Pace Suburban Bus Service will not have to pay $1.5 million to an insurance company that settled with the family of an intellectually disabled woman who suffered a heat stroke on one of its buses, a state appeals panel ruled Thursday.

The 1st District Appellate Court found that Philadelphia Indemnity Insurance Co. cannot subrogate or compel Pace to pay the claim because the suburban transit agency made clear in its leasing agreement with a disabilities service provider it would not provide liability for reckless conduct involving the Pace-owned vehicles.

“Because the claim at issue would be excluded under the agreement, equitable subrogation could not apply,” Justice Margaret Stanton McBride wrote. “Thus, even assuming Pace was providing an insurance policy, we could not say that Pace would be the insurance carrier who was ‘primarily liable to the insured for [the] loss,’ since it was explicitly excluded under the leasing agreement.”

In 2010, the Countryside Association for People with Disabilities entered a leasing agreement through Pace’s Advantage Vehicle Program, which provides vans to organizations that offer work-related transportation to people with disabilities.

Countryside, based in Palatine and Waukegan, is a nonprofit organization that assists people in parts of the north and northwest suburbs.

As part of the leasing agreement, Pace provided commercial auto liability coverage through its risk financing program, while Countryside would provide its own drivers.

The agreement, however listed exclusions from coverage “arising as the result of willful and wanton, reckless, or intentional conduct” of Countryside and its employees.

Countryside purchased additional insurance from Philadelphia, whose policies did not contain any exemptions for misconduct.

The lawsuit between Philadelphia and Pace stemmed from a July 10, 2013, incident, the facts of which were laid out in a presuit settlement letter from the victim.

On that day, Countryside employee Robert Gottardo drove to Schaumburg in a Pace van to pick up Lisa Gomez, a 42-year-old woman with an intellectual disability.

The 1st District panel said she “functions at the level of a [5]-year-old child.”

Gottardo picked up Gomez at 7:30 a.m. An hour later, they were back at the Countryside facility. But Gottardo left Gomez strapped in the van with the windows rolled up, exited the vehicle and posted a sign indicating the vehicle was empty. He told his co-workers Gomez was a no-show and then left the Countryside facility.

Gomez remained in the van for more than five hours while the outside temperatures climbed past 90 degrees.

Gottardo came back and saw Gomez at 1:50 p.m., but didn’t tell anyone. Instead of checking on her, Gottardo drove her home, where her mother recognized she was having a heat-induced seizure.

Because she sat in the hot van for more than five hours, Gomez suffered “a heart attack, septic shock, gastrointestinal hemorrhage and infections caused in part by exposure to urine and feces-soaked clothing,” McBride wrote.

Gottardo admitted he abandoned Gomez in the van and that when he realized he had left her in there, he did not seek medical attention for her.

He was arrested by the Lake County Sheriff’s Office later that day and charged with reckless conduct, a Class 4 felony. In February 2014, he entered a negotiated guilty plea and received 24 months of probation.

The Gomez family’s attorney sent a presuit settlement letter in September 2013 to Philadelphia, warning of a lawsuit against Countryside and Gottardo. Pace later became aware of this claim and asserted to the parties it had no duty to cover it because of Gottardo’s reckless conduct.

Discussions and negotiations between the parties continued over the following months, with Philadelphia arguing Pace had a duty to cover the Gomez family’s claims and Pace contending otherwise.

At one point, Philadelphia told Pace it would sue it to recover for any amounts from the claim. Philadelphia then unilaterally settled with the Gomez family for $1.5 million.

Philadelphia then sued Pace in Cook County Circuit Court in May 2014, asserting the public transit agency had to a duty to pay the $1.5 million through its policy. Philadelphia’s four-count claim included allegations of equitable subrogation, equitable contribution and unjust enrichment.

Pace moved to dismiss the lawsuit, arguing it did not have a duty to pay because it is a self-insured agency and not an insurance company — that the risk financing program was publicly funded and public policy cannot support use of the funds for tort liability.

Circuit Judge Diane Joan Larsen agreed with Pace and dismissed Philadelphia’s lawsuit in May 2015. Philadelphia appealed.

In the appeal, McBride wrote at length about the case law surrounding “self-insured municipalities,” noting that they are not to be treated in the same way as private insurance companies.

Philadelphia did not argue Pace wasn’t a self-insured municipality, but rather that the agency can’t cite public policy to sidestep contractual obligations.

McBride wrote, “we ultimately conclude that we need not reach the issue of whether public policy overrides the contractual promises to insure that Pace made in the lease agreement or whether Pace can be treated as an insurer issuing a policy of insurance.”

Instead, the panel focused entirely on the reckless conduct exclusion. Even if Pace was found to be an insurance company, it would have no obligation to reimburse Philadelphia because it made clear in its leasing agreement that it would not cover claims based on reckless conduct.

“Gottardo acted recklessly, which excludes the resulting claims from coverage under the leasing agreement,” McBride wrote. “Philadelphia never challenged the account provided in the record or provided any facts contradicting that account or that would otherwise tend to show that Gottardo’s conduct could be found to be anything less than reckless.”

The panel, in dismissing all of Philadelphia’s claims, kept returning to the expressly written exception in the agreement. For instance, Philadelphia’s claim of equitable contribution failed because Pace and Philadelphia do not insure the same risks; this claim can only be satisfied if there are overlapping insurance policies covering the same incident. Because of Pace’s exception, the Gomez family’s claim was only covered by Philadelphia.

Philadelphia was represented by Stephen R. Swofford, Kent J. Cummings and Frank M. Ward III of Hinshaw & Culbertson LLP. They did not return a request for comment.

Pace was represented by William K. McVisk and Jennifer M. Theodore of Johnson & Bell Ltd. They did not return a request for comment.

Justices David Ellis and Nathaniel Howse Jr. concurred with the opinion.

The case is Philadelphia Indemnity Insurance Co. v. Pace Suburban Bus Service, 2016 IL App (1st) 151659.