The Medical Protective Company v. Kyrsten Sutton
Filing
UNPUBLISHED AUTHORED OPINION filed. Originating case number: 2:12-cv-00194-RMG. Copies to all parties and the district court. [999597554]. [13-1721, 13-1722]
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UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 13-1721
FIRST PROFESSIONALS INSURANCE COMPANY,
Plaintiff,
v.
KYRSTEN E. SUTTON, MD,
Defendant and 3rd-Party Plaintiff – Appellee,
v.
THE MEDICAL PROTECTIVE COMPANY,
Third Party Defendant – Appellant.
No. 13-1722
FIRST PROFESSIONALS INSURANCE COMPANY,
Plaintiff - Appellee,
v.
KYRSTEN E. SUTTON, MD,
Defendant and 3rd-Party Plaintiff– Appellant,
v.
THE MEDICAL PROTECTIVE COMPANY,
Third Party Defendant.
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Appeal from the United States District Court for the District of
South Carolina, at Charleston.
Richard Mark Gergel, District
Judge. (2:12-cv-00194-RMG)
Argued:
January 28, 2015
Decided:
June 8, 2015
Before KING and FLOYD, Circuit Judges, and DAVIS, Senior Circuit
Judge.
Affirmed in part and vacated and remanded in part by unpublished
opinion. Senior Judge Davis wrote the opinion, in which Judge
King joined. Judge Floyd wrote an opinion concurring in part and
dissenting in part.
ARGUED: Gabriela Richeimer, TROUTMAN SANDERS LLP, Washington,
D.C., for Appellant The Medical Protective Company.
George J.
Kefalos, GEORGE J. KEFALOS, P.A., Charleston, South Carolina,
for Appellee/Cross-Appellant Kyrsten E. Sutton, M.D.
Thomas C.
Salane, TURNER PADGET GRAHAM & LANEY P.A., Columbia, South
Carolina, for Appellee First Professionals Insurance Company.
ON BRIEF: John T. Lay, Laura W. Jordan, Janice Holmes, GALLIVAN,
WHITE & BOYD, P.A., Columbia, South Carolina; John R. Gerstein,
TROUTMAN SANDERS LLP, Washington, D.C., for Appellant The
Medical Protective Company. Oana D. Johnson, GEORGE J. KEFALOS,
P.A., Charleston, South Carolina, for Appellee/Cross-Appellant
Kyrsten E. Sutton, M.D.
R. Hawthorne Barrett, TURNER PADGET
GRAHAM & LANEY P.A., Columbia, South Carolina, for Appellee
First Professionals Insurance Company.
Unpublished opinions are not binding precedent in this circuit.
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DAVIS, Senior Circuit Judge:
These
cross-appeals
arise
out
of
an
insurance
coverage
dispute related to claims for alleged birth injuries resulting
from professional negligence.
Dr. Kyrsten Sutton attended the
birth of Richard and Amy Moore’s son, Nathan.
The Moores filed
suit in state court for medical malpractice against Dr. Sutton.
Dr.
Sutton’s
Company
former
insurers,
(“FirstPro”)
(“MedPro”)
and
First
the
Professional
Medical
Insurance
Protective
Company
disagree as to which, if either, insurer owes Dr.
Sutton a duty to defend the lawsuit; accordingly, FirstPro filed
this
declaratory
bench
trial,
judgment
the
district
action
court
in
federal
ruled
that
court.
After
MedPro,
but
a
not
FirstPro, has a duty to defend Dr. Sutton and pay damages as may
be
required
under
the
MedPro
policy.
For
the
reasons
that
follow, we affirm in part and vacate and remand in part.
I.
A.
Dr. Sutton is a board certified obstetrician-gynecologist
who has practiced medicine in South Carolina since 2000.
She
admitted Amy Moore to St. Francis Hospital in South Carolina for
labor and delivery of her child, Nathan Moore, on June 22, 2004.
When
Nathan
was
born,
he
“was
documented
to
be
abnormally
depressed with poor color, muscle tone, and respiratory effort,”
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and “required resuscitation in the delivery room.”
Eventually,
South
he
was
Carolina
transferred
Hospital
to
after
the
Medical
experiencing
J.A. 715.
University
seizures
in
of
the
nursery.
After
Nathan’s birth, Amy Moore continued to be treated by
Dr. Sutton.
With respect to her son’s prognosis, she told Dr.
Sutton at first that Nathan’s treating physicians were uncertain
about it,
but then “informed [her] that [they] expected him to
have some deficits but they may be mild.”
Id.
During a later
visit with Dr. Sutton in August 2004, Amy Moore told her that
Nathan’s
tests
were
treating
physician
expected
“was
to
hopeful
residual [health] problems.”
be
normal
there
and
would
Id. at 716.
that
be
Nathan’s
little
to
no
During this time, Amy
Moore never complained to Dr. Sutton about her care, treatment,
or the delivery, and never expressed an intention to bring a
lawsuit.
When Nathan was nearly four years old, Dr. Sutton received
a
letter
Hospital
from
the
disclosing
Risk
that
Management
it
had
Department
received
a
at
St.
request
Francis
for
Amy
Moore’s medical records from June 22, 2004 (the day Nathan was
born).
The letter noted that it was informing Dr. Sutton of the
request
because
of
“ongoing
Risk
Management
activities
identify potential claims within our health care system.”
596.
to
J.A.
The letter further stated that Dr. Sutton could review the
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medical record, but gave no further details about any treatment
or
hospitalization
provided.
At
the
time
she
received
the
letter, Dr. Sutton did not remember Amy Moore as her patient or
the treatment she provided her; thus, the only information she
knew about Amy Moore was contained in the St. Francis letter.
Critical to the district court’s findings and conclusions
in this case, Dr. Sutton testified that upon her receipt of the
letter,
she
called
her
then-insurance
company,
MedPro,
whose
policy provided coverage from May 1, 2003 to May 1, 2009.
She
further testified that during this call, she advised the MedPro
representative with whom she spoke of the contents of the letter
from St. Francis.
There is no documentation of this call in the
files of MedPro, and Dr. Sutton has none.
In 2011, Dr. Sutton received a notice of intent to sue from
counsel for the Moores, acting as parents and guardians ad litem
of Nathan, for the injuries he suffered in connection with his
birth (“the Moore Lawsuit”).
She referred this claim to her
then-current insurer, FirstPro, whose policy insured her from
April 1, 2009 to April 1, 2012.
In
January
2012,
FirstPro
filed
a
complaint
based
on
diversity jurisdiction against Dr. Sutton in the District of
South
Carolina,
seeking
a
declaratory
judgment
that
FirstPro
“has no duty to defend or indemnify [Dr.] Sutton for the claims
made in the [Moore] Lawsuit.”
J.A. 26.
5
FirstPro argues that
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the claim is excluded from coverage based on three exclusions in
the relevant policy.
Only one of these provisions, Exclusion
11(b), was considered by the district court.
That provision
states that FirstPro refuses to “defend or pay” for injury or
damages “arising out of a medical incident or committee incident
which prior to the effective date of this policy was” “reported
to an insurer.”
was
triggered
J.A. 644.
because
FirstPro argues that this exclusion
Dr.
Sutton’s
2008
call
to
MedPro
disclosing her receipt of the medical records request qualifies
as a “medical incident” that was reported to another insurer.
In response to the declaratory judgment action, Dr. Sutton
counterclaimed
against
FirstPro
and
filed
a
third-party
complaint against MedPro, arguing that if FirstPro did not owe
her coverage, then MedPro did.
MedPro argues that it does not
owe coverage to Dr. Sutton because it has no record of receiving
the call from Dr. Sutton in 2008, and thus, Dr. Sutton failed to
notify MedPro about the potential claim as required under the
MedPro
policy.
MedPro’s
policy
explicitly
states
that
“the
Company shall have no duty to defend or pay damages” “on a
potential claim unless it was reported to the Company during the
term
of
this
obtainable
circumstances
policy
and
information,
of
the
the
report
including
incident;
the
includes
the
nature
all
time,
and
reasonably
place
extent
of
and
the
patient’s injuries; and the names and addresses of the patient
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and any available witnesses.”
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J.A. 592.
Dr. Sutton denies that
the medical records request put her on notice of a potential
claim arising from her delivery of Nathan.
In any event, she
contends that her call was enough to relieve her of (or satisfy)
her duty to report to MedPro a potential claim.
In
argued
due
course,
that
FirstPro
the
Moores
owed
Dr.
intervened
Sutton
as
coverage
defendants
for
the
and
Moore
Lawsuit. 1
B.
After
the
close
of
discovery,
the
insurers
moved
for
summary judgment, each arguing, inter alia, that as a matter of
law, it had no duty to provide coverage for the Moore Lawsuit.
The
district
MedPro’s
court
motion,
the
denied
both
district
motions.
court
stated
With
that
respect
there
was
to
a
genuine issue of fact as to “whether Dr. Sutton reported the
2008 Letter to MedPro” and “whether the information allegedly
provided by Dr. Sutton to MedPro was sufficient to report a
potential claim regarding Nathan Moore.”
J.A. 135, 136.
As to
FirstPro’s motion, the court stated that there was a genuine
1
Counsel have disclosed that MedPro and the Moores have
entered into an agreement under which MedPro will provide
coverage no matter the outcome of this appeal, explaining that
“[t]his agreement ensures that Dr. Sutton is not left without
coverage and . . . is not personally exposed to a verdict . . .
.”
Reply Br. of MedPro at 11.
We are satisfied that this
agreement does not moot the disputes presented in this case.
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issue of fact with respect to whether Dr. Sutton’s phone call to
MedPro
regarding
the
St.
Francis
letter
triggered
Exclusion
11(b) of the FirstPro policy.
To resolve these issues of fact, the district court
held a
bench trial on March 2, 2013.
It heard testimony from only two
witnesses,
Joseph
Dr.
specialist.
called
Dr.
MedPro
received
a
Sutton
Sutton
and
and
testified
notified
medical
records
the
Costy,
to
the
MedPro’s
following:
representative
request
claims
letter
that
from
(1)
she
she
had
St.
Francis
Hospital; (2) she told the MedPro representative the name ‘Amy
Moore’, gave the representative
the date for which the medical
records were being requested, and basically read the contents of
the letter to the representative; (3) the MedPro representative
did not instruct her to take any action with regard to the
letter; (4) she received no follow-up communication from MedPro
after she made the call; and (5) she did not follow up with St.
Francis to review any medical records.
The district court then heard testimony from Costy, who
testified
system.
as
to
the
procedures
of
MedPro’s
call
and
claims
He testified that he had conducted multiple searches of
MedPro’s records and could find no record of Dr. Sutton’s call
to the company call center in 2008, and that if Dr. Sutton had
called, “the persons answering the phones in the call center
were trained . . . to document any call regarding a possible
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claim from a South Carolina insured by opening an electronic
‘ticket’ that was then forwarded to him as the assigned claims
adjuster.”
to
the
J.A. 717.
reliability
testified
that
the
Upon questioning by the district court as
of
these
call
call
center
center
staff
procedures,
and
Costy
procedures
were
generally reliable.
Upon conclusion of the bench trial, the district court made
several findings of fact.
Critically, the district court found
credible both Dr. Sutton’s testimony that she called MedPro to
report
the
contents
of
the
St.
Francis
letter
and
Costy’s
testimony that he did not receive notification from the MedPro
call center regarding Dr. Sutton’s call.
it
was
failed
“more
to
likely
follow
than
company
not
[that]
It further found that
the
procedures
to
MedPro
create
call
an
center
electronic
‘ticket’ regarding the call and to forward the information to
Mr. Costy upon receipt of the call from Dr. Sutton.”
J.A. 719.
It concluded that the “MedPro system is dependent upon the call
center
operators
claims
process
specific
memory
undertaking
and,
in
of
making
a
light
series
of
the
Dr.
call
to
of
tasks
Sutton’s
MedPro,
to
start
the
credible
and
the
Court
is
unpersuaded from the evidence in the record that the system is
free of human error generally or in this particular matter.”
J.A. 719.
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In
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light
of
the
above
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findings,
the
district
court
concluded that Dr. Sutton met her burden of showing that she
provided
MedPro
timely
and
sufficient
claim under the MedPro policy.
notice
of
a
potential
With respect to FirstPro, the
court concluded that Dr. Sutton’s call to MedPro about the St.
Francis letter qualified as a report of a medical incident to an
insurer prior to the inception of the FirstPro policy, and as
such, FirstPro met its burden of showing that it is entitled to
exclude
coverage
under
Paragraph
11(b)
of
its
policy.
Consequently, the court stated it was unnecessary to consider
whether the exclusions under Paragraphs 11(a) and (c) of the
FirstPro policy applied.
Following
appealed
the
the
district
district
court’s
court’s
order
decision,
that
it
MedPro
had
a
timely
duty
to
provide coverage for the Moore Lawsuit and Dr. Sutton filed a
protective
cross-appeal
from
the
district
court’s
order
that
FirstPro was under no duty to do so.
II.
Because the district court’s decision that the exclusion in
Paragraph 11(b) of the FirstPro policy applied rested heavily on
its
factual
determination
representative
of
the
that
contents
Dr.
of
Sutton
the
St.
notified
Francis
a
MedPro
letter
in
2008, we first address the MedPro appeal and then resolve Dr.
Sutton’s protective cross-appeal.
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MedPro
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presents
four
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bases
for
reversing
the
district
court’s judgment: (1) the district court erred as a matter of
law in its interpretation of the MedPro policy; (2) the district
court erroneously shifted the burden of proof from Dr. Sutton to
MedPro; (3) the district court’s factual determination that Dr.
Sutton
reported
a
potential
claim
to
MedPro
is
clearly
erroneous; and (4) the district court lacked impartiality while
conducting
the
bench
trial.
None
of
MedPro’s
arguments
are
persuasive, and we therefore affirm the district court’s ruling
that
MedPro
has
a
duty
to
defend
Dr.
Sutton
in
the
Moore
Lawsuit.
A.
This Court “review[s] a judgment following a bench trial
under
a
mixed
standard
of
review
—
factual
findings
may
be
reversed only if clearly erroneous, while conclusions of law,
including contract construction, are examined de novo.”
Roanoke
Cement Co., LLC v. Falk Corp., 413 F.3d 431, 433 (4th Cir.
2005).
approach
Under South Carolina law, 2 which takes a formalistic
to
the
interpretation
of
contracts,
“‘insurance
policies are subject to general rules of contract construction,’
and therefore, [courts] ‘must enforce, not write contracts of
insurance
and
.
.
.
must
give
2
policy
language
its
plain,
The parties agree that South Carolina law governs the
construction of the insurance policies at issue in this case.
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ordinary, and popular meaning.’”
Bell v. Progressive Direct
Ins. Co., 757 S.E.2d 399, 406 (S.C. 2014) (quoting Gambrell v.
Travelers Ins. Co., 31 S.E.2d 814, 816 (S.C. 1983)).
Thus, when
a contract is unambiguous, “it must be construed according to
the terms the parties have used.”
Id. (internal quotation marks
omitted).
Under the MedPro policy, the insurer only has a duty to
defend or pay damages on a potential claim that “was reported to
[MedPro] during the term of the policy and the report includes
all reasonably obtainable information, including the time, place
and circumstances of the incident; the nature and extent of the
patient’s injuries; and the names and addresses of the patient
and any available witnesses.”
Sutton’s
2008
call
to
J.A. 592.
MedPro
satisfied
In concluding that Dr.
this
provision,
the
district court construed this provision in two ways that MedPro
now challenges.
show
only
provision.
First, it determined that Dr. Sutton had to
substantial,
And
second,
not
it
strict,
found
that
compliance
specific
with
the
information
relating to “the time, place and circumstances of the incident;
the nature and extent of the patient’s injuries; and the names
and addresses of the patient and any available witnesses” need
only be reported if that information is reasonably obtainable.
MedPro’s reporting provision is properly understood as a
condition precedent because an insured must perform the act of
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reporting before MedPro’s duty to defend or pay damages arises.
See Springs and Davenport, Inc. v. AAG, Inc., 683 S.E.2d 814,
816-17 (S.C. Ct. App. 2009) (“A condition precedent is any fact,
other than mere lapse of time, which, unless excused, must exist
or occur before a duty of
immediate performance by the promisor
can arise.” (internal quotation marks omitted)).
Contrary to
the conclusion expressed by the district court, South Carolina
law requires strict, not substantial, compliance with conditions
precedent.
See McGill v. Moore, 672 S.E.2d 571, 575 (S.C. 2009)
(holding that party may not “circumvent the contracts condition
precedent by arguing substantial compliance”).
clear
direction
insureds
must
from
comply
the
South
strictly
Carolina
with
In light of the
Supreme
conditions
Court
that
precedent,
the
district court erred in finding that only substantial compliance
was necessary. 3
Notwithstanding the district court’s error in determining
what
type
determining
of
compliance
that
the
was
policy
required,
requires
it
the
did
not
specific
err
in
type
of
information listed to be reported only if that information is
reasonably obtainable.
MedPro argues that specific information
relating to “the time, place and circumstances of the incident;
the nature and extent of the patient’s injuries; and the names
3
The district court relied on non-South Carolina law in its
conclusion that only substantial compliance was required.
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and addresses of the patient and any available witnesses” must
be reported under the reporting provision regardless of whether
that information is reasonably obtainable or not.
It therefore
views the provision as a “non-negotiable minimum” for coverage.
MedPro’s argument is strained, and ultimately unpersuasive,
for
two
reasons.
First,
the
most
natural
reading
of
the
provision is that the phrase “reasonably obtainable” modifies
all of the specific types of information that comes after it.
See Schulmeyer v. State Farm Fire and Cas. Co., 579 S.E.2d 132,
134 (S.C. 2003) (“When a contract is unambiguous a court must
construe its provisions according to the terms the parties used;
understood
in
their
plain,
ordinary,
and
popular
sense.”).
Second, even if it can be said that the provision is ambiguous
as to whether it requires the specific types of information to
be
reported
regardless
of
whether
they
are
reasonably
obtainable, ambiguity must be construed against both the drafter
of the provision and the insurer, i.e., MedPro.
v.
Global
Sun
Pools,
Inc.,
644
S.E.2d
718,
See Chassereau
722
(S.C.
2007)
(noting that a general principle of contract construction is
that “a court will construe any doubts and ambiguities in an
agreement against the drafter of the agreement”); Helena Chem.
Co. v. Allianz Underwriters Ins. Co., 594 S.E.2d 455, 459 (S.C.
2004) (“Where the words of an insurance policy are capable of
two reasonable interpretations, the construction most favorable
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to the insured should be adopted.”).
Thus, the district court
correctly interpreted the provision to mean that an insured must
only
give
the
specific
types
of
information
listed
in
the
provision if that information is reasonably obtainable.
Viewing this provision as a whole, MedPro’s duty to defend
or pay damages on the Moore Lawsuit only arises if Dr. Sutton
strictly complied with a reporting provision that required her
to report a potential claim during the term of the policy and
supply all reasonably obtainable information.
Although it is
undisputed that Dr. Sutton called MedPro during the term of the
policy, the parties disagree as to whether she (1) reported a
potential
claim
and
(2)
supplied
all
reasonably
obtainable
information.
Under MedPro’s policy, a potential claim is “an incident
which the Insured reasonably believes will result in a claim for
damages.”
J.A. 593.
MedPro argues that because Dr. Sutton has
consistently denied reporting a “potential claim” as defined in
the
MedPro
policy
and
has
never
believed
that
the
letter
described an incident that would result in a damages claim, she
did not report a potential claim as required by the policy.
argument,
however,
overlooks
a
critical
point:
the
Its
term
“potential claim” is measured with respect to an objective, not
subjective,
standard.
In
this
light,
the
proper
inquiry
is
whether a reasonable person in Dr. Sutton’s shoes would have
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believed
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that
the
May
2008
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letter
from
St.
Francis
Hospital
described an incident that would result in a claim for damages.
Cf. Matter of Anonymous Member of S.C. Bar, 432 S.E.2d 467, 468
(S.C. 1993) (explaining that Rule 1.7 of South Carolina’s Rules
of Professional Conduct, which states that “a lawyer shall not
represent a client if the representation of that client will be
directly adverse to another client, unless the lawyer reasonably
believes
the
relationship
representation
with
the
other
will
not
adversely
client,”
is
affect
measured
under
the
an
objective test); Hook v. Rothstein, 316 S.E.2d 690, 703 (S.C.
Ct. App. 1984) (interpreting the term “reasonably believes” in
the context of medical malpractice under an objective standard
of
whether
“a
reasonable
physician
of
the
same
branch
of
medicine as the defendant would have disclosed the risks under
the
same
or
similar
circumstances”).
Because
a
reasonable
doctor could view a letter from a hospital’s risk management
department relaying a medical records request as a first step in
a patient’s decision to initiate litigation, the evidence here
supports a finding that there could exist a reasonable belief
that
the
incident
would
result
in
a
claim
for
damages.
Therefore, the district court did not err in determining that
Dr. Sutton (even contrary to her own subjective state of mind)
reported a potential claim under the terms of the policy.
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We
respect
thoughtful
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the
views
dissenting
Pg: 17 of 50
set
opinion.
forth
in
Contrary
our
to
good
the
friend’s
dissent’s
assertion, however, that “[t]his appeal turns on whether Dr.
Sutton ‘reported’ a ‘potential claim’ to MedPro during the term
of her policy,” post at 1, the outcome of this appeal actually
turns on the correctness, under the proper standard of review,
of the district court’s factual finding that Dr. Sutton did so.
Marshalling support from citations to caselaw 4 that nowhere
makes an appearance in MedPro’s briefs on appeal, and claiming
that
“the
plain
language
subjective/objective
hybrid
of
the
[MedPro]
analysis,”
4
the
policy
dissent
requires
a
concludes
Darwin Nat’l Assurance Co. v. Matthews & Megna LLC, 36 F.
Supp. 3d 636 (D.S.C. 2014); Greenwich Ins. Co. v. Garrell, No.
4:11-CV-02743-RBH, 2013 WL 869602 (D.S.C. Mar. 7, 2013).
Neither case constitutes controlling authority in this case, nor
is either persuasive.
The policies in both Darwin and Garrell
include language that is explicitly subjective. For example, in
Darwin, the policy language provided coverage for a claim only
if the Insured had no basis “(1) to believe that any Insured had
breached a professional duty; or (2) to foresee that any such
wrongful or related act or omission might reasonably be expected
to be the basis of a claim against any Insured.” 36 F. Supp. 3d
at 653 (emphasis added). Similarly, in Garrell, no coverage
existed unless the Insureds had “a basis to believe that [the
act or omission at issue], or any related act or omission, might
reasonably be expected to be the basis of a claim.”
2013 WL
869602, at *7 (emphasis added).
In contrast, the policy
language at issue here states that a potential claim is “an
incident which the Insured reasonably believes will result in a
claim for damages,” with the term “reasonably” modifying the
term “believes.” Therefore, while the policy language at issue
in Darwin and Garrell arguably directs a subjective/objective
hybrid inquiry, no similar language compels such a dual inquiry
here.
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that MedPro owes Dr. Sutton no coverage because she disavowed
any belief that she had done anything wrong that could give rise
to a claim against her, and would summarily reverse the judgment
against MedPro.
The dissent’s application of such an extreme interpretation
of the policy language yields harsh results.
As the district
court properly found, however, in reliance on the testimony of
MedPro’s own witness, had MedPro properly handled Dr. Sutton’s
telephone
call
upon
learning
the
contents
of
the
letter
she
received, the proper MedPro official would have obtained the
records and, upon her review, immediately treated the matter as
a potential claim.
The policy language did not require the
district court to blink at this compelling evidence.
The
dissent’s
controlling
harsh
authority.
result
Not
a
is
single
not
justified
opinion
from
by
the
any
South
Carolina appellate courts or any federal court of appeals has
adopted the dissent’s insistence that the MedPro policy’s use of
the
word
“Insured”
in
its
definition
of
“potential
claim”
requires such an extravagant reading as the dissent ascribes to
it.
Notably,
presented
an
the
one
published
opportunity
to
federal
deal
with
language actually did not deal with it.
appellate
this
case
MedPro
that
policy
See Owatonna Clinic-
Mayo Health Sys. v. Med. Protective Co., 639 F.3d 806 (8th Cir.
2011).
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In Owatonna, the district court granted summary judgment in
favor of the insured on the issue of whether the insured had an
objectively reasonable belief that a claim would be filed and
conducted
a
jury
trial
on
the
issue
subjectively held that belief.
language
which
necessitated
of
whether
the
insured
639 F.3d at 809. The policy
this
dual
inquiry
was
materially
different from the language at issue in this case.
There, the
claims made policy provided coverage for “any claim for damages”
filed during the policy period and defined a “claim filed” as
the
receipt,
by
MedPro
“written
notice
of
Clinic]
reasonably
result.”
a
during
medical
the
term
from
the
policy,
allegations
of
which
of
Id. at 811.
believes
incident
of
[Owatonna
liability
may
After a trial, a jury found that the insured subjectively
believed that a claim for damages would be filed.
Id. at 809.
MedPro appealed and the Eighth Circuit affirmed the judgment on
the jury verdict without once mentioning the district court’s
underlying
analysis
of
the
relevant
policy
provision
and,
specifically, without any discussion of or any citation to legal
authorities suggesting that the district court’s analysis of the
policy language was correct.
Thus, the dissent is correct in saying, as it does, post at
9, that “Owatonna is inapposite” but not because “the district
court here never conducted this subjective/objective analysis.”
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Owatonna is inapposite because it tells us nothing about
what the Supreme Court of South Carolina would do when it is
called upon to interpret the MedPro policy language at issue
here. 5
As many precedents show, South Carolina favors coverage
in its interpretation of insurance contracts.
See, e.g., M and
M Corp. of S.C. v. Auto-Owners Ins. Co., 701 S.E.2d 33, 35 (S.C.
2010) (“Policies are construed in favor of coverage . . . .”);
5
Ironically, the ancestor of MedPro’s “reasonably believes”
clause is a classic exclusion from coverage found in many, if
not
all,
automobile
insurance
policies,
i.e.,
occurrence
policies, not claims made policies.
This court is not without
experience with so called “reasonable belief” provisions in
automobile insurance policies. See Emick v. Dairyland Ins. Co.,
519 F.2d 1317, 1325 n.12 (4th Cir. 1975).
In fact, the district court in Owatonna simply cited
generally to an unpublished district court opinion applying
Texas law, Empire Indem. Ins. Co. v. Allstate County Mut. Ins.
Co., Civ. No. 3:06–1415, 2008 U.S. Dist. LEXIS 37764, at *22–23,
2008 WL 1989452 (N.D. Tex. May 8, 2008) (“The Allstate policy
also contains an exclusion provision that applies when any
person uses ‘a vehicle without a reasonable belief that that
person is entitled to do so.’”), in reasoning that the term
“reasonable belief” “in this context has an objective and
subjective component.” Owatonna Clinic-Mayo Health Sys. v. Med.
Protective Co., Civ, No. 08–417, 2009 WL 2215002, at *5 (D.
Minn. July 22, 2009). But the “context” is not the same; it is
black letter law that the interpretation of coverage provisions
is not the same as the interpretation of exclusions from
coverage, not in South Carolina and not anywhere. See McPherson
v. Mich. Mut. Ins. Co., 42 S.E.2d 770, 771 (S.C. 1993) (“[R]ules
of construction require clauses of exclusion to be narrowly
interpreted, and clauses of inclusion to be broadly construed.
This rule of construction inures to the benefit of the
insured.”); Erik S. Knutsen, Confusion About Causation In
Insurance: Solutions for Catastrophic Losses, 61 ALA. L. REV. 957,
967 (2010) (“Most American courts also interpret coverage
clauses broadly and exclusion clauses narrowly.”).
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S.C. State Budget & Control Bd. v. Prince, 403 S.E.2d 643, 646
(S.C.
1991)
(“[I]nsurance
contracts
are
generally
construed
against the party who prepares them and liberally in favor of
the insured.”); Walde v. Ass’n Ins. Co., 737 S.E.2d 631, 635
(S.C. Ct. App. 2012) (same); Cook v. State Farm Auto. Ins. Co.,
656 S.E.2d 784, 786 (S.C. Ct. App. 2008) (“In South Carolina,
clauses of inclusion should be broadly construed in favor of
coverage,
extent
and
of
understood
when
there
coverage,
in
its
are
the
most
doubts
language
inclusive
about
of
the
sense.”
the
existence
policy
is
(internal
to
or
be
quotation
marks omitted)).
Accordingly,
we are unpersuaded by the dissent’s arguments
and hold that the district court did not err in discounting Dr.
Sutton’s ill-informed belief about the potential outcome of a
lawyer’s request for medical records for the treatment of one of
her patients.
The only remaining question is whether Dr. Sutton supplied
all
reasonably
potential claim.
obtainable
information
when
reporting
the
We note that this is a close question.
The
insurance provision lists specific types of information such as
the “time, place and circumstances of the incident; the nature
and
extent
of
the
patient’s
injuries;
and
the
names
and
addresses of the patient and any available witnesses,” J.A. 592,
almost
none
of
which
Dr.
Sutton
21
relayed
to
the
MedPro
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representative she called in 2008.
Although she fully reported
the contents of the letter, she did not identify Amy Moore as
her former patient or report any details about her labor and
delivery of Nathan.
Before reporting the contents of the letter
to MedPro, she did not review Amy Moore’s records because she
had left the practice at which Amy Moore was her patient, and
did
not
records.
contact
St.
Francis
Hospital
to
review
any
medical
Therefore, the nature of the information she gave to
MedPro was limited, although she could have obtained at least
two sets of Amy Moore’s medical records (the private practice’s
records and St. Francis Hospital’s records).
The district court
reasoned that Dr. Sutton nevertheless complied with the terms of
the provision because she relayed all information that was then
known to her at the time of the call.
It further stated:
She could have obviously undertaken further inquiry
and investigation to obtain additional information,
with a consequential delay in reporting the St.
Francis letter to Med Pro, but she provided Med Pro at
the time of her call “all reasonably obtainable
information” then available to her. Had her call
received the proper company follow up, she would have
most probably been requested to obtain (and would have
had the duty to provide) a copy of the hospital and
office
notes
to
provide
the
company
additional
information concerning the nature of the claim and
extent of the child’s injuries. The St. Francis
letter, with the name of the patient, the date of the
hospitalization, and the reference to the matter as a
“potential claim” by the hospital’s Risk Management
Department, provided Med Pro sufficient information to
alert the company of a potential claim and to begin
its claims processing. Med Pro had its duty to
investigate the potential claim, which it would have
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undoubtedly
done
had
information
concerning
Dr.
Sutton's report to the call center been conveyed to
Mr. Costy. Thus, the Court finds that Dr. Sutton
complied with the notice requirements . . . .
J.A. 725-26.
We
accept
testified
the
credibly
district
that
receiving the letter.
court’s
she
finding
made
the
that
Sutton
“shortly
call
Dr.
after”
In light of its finding, it was not
clearly erroneous for the court to find, as it did, that the
information described above regarding the details of Amy Moore’s
treatment
was
not
reasonably
obtainable.
Thus,
the
further
finding that its disclosure was not required to trigger coverage
is likewise not clear error.
that
there
processed,
was
Costy
testimony
would
This is especially so considering
that
have
had
followed
provide additional information.
the
call
up
with
been
Dr.
properly
Sutton
to
This suggests that both Dr.
Sutton and MedPro had a continuing duty to provide information
and
to
investigate
the
claim,
and
that
the
term
“reasonably
obtainable” must be measured with respect to the time period
during which the information was being given.
In sum, the district court did not commit clear error in
finding
that
Dr.
Sutton
provided
all
reasonably
obtainable
information as required by MedPro’s reporting provision.
It
therefore did not err in its legal conclusion that Dr. Sutton
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complied with the required reporting provision under the MedPro
policy.
B.
Next, MedPro argues that, as a matter of law, Dr. Sutton’s
uncorroborated
testimony
that
she
called
MedPro
in
2008
and
reported the contents of the St. Francis letter was insufficient
to carry her burden of proof to show that she met MedPro’s
reporting requirement.
But the cases it cites in support of its
argument are inapposite.
National
Bank
v.
(D.S.C.
1981),
For example, MedPro relies on S.C.
Lumbermens
in
which
the
Mut.
Cas.
Co.,
district
court
526
held
F.Supp.
that
94
the
defendant insurer failed to carry its burden of establishing
that
notice
of
cancellation
of
the
policy
was
mailed
to
plaintiff, where defendant “had neither a certificate of mailing
nor
a
record
or
any
notation
in
its
file
notification was actually mailed to Plaintiff.”
also cites
to
show
that
Id. at 95 .
It
a tax reporting case in which the Tenth Circuit held
that “absent some proof of an actual postmark or dated receipt,
a presumption that tax documents allegedly mailed to the IRS
were
in
fact
received
does
not
taxpayer’s self-serving testimony.”
1187, 1195 (10th Cir. 2004).
arise
based
solely
upon
a
Sorrentino v. IRS, 383 F.3d
But these cases involve self-
serving testimony that a litigant mailed notice or some other
legally significant paperwork.
In the context of mailing, there
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is usually some other objective evidence, such as a copy of the
paperwork mailed, receipt of mailing, or proof of postmark that
accompanies
taxpayer
a
is
mailing.
in
the
Cf.
best
id.
at
position
1195
with
(noting
the
clock
that
“the
running
to
protect himself by procuring independent evidence of postmark
and/or
mailing,
whether
testimony, or otherwise”).
by
mail
receipt,
corroborating
By contrast, in the context of phone
calls, there is usually no similarly accessible corroborating
evidence that one expects to record the fact of making a phone
call.
Thus,
the
district
court’s
reliance
on
Dr.
Sutton’s
testimony, which it found to be credible, is not unreasonable
under the circumstances of this case.
Additionally, MedPro relies on the reasoning of Feldman v.
Charlotte-Mecklenburg
DSC.,
2012
WL
proposition
testimony
evidence.”
3619078
that
from
corroborating
Board
Education,
(W.D.N.C.
“[c]ourts
a
at
*5
and
.
Aug.
should
plaintiff
evidence
Id.
of
where
21,
put
it
undermined
But
No.
here,
3:11–cv–34–RJC–
2012),
aside
for
the
self-serving
is
unsupported
by
other
although
by
credible
there
is
no
corroborating evidence that Dr. Sutton called MedPro in 2008,
there is no credible evidence that undermines her testimony of
having the “specific memory of sitting at her desk with the
letter
and
calling
correspondence.”
MedPro
J.A. 719.
to
report
the
receipt
of
this
The only evidence that could be
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viewed to undermine this testimony is the testimony from Costy
that there was no record of a call from Dr. Sutton to the MedPro
call center in 2008.
But whether any member of this panel might
have reached the same finding is of no moment; the district
court found
that
evidence
of
“a
number
of
different
persons
performing call center duties” and “turnover in those positions
and
phones
being
answered
by
trainees”
showed
that
MedPro’s
system was prone to “human error or a failure to follow standard
company procedures,”
J.A. 718, and that therefore testimony
that MedPro received no call from Dr. Sutton in 2008 did not
undermine
her
otherwise
credible
testimony.
In
this
light,
although Dr. Sutton’s specific testimony of calling MedPro in
2008
is
uncorroborated,
there
is
evidence
in
the
record
to
explain why MedPro might not have had any record of such a call
that is consistent with Dr. Sutton having called and reported
the
contents
observe
that
of
the
letter.
a
litigant’s
It
is
credible
surely
unremarkable
testimony
sufficient to carry the burden of proof.
alone
may
to
be
See, e.g., United
States v. Jones, 977 F.2d 105, 111 (4th Cir. 1992) (“There may
be
circumstances
testimony,
under
uncorroborated
which
by
a
other
defendant’s
testimonial
self-serving
or
documentary
evidence, about events this distant in time could properly be
thought to carry his heavy burden of proof . . . .”).
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Considering
that
Pg: 27 of 50
MedPro’s
cited
cases
in
favor
of
its
argument are inapposite, that there was no credible evidence in
the record that undermined Dr. Sutton’s credible and specific
testimony
of
making
the
call
to
MedPro,
and
that
there
was
evidence in the record to support the district court’s finding
of potential human error in MedPro’s call center, we conclude
that the district court did not err in finding that Dr. Sutton
carried her burden to show that she complied with the reporting
provision of the MedPro policy.
C.
MedPro next argues, in what amounts to a restatement or
variation on its sufficiency challenge to the district court’s
factual findings, that the district court should not have relied
on Dr. Sutton’s testimony that she called MedPro to report her
receipt
of
the
medical
request
letter.
As
we
have
said
repeatedly, we review a district court’s factual findings for
clear error.
Roanoke Cement, 413 F.3d at 433.
A finding is
clearly erroneous if “although there is evidence to support it,
the reviewing court on the entire evidence is left with the
definite and firm conviction that a mistake has been committed.”
Jiminez v. Mary Washington Coll., 57 F.3d 369, 379 (4th Cir.
1995) (quoting United States v. United States Gypsum Co., 333
U.S. 364, 395 (1948)).
“This standard plainly does not entitle
a reviewing court to reverse the finding of the trier of fact
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simply because it is convinced that it would have decided the
case differently.”
United States v. Heyer, 740 F.3d 284, 292
(4th Cir. 2014) (internal quotation omitted).
“If the district
court’s account of the evidence is plausible in light of the
record viewed in its entirety, [we] may not reverse it even
though convinced that had [we] been sitting as the trier of
fact, [we] would have weighed the evidence differently.” Id.
(internal
quotation
cases
which
in
assessments
of
a
omitted).
district
witness
Indeed,
court’s
as
we
factual
credibility
or
have
said:
findings
the
turn
weighing
“In
on
of
conflicting evidence during a bench trial, such findings are
entitled to even greater deference.”
FTC v. Ross, 743 F.3d 886,
894 (4th Cir. 2014); see also Benner v. Nationwide Mut. Ins.
Co., 93 F.3d 1228, 1234 (4th Cir. 1996) (“On review, we may
neither
weigh
the
evidence
nor
judge
the
credibility
of
witnesses.”); Pigford v. United States, 518 F.2d 831, 836 (4th
Cir. 1975); United States v. Bagdasian, 291 F.2d 163, 166 (4th
Cir. 1961).
MedPro attacks the district court’s finding that Dr. Sutton
reported a claim to MedPro in two ways: (1) by arguing that the
district court failed to consider the self-serving nature of Dr.
Sutton’s testimony and (2) by arguing that the district court
erroneously found that MedPro’s procedures were subject to human
error.
The first assertion is not reviewable on appeal as it
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essentially
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asks
this
Court
Pg: 29 of 50
to
review
the
district
finding that Dr. Sutton was a credible witness.
court’s
See Benner, 93
F.3d at 1234.
MedPro’s second argument about the district court’s finding
on the reliability of MedPro’s procedures is reviewable.
It
argues that there was insufficient evidence in the record of the
unreliability of MedPro’s reporting procedures.
The district
court found that human error was possible in MedPro’s reporting
procedures
because
of
turnover;
MedPro
sought
to
rebut
that
finding by arguing that the only evidence of turnover stemmed
from Costy’s testimony that one of the call center employees
with whom he had been talking had been on the job for only a
year.
It is true that the testimony of Costy is alone a thin
basis for determining that there existed a high rate of turnover
that affected the reliability of the call center, and there does
not appear to be other evidence of turnover of employees at the
call center.
evidence
of
But the district court relied on more than just
turnover
in
concluding
that
the
call
center
was
prone to human error — it relied on records produced at trial
that showed that a number of different persons were performing
call
center
trainees.
duties
and
that
phones
were
being
answered
by
In this light, although the question is close one,
there is sufficient evidence for a finding of unreliability, and
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the district court’s finding was plausible when viewed in light
of the entire record.
Furthermore,
testimony
See Heyer, 740 F.3d at 292.
after
credible,
finding
and
both
reviewing
Dr.
Sutton
records
and
about
Costy’s
trainees
answering the phone, the district court reasonably inferred that
the most probable cause for Costy’s lack of documentation of Dr.
Sutton’s call was human error in the call center.
The district
court is entitled to draw such reasonable inferences during a
bench trial.
Cf. United States v. Bishop, 740 F.3d 927, 935
(4th Cir. 2014) (“In reviewing the district court’s judgment, we
are mindful that, as the trier of fact, that court was in a
better
position
than
we
are
to
evaluate
the
credibility
of
witnesses, take into account circumstances, and make reasonable
inferences.”).
Thus, although the evidence supporting the district court’s
finding that MedPro’s reporting procedures were unreliable is
not
particularly
robust,
we
cannot
say
it
reaches
limit of the deferential standard for clear error.
the
outer
The district
court could plausibly find that MedPro’s procedures were prone
to unreliability and that this unreliability explained why Costy
did not receive receipt of Dr. Sutton’s call to MedPro to report
the
contents
of
the
St.
Francis
therefore, did not err.
D.
30
letter;
the
district
court,
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MedPro’s
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last
assignment
Pg: 31 of 50
of
error
is
that
the
district
court denied MedPro a fair trial by manifesting bias in favor of
Dr.
Sutton.
“Although
courts
do
not
generally
address
the
standard of review applicable to assessing judicial bias, we
should conduct a plenary review of such an issue because it
raises due process concerns.”
ePlus Tech., Inc. v. Aboud, 313
F.3d 166, 178 n.12 (4th Cir. 2002).
But, because MedPro failed
to raise the issue of bias in the proceedings below and failed
to make a motion for recusal, “any alleged errors are subject to
plain-error review.”
Murphy v. United States, 383 F. App’x 326,
332 (4th Cir. 2010) (unpublished).
As to a district court’s questioning of litigants during
bench trials, we have stated:
The judge, for example, is entitled to propound
questions pertinent to a factual issue which requires
clarification. He may intercede because of apparent
inadequacy of examination
or
cross-examination
by
counsel, or to draw more information from relevant
witnesses or experts who are inarticulate
or
less
than candid. This privilege or duty, however, is
subject to reasonable limitations. A trial judge must
assiduously perform his function as governor of the
trial dispassionately, fairly, and impartially. He
must not predetermine a case . . . .
Crandell v. United States, 703 F.2d 74, 77-78 (4th Cir. 1983).
MedPro argues that the district court’s questioning of Costy and
Dr.
Sutton
revealed
a
predetermination
that
Dr.
Sutton
had
reported the contents of the St. Francis letter to MedPro in
2008.
This is not so.
MedPro’s characterization of “grilling”
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Costy with “extensive” questioning is not borne out by the trial
transcript.
There
were
only
three
periods
during
Costy’s
testimony in which the district court asked questions, which can
hardly be viewed as extensive or overwhelming for Costy.
It is
clear
these
that
the
district
court’s
purpose
in
asking
questions was to gain greater insight into the procedures used
by
MedPro
to
Specifically,
the
document
district
incoming
court
calls
from
questioned
Costy
insureds.
as
to
the
reliability of MedPro’s reporting procedures — something that
counsel had not yet specifically addressed in great detail in
its questioning of Costy.
Its questioning, therefore, did not
reveal a prejudgment in favor of Dr. Sutton as much as an intent
to understand what procedures might have or have not been in
place that could explain Dr. Sutton credibly testifying that she
had placed the call and Costy credibly testifying that MedPro
lacked documentation of such a call.
MedPro further contends that the district court’s hostility
towards Costy during its questioning also reveals bias against
MedPro and in favor of Dr. Sutton.
hostility.
But we discern no such
In fact, the district court explicitly stated in its
findings of fact that it found Costy’s testimony to be credible,
and during the bench trial, the district court stated that it
found Costy to be “a very fine [and very honest] witness.”
356.
J.A.
And, although the district court certainly followed up
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Costy’s responses with additional questions, its questioning was
measured; indeed, the district court stopped questioning Costy
on a particular point when he stated that he did not know or was
unsure of the answer.
MedPro therefore cannot show hostility
towards Costy that evinces a bias against MedPro or in favor of
Dr. Sutton.
In any event, hostility towards or critical questioning of
one party does not in and of itself equate to bias:
[O]pinions formed by the judge on the basis of facts
introduced or events occurring in the course of the current
proceedings, or of prior proceedings, do not constitute a
basis for a bias or partiality motion unless they display a
deep-seated favoritism or antagonism that would make fair
judgment impossible. Thus, judicial remarks during the
course of a trial that are critical or disapproving of, or
even hostile to, counsel, the parties, or their cases,
ordinarily do not support a bias or partiality challenge.
Liteky v. United States, 510 U.S. 540, 555 (1994).
What MedPro
actually challenges is the district court’s opinion and judgment
stemming
from
the
testimony
testified
credibly,
reporting
procedures
and
its
based
of
Dr.
Sutton,
resulting
on
that
that
inquiry
reasoned
Dr.
into
Sutton
MedPro’s
opinion.
But
without a scintilla of evidence that the district court formed
these judgments on the basis of “extrajudicial sources,” see
id., these determinations must be challenged on their merits,
not on the basis of bias.
*
*
33
*
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In
Filed: 06/08/2015
sum,
indications
MedPro
that
any
has
one
Pg: 34 of 50
failed
of
its
to
point
bases
for
district court’s judgment has merit.
to
persuasive
reversal
We therefore
of
the
affirm the
district court’s judgment that MedPro has a duty to defend Dr.
Sutton
against
the
Moore
Lawsuit
and
pay
damages
as
may
be
required under its policy.
III.
Although we are not required to do so, see supra n.1, in
the interest of a thorough treatment of the issues presented by
the
parties,
we
next
address
Dr.
Sutton’s
protective
cross-
appeal of the district court’s judgment that FirstPro has no
duty to defend Dr. Sutton in the Moore Lawsuit.
court
found
report
of
inception
that
of
Sutton’s
call
medical
a
Dr.
incident
to
the
FirstPro
to
an
policy,
MedPro
insurer
which
The district
constituted
prior
triggered
to
a
the
Exclusion
11(b) of the FirstPro policy.
The
Sutton’s
legal
call
issue
to
presented
MedPro
to
here
convey
is
narrow:
the
whether
of
contents
Dr.
St.
the
Francis letter constitutes a report of a medical incident under
the FirstPro policy.
Dr. Sutton correctly contends that the
district court’s finding that Dr. Sutton gave MedPro notice of a
potential
claim
reported
a
FirstPro
policy.
does
medical
not
automatically
incident
That
is
under
because
34
mean
that
exclusion
the
terms
Dr.
11(b)
Sutton
of
the
“notice”
and
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“potential claim” are not necessarily equivalent to the terms
“report” and “medical incident.”
Whether an exclusion is triggered is a question of contract
construction that we review de novo.
413 F.3d at 433.
See Roanoke Cement Co.,
“Insurance policy exclusions are construed
most strongly against the insurance company,” and FirstPro, as
the insurer, “bears the burden of establishing the exclusion’s
applicability.”
Owners Ins. Co. v. Clayton, 614 S.E.2d 611, 614
(S.C. 2005).
Exclusion 11(b) of FirstPro’s policy reads:
We will not defend or pay under this coverage part for:
* * *
11. Any injury or damages:
b. arising out of a medical incident or committee
incident which prior to the effective date of
this policy was:
I. reported to any insurer; or
II. a pending claim or proceeding; or
III. a paid claim
J.A. 644.
As FirstPro points out, this provision is a “prior
knowledge provision” which is designed to ensure that insurers
do
not
“contract
to
cover
known by the insured.”
Co.,
419
F.
App’x
422,
preexisting
risks
and
liabilities
Bryan Bros. Inc. v. Continental Cas.
425
(4th
Cir.
2011)
(unpublished).
“Thus, it is generally the insured’s duty to provide truthful
35
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and complete information so the insurer can fairly evaluate the
risk it is contracting to cover.”
“Medical
incident,”
as
Id.
defined
by
the
FirstPro
policy,
means “any act, error or omission in the providing of or failure
to provide professional services to a patient by [the doctor] or
by persons described in the Individual Professional Liability
Coverage Part for whom [the doctor is] determined to be legally
responsible.”
J.A. 636.
Of particular importance to this case
is that the policy treats “all bodily injury(ies) caused by a
course of treatment(s) of a patient or of a mother and fetus (or
fetuses) from conception through postpartum care” as a single
medical incident.
J.A. 637.
The term “report” or “reported” is
not defined by FirstPro’s policy in the same manner as “medical
incident.”
“reported,”
Because the FirstPro policy does not define the term
accepted
meaning.”
Bardsley v. GEICO, 747 S.E.2d 436, 440 (S.C. 2013).
According
to
the
commonly
we
Oxford
look
to
English
defined
as
“to
its
“commonly
Dictionary,
give
an
the
account
verb
of
“to
(a
report”
fact,
is
event,
etc.),” “to describe,” or “to convey, impart, pass on (something
said, a message, etc.) to a person as knowledge or information.”
Oxford English Dictionary Online (last visited April 17, 2015)
(saved as ECF opinion attachment).
As FirstPro points out in
its brief, it is therefore commonly understood as communicating
or conveying information to someone, synonymous with the term
36
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“to inform.”
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Against this background, when Dr. Sutton called
MedPro to convey the contents of the St. Francis letter, she
“reported” the information in the letter.
But she did not necessarily report a “medical incident” as
defined by the FirstPro policy.
Beyond reporting the contents
of the St. Francis letter, which merely identified Amy Moore as
a patient who visited Dr. Sutton on June 22, 2004, Dr. Sutton
did
not
report
to
MedPro
any
details
about
the
acts
she
performed, any treatment she provided, or any potential errors
or omissions that arose during her interactions with Amy Moore.
The sparse information provided, detailing merely the fact that
Amy Moore was a patient of Dr. Sutton’s, can hardly be said to
describe
a
medical
“medical
incident”
incident.
as
“any
Because
act,
error,
the
policy
or
omission
defines
in
the
providing of . . . professional services,” it contemplates the
reporting of acts, errors, or omissions beyond the mere fact of
a doctor’s provision of professional services.
We therefore
decline to adopt FirstPro’s argument that reporting the mere
fact
of
having
seen
a
patient
can
qualify
as
a
“medical
incident” when that report includes no description of any acts,
errors, or omissions that took place during the provision of
services.
contents
Thus,
of
Dr.
Sutton’s
the
St.
call
Francis
to
letter
MedPro
does
exclusion in 11(b) of the FirstPro policy.
37
to
not
report
the
trigger
the
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Although
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the
exclusion
Pg: 38 of 50
in
11(b)
is
not
applicable,
we
remand to the district court to determine (if the case is not
otherwise
resolved)
whether
the
exclusion
in
11(c)
of
the
FirstPro policy applies, an issue the district court did not
reach.
That exclusion states that FirstPro will not defend or
pay for any injury or damages “arising out of a medical incident
or
committee
incident
disclosed
or
which
should
have
been
disclosed on our applications, renewal applications, or during
the application or renewal process.”
Sutton
should
response
to
have
two
disclosed
questions
FirstPro argues that Dr.
the
the
in
Moore
medical
application
incident
for
in
insurance.
Question 5(a) of the Application states: “Do you know or is it
reasonably foreseeable from the facts, reasonable inferences or
circumstances
that
any
of
the
following
circumstances
might
reasonably lead to a claim or suit being brought against you,
even if you believe the claim will not have merit: a request for
records from a patient and or attorney related to an adverse
outcome.”
J.A. 597.
Relatedly, Question 7 of the application
states: “Do you know or is it reasonably foreseeable from the
facts,
reasonable
inferences
or
circumstances
that
there
are
outstanding incidents, claims, or suits (even if you believe the
outstanding claim or suit would be without merit) that have not
been reported to your current or prior professional liability
carrier.”
J.A.
597.
Dr.
Sutton
38
responded
“no”
to
these
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questions.
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J.A.
597.
We
Pg: 39 of 50
remand
to
the
district
court
to
determine whether it was reasonably foreseeable that the St.
Francis medical records request letter might reasonably lead to
a claim or suit being brought against Dr. Sutton and whether the
claim
arising
from
the
birth
of
Nathan
Moore
was
reasonably
foreseeable, thereby triggering the exclusion in 11(c).
IV.
For the reasons set forth, the judgment is
AFFIRMED IN PART AND
VACATED AND REMANDED IN PART.
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FLOYD, Circuit Judge, concurring in part and dissenting in part:
I agree with all of the majority opinion except for its
conclusion that Dr. Sutton reported a potential claim as defined
by the MedPro policy.
I therefore dissent from part II.A. of
the majority opinion.
I.
This
appeal
turns
on
whether
Dr.
Sutton
“reported”
a
“potential claim” to MedPro during the term of her policy – a
condition precedent to coverage.
J.A. 592.
The policy defines
a potential claim as “an incident which the Insured reasonably
believes
will
result
(emphasis added).
consistently
claim.
in
a
claim
for
damages.”
J.A.
593
Both below and here on appeal, Dr. Sutton has
denied
believing
that
she
ever
reported
such
a
Because South Carolina law requires strict compliance
with conditions precedent, her admission would seem to end the
matter.
But the majority concludes her subjective belief is
irrelevant, and instead misconstrues the policy as imposing a
solely objective test.
I disagree for two reasons.
First, the plain language of
the policy requires a subjective/objective hybrid analysis.
And
second, even assuming that a purely objective standard applies,
the
record
is
devoid
of
any
evidence
or
factual
findings
supporting the majority’s conclusion that a reasonable physician
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Appeal: 13-1721
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Doc: 55
Dr.
Filed: 06/08/2015
Sutton’s
request
as
a
shoes
first
would
step
Pg: 41 of 50
have
viewed
a
medical
to
the
medical
records
malpractice
action.
Accordingly, I would reverse.
II.
As my friends in the majority correctly recognize, South
Carolina
law
requires
that
we
according to their plain terms.
enforce
insurance
contracts
Maj. Op. at 11-12 (citing Bell
v. Progressive Direct Ins. Co., 757 S.E.2d 399 (S.C. 2014)).
Here,
MedPro’s
policy
defines
a
“potential
claim”
as
“an
incident which the Insured reasonably believes will result in a
claim for damages.”
reasonable
belief,
J.A. 593.
this
subjective/objective analysis.
By focusing on the Insured’s
language
requires
a
mixed
First, did the Insured believe
the relevant incident would result in a claim for damages?
the
answer
question:
to
that
question
is
yes,
is that belief reasonable?
we
turn
to
the
If
second
Here, Dr. Sutton denies
believing that the records request would lead to a claim for
damages.
Accordingly, we never get past the first step. 1
As
such, I would hold that Dr. Sutton failed to comply with the
1
The word “reasonably” modifies the phrase “believes will
result in a claim for damages.”
Because Dr. Sutton never had
any such belief we need not consider whether her non-existent
belief is reasonable.
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notice requirements in the MedPro policy, and so MedPro does not
owe her any coverage.
Courts
language
that
have
interpreted
repeatedly
apply
subjective/objective inquiry.
similar
a
insurance
similar
policy
two-step
See Owatonna Clinic-Mayo Health
Sys. v. Med. Protective Co. of Fort Wayne, Ind., No. CIV. 08417DSDJJK, 2009 WL 2215002, at *5 (D. Minn. July 22, 2009), as
amended (Aug. 10, 2009), aff’d in part, 639 F.3d 806 (8th Cir.
2011) (holding that a MedPro policy conditioning coverage on
receipt of notice of an incident which the insured “reasonably
believes allegations of liability may result” requires both “an
objective and subjective” analysis); Darwin Nat’l Assurance Co.
v. Matthews & Megna LLC, 36 F. Supp. 3d 636, 653-54 (D.S.C.
2014)
(applying
a
analyzing
so-called
contracts,
which
hybrid
“prior
exclude
subjective/objective
knowledge”
coverage
provisions
for
standard
in
in
insurance
unreported
incidents
predating the policy period which the insured knew or should
reasonably have known would give rise to a claim); Greenwich
Ins. Co. v. Garrell, No. 4:11-CV-02743-RBH, 2013 WL 869602, at
*7 (D.S.C. Mar. 7, 2013) (citing Seiko v. Home Ins. Co., 139
F.3d 146, 152 (3rd Cir. 1998)) (same). 2
2
Cf. Am. Cont’l Ins. Co. v. Phico Ins. Co., 512 S.E.2d
490, 493 (N.C. Ct. App. 1999) (“The policy sets up a subjective
standard . . . under which a claim is deemed filed if the
(Continued)
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Yet the majority concludes the MedPro policy calls for an
“objective,
not
subjective,
standard.”
Maj.
Op.
at
15.
According to the majority, the “proper inquiry” is “whether a
reasonable person in Dr. Sutton’s shoes” would have believed
that the medical records request “described an incident that
would result in a claim for damages.”
is not what the policy says.
Maj. Op. 15-16.
But that
Rather, the policy plainly states
that Dr. Sutton’s reasonable belief controls.
Simply put, the
majority is not free to rewrite the definition of a “potential
claim” by swapping the phrase “what a reasonable person in Dr.
Sutton’s
shoes
believes”
reasonably believes.”
for
the
phrase
“what
the
Insured
See, e.g., Torrington Co. v. Aetna Cas. &
Sur. Co., 216 S.E.2d 547, 550 (S.C. 1975) (“[P]arties have a
right to make their own contract and it is not the function of
this Court to rewrite it or torture the meaning of a policy to
extend coverage never intended by the parties.”).
The majority only musters two cases purportedly supporting
its conclusion that the phrase “reasonably believes” means an
objective analysis applies: In re Anonymous Member of the South
Carolina Bar, 432 S.E.2d 467 (S.C. 1993), and Hook v. Rothstein,
insured reasonably believes that an express demand for damages
will be forthcoming.
Therefore, we must view Ms. Chapman’s
actions to determine whether she . . . had a reasonable belief
that a suit would be filed in the Watson case.”).
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316 S.E.2d 690 (S.C. Ct. App. 1984).
inapposite.
In my view, both are
Neither addresses contract law, much less language
in insurance policies similar to the language at issue here.
And both are distinguishable on their facts.
In In re Anonymous Member of the South Carolina Bar, the
court
addressed
Rule
Professional Conduct.
1.7
of
the
South
Carolina
Rules
of
That Rule states that “a lawyer shall not
represent a client if the representation of that client will be
directly adverse to another client, unless the lawyer reasonably
believes
the
representation
will
not
relationship with the other client.”
adversely
affect
the
432 S.E.2d at 468.
The
court concluded this Rule sets up an objective standard.
But
the court did not do so, as the majority implies, because the
phrase
“reasonably
analysis.
believes”
per
se
requires
an
objective
Rather, it did so only because the comment to that
Rule expressly states that conflicts governed by the Rule are to
be measured under the view of a “disinterested lawyer.”
See id.
In
that
a
of
a
contrast,
potential
nothing
claim
in
should
the
be
MedPro
measured
policy
under
states
the
view
“disinterested insured” – rather, the policy is clear that the
view of “the Insured,” Dr. Sutton, controls.
Hook
v.
Rothstein
is
similarly
inapposite.
That
case
establishes that whether a physician departed from a standard of
reasonable medical care in a lack-of-informed-consent action is
44
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evaluated
Filed: 06/08/2015
under
the
same
Pg: 45 of 50
objective
medical malpractice actions.
standard
applicable
316 S.E.2d at 703.
to
Standards for
medical malpractice and lack-of-informed-consent actions have no
bearing
on
the
meaning
of
a
“potential
claim”
as
expressly
to
interpret
identical contractual language in a published opinion.
Contrary
defined in MedPro’s policy.
Admittedly,
to
the
South
majority’s
Carolina
assertion,
courts
however,
have
I
would apply a purely objective standard.
do
yet
not
believe
they
The plain language of
the policy states that Dr. Sutton’s reasonable belief controls –
not,
as
the
majority
concludes,
person in Dr. Sutton’s shoes.”
enforce
insurance
contracts
the
belief
of
“a
reasonable
Because South Carolina courts
according
to
their
plain
terms,
Bell, 757 S.E.2d at 406, I am confident they would join courts
in other jurisdictions considering similar language and apply a
two-part subjective/objective analysis.
The district court also appeared to recognize that the twostep inquiry applies in some instances.
In fact, it applied an
analogous inquiry in analyzing FirstPro’s claim that Exclusion
11(a)
in
its
policy
precluded
coverage.
J.A.
116.
That
exclusion states that FirstPro will not defend or pay for any
injury
or
effective
damages
date
if
arising
Dr.
out
Sutton
of
“knew
claims
or
could
made
have
before
the
reasonably
foreseen from the facts, reasonable inferences or circumstances
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that a claim might be made.”
acknowledged,
this
Yet
the
subjective
language
in
believe[d]”
was
MedPro’s
that
contains
As the district court
“both
a
subjective
and
J.A. 116.
district
belief
J.A. 647.
language
objective element.”
Pg: 46 of 50
an
court
concluded
entirely
policy,
incident
irrelevant
that
Dr.
under
i.e.
whether
would
“result
the
she
in
Sutton’s
similar
“reasonably
a
claim
for
damages”:
Well, she might not have a reasonable belief of a
lawsuit, I understand your argument there, but the
purpose of the notice provision is to protect, to
bring it to your attention so you can do the
investigation during the policy period.
And now you
want to turn it into some, Oh, no, if there is not a
subjective belief by the insured that she’s going to
get sued, then we don’t have to do it. I’m sorry.
J.A. 108.
In doing so, the court – like the majority – ignored
the plain language of MedPro’s policy and instead rewrote it to
reflect its purported “purpose.”
not
write
contracts
of
Because courts “must enforce,
insurance,”
Bell,
757
S.E.2d
at
406
(quotation omitted), the district court erred as a matter of
law.
Accordingly, I would reverse.
III.
Even assuming an objective standard applies as the majority
contends,
here.
nothing
suggests
that
this
standard
was
satisfied
As an initial matter, the district court never applied an
46
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objective
Filed: 06/08/2015
standard.
Rather,
Pg: 47 of 50
it
concluded
that
the
notice
provision was satisfied because MedPro – not Dr. Sutton – would
have considered the medical records request to be a “potential
claim.”
J.A. 102-10, 136, 390. 3
In doing so, the district court
rewrote the policy’s definition of a “potential claim” to read
“an incident which MedPro reasonably believes will result in a
claim for damages.”
Again, the court was not free to rewrite
the policy in this way.
See Hutchinson v. Liberty Life Ins.
Co., 743 S.E.2d 827, 829 (S.C. 2013) (stating that courts can
interpret, but not rewrite, provisions in insurance policies).
The district court relied on Owatonna Clinic-Mayo Health
Sys. v. Medical Protective Co., 639 F.3d 806 (8th Cir. 2011) for
this point.
Owatonna,
similar
analysis.
See J.A. 136.
the
district
notice
court
language
But that case is inapposite.
held
that
required
2009 WL 2215002, at *5.
a
a
MedPro
policy
In
with
subjective-objective
The district court granted
summary judgment as to the objective component, and held a trial
on the subjective component.
967 (D. Minn. 2010).
Id.; see also 714 F. Supp. 2d 966,
MedPro appealed only the district court’s
3
Similarly, the court concluded that after Dr. Sutton
reported the medical records request to MedPro, MedPro was then
responsible for investigating whether the request amounted to a
potential claim triggering coverage, regardless of Dr. Sutton’s
subjective belief that it would not lead to a claim. J.A. 136.
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ruling on the objective component, but did not appeal the jury’s
findings as to the subjective component. 4
The Eighth Circuit rejected MedPro’s assertions, concluding
that the insured’s belief that it would be sued was objectively
reasonable.
establishes
639 F.3d at 813.
that
the
district
At a minimum then, Owatonna
court
should
have
objective analysis here (which it failed to do).
Circuit
because MedPro did not raise that issue on appeal. 5
As such,
not
to
support
address
the
the
And the Eighth
component
does
declined
an
subjective
Owatonna
only
applied
district
court’s
decision
to
ignore the subjective inquiry required by the plain language of
the MedPro policy (and indeed the objective inquiry as well).
Finally, there is little, if any, evidence in the record
that a reasonable physician would have believed that the medical
4
MedPro also made an additional argument on appeal: that
the insured’s notice failed to literally comply with the
requirements of the notice provision because it did not include
any names, addresses, or other details required by the policy.
639 F.3d at 811-13.
The Eighth Circuit disagreed, concluding
that the insured’s notice provided sufficient facts to put
MedPro on notice of a claim under Minnesota law. Id. at 812-13.
The district court here appears to have relied on this portion
of the Eighth Circuit’s analysis (see J.A. 136), while
overlooking the portion of the Eighth Circuit’s opinion
analyzing whether the insured’s belief that a claim would be
filed was objectively reasonable.
5
639 F.3d at 810-11 (“In our case . . . the only issue on
which there was a trial was the matter of the [Insured’s]
subjective belief, as to which there was no doubt as to the
sufficiency of the evidence, and as to which, more relevantly,
there is no issue raised on appeal.”).
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records request would result in a claim for damages.
the
district
court’s
findings
in
the
related
In fact,
context
of
FirstPro’s Exclusion 11(a) suggest just the opposite: that a
reasonable physician would not have believed the request would
result in a claim.
For example, in denying FirstPro’s motion
for summary judgment, the district court found that the “record
evidence suggests that a reasonable physician would not view a
request for records by an attorney as a definite sign of an
impending claim.”
J.A. 139.
And at trial, the court denied Dr.
Sutton’s motion for a directed verdict as to this Exclusion,
finding that additional evidence was needed as to whether Dr.
Sutton’s
belief
was
objectively
reasonable.
J.A.
260-62.
Ultimately, the court determined a different exclusion applied
as
to
FirstPro,
and
thus
never
decided
whether
Dr.
Sutton’s
belief was objectively reasonable under Exclusion 11(a).
The
court’s comments, however, suggest that this was a much closer
issue
than
the
majority
suggests.
See,
e.g.,
J.A.
363
(inquiring why there was “no evidence [as to] what a reasonable
physician would have” believed).
Moreover,
for
medical
unrebutted
records
testimony
typically
do
established
not
give
that
rise
requests
to
medical
malpractice claims, but rather arise in other contexts, such as
worker’s compensation claims or personal injury lawsuits.
104;
208-09.
Thus,
as
I
read
49
the
record,
equally
J.A.
strong
Appeal: 13-1721
Doc: 55
evidence
exists
Filed: 06/08/2015
that
a
Pg: 50 of 50
reasonable
physician
would
not
have
viewed the medical records request as a first step to a medical
malpractice
action.
In
any
event,
undertook this fact-intensive inquiry.
the
district
court
never
Accordingly, assuming an
objective standard applies as the majority contends, I would
remand
to
the
district
court
to
decide
whether
Dr.
Sutton’s
belief was objectively reasonable in the first instance.
IV.
For the above reasons, I respectfully dissent from Part
II(a) of the majority opinion.
50
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