hospital and against Pekin Memorial Hospital. Potts alleged the prenatal and postnatal treatment of his wifeand son, born on July 15, 1985, was negligent. Among the nursedefendants were Dorothy C. Lovell, Deborah M. Ruwe, and PatriciaE. Krile.

NURSES' LIABILITY INSURANCE POLICIES

For the time at issue in the underlying action, each ofthese three nurses had a professional nursing liability insurancepolicy issued by American Casualty (American Casualty LiabilityPolicies). The policies for Lovell and Ruwe each hadprofessional liability limits of $500,000 for each medicalincident. Krile's policy had a professional liability limit of$1,000,000 for each medical incident.

The American Casualty Liability Policies provided coveragefor:

"all amounts up to the limits of liability:

1. which you become legally obligated to pay as a resultof injury or damage. The injury or damage must becaused by:

a. a medical incident as a result of the supplying ofor failure to supply professional services by you***."

Each of the three policies also contained an "otherinsurance" clause, which read:

"If you have other insurance which applies to injury ordamage resulting from your professional services, the otherinsurance must pay first. It is the intent of this policyto apply to the amount of loss which is more than the limitof the other insurance."

PEKIN MEMORIAL HOSPITAL'S LIABILITY INSURANCE POLICIES

Travelers Primary Liability Policy

Pekin Memorial Hospital had a primary general liabilitypolicy issued by Travelers covering the time at issue in theunderlying complaint (Travelers Primary Liability Policy). Thepolicy included coverage for professional liability with a limitof $500,000 per occurrence or medical incident.

The policy extended coverage to any employee of PekinMemorial Hospital while acting within the scope of her duties. The underlying complaint alleged the nurses were acting withinthe scope of their employment. Thus, for purposes of theunderlying action, Krile, Ruwe, and Lovell were additionalinsureds under the Travelers Primary Liability Policy.

Travelers Excess Liability Policy

Pekin Memorial Hospital had a comprehensive hospital excessliability policy covering the relevant period. This policy wasalso issued by Travelers (Travelers Excess Liability Policy). The policy provided a liability limit of $10,000,000 per claimand in the aggregate, subject to a self-insured retention of$500,000. The policy extended coverage to the nurse employeeswhile acting within the scope of their employment.

An endorsement to the Travelers Excess Liability Policylisted the Travelers Primary Liability Policy as an underlyingpolicy. The endorsement explains that the underlying policiesscheduled in the endorsement are "deemed a part of the self-insurance plan and retention."

The Travelers Excess Liability Policy contained its own"other insurance" provision, which stated:

"This insurance is excess over any other insurance availableto the Insured (including a policy purchased by anyadditional insured hereunder). Amounts collectible under aself-insured trust plan or other self-insured plan shall bedeemed other insurance. This clause does not apply toexcess insurance written specifically to be in excess ofthis policy."

PROCEEDINGS BELOW

In the underlying action, Travelers defended Pekin MemorialHospital and its nurses. In April 2000, the parties settled theunderlying action for $4,500,000.

On May 31, 2000, Travelers filed a declaratory judgmentaction against American Casualty seeking a declaration thatpolicies described above should respond in the following order tothe portion of the settlement of claims against Lovell, Ruwe, andKrile:⁽¹⁾

(1) the Travelers Primary Liability Policy up to the$500,000 limit,

(2) the American Casualty Liability Policies up to theirrespective limits; and

(3) the Travelers Excess Liability Policy up to the$10,000,000 limit.

American Casualty denied owing any contribution toward theportion of the settlement of claims against the nurses.

On January 1, 2001, Travelers moved for partial summaryjudgment contending the limits on the American Casualty LiabilityPolicies had to be exhausted before coverage under the TravelersExcess Liability Policy was triggered. On March 1, 2001,American Casualty filed a cross-motion for summary judgment⁽²⁾ andsupporting brief, in which American Casualty contended theAmerican Casualty Liability Policies were excess to the TravelersExcess Liability Policy, or, alternatively, the court shouldrequire a pro rata allocation between the American CasualtyLiability Policies and the Travelers Excess Liability Policy.

In its May 1, 2001, order, the circuit court denied in partand granted in part Travelers' motion with the followingfindings:

(1) American Casualty was required to contribute to thesettlement;

(2) the Travelers Excess Liability Policy and the AmericanCasualty Liability Policies all provided coverage for the nursesin excess of the limits of the Travelers Primary LiabilityPolicy; and

(3) the Travelers Excess Liability Policy and the AmericanCasualty Liability Policies should all contribute to thesettlement pro rata.

In subsequent orders dated February 20, 2002, and June 17,2002, the circuit court allocated the settlement against thenurses pro rata among the two policies according to its May 1,2001, order. Travelers appeals from these three orders.

DECISION

Summary judgment is appropriate where "the pleadings,depositions, and admissions on file, together with theaffidavits, if any, show that there is no genuine issue as to anymaterial fact and that the moving party is entitled to a judgmentas a matter of law." 735 ILCS 5/2-1005(c) (West 2000); see alsoGeneral Casualty Insurance Co. v. Lacey, 199 Ill. 2d 281, 284,769 N.E.2d 18 (2002). We review an order granting summaryjudgment de novo. General Casualty Insurance Co., 199 Ill. 2d at284.

If two insurance policies extend coverage to the insured forthe occurrence and have "mutually repugnant" clauses providingthat each will be excess insurance over any other applicableinsurance, then each insurance company is liable for a pro ratashare of the judgment or settlement. Continental Casualty Co. v.New Amsterdam Casualty Co., 28 Ill. App. 2d 489, 497-98, 171N.E.2d 406 (1960). The threshold issue is whether the policiesare on the "same level." Illinois Emcasco Insurance Co. v.Continental Casualty Co., 139 Ill. App. 3d 130, 133, 487 N.E.2d110 (1985).

Primary and excess policies "inherently serve differentfunctions, cover different risks and attach at different stages." Federal Insurance Co. v. St. Paul Fire & Marine Insurance Co.,271 Ill. App. 3d 1117, 1122, 649 N.E.2d 460 (1995). The primarypolicy typically covers claims starting at the first dollar ofloss or the first dollar in excess of a deductible or self-retention. 1 Eric Mills Holmes & Mark S. Rhodes, Holmes'sAppleman on Insurance, 2d