Capson Physicians Insurance Company v. MMIC Insurance Inc

Filing 90

ORDER: Capson's motion to amend complaint, 56 granted. Amended complaint due by 25 February 2015. Dr. Hasik's motion to amend answer, 55 , granted on the counterclaims for breach of contract and declaratory judgment, denied on bad faith. Amended answer with counterclaims due by 25 February 2015. Crawford County Memorial Hospital's motion to intervene, 57 , granted as modified. Intervention is limited to the fee issue. Hospital's complaint due by 25 February 2015. Rays' motion to stay, 72 , denied. Joint report, 88 , noted and responded to. Dr. Hasik's motion to clarify, 89 , denied without prejudice to a joint report. Signed by Judge D. P. Marshall Jr. on 2/18/2015. (jak)

IN THE UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF ARKANSAS
JONESBORO DIVISION
CAPSON PHYSICIANS
INSURANCE COMPANY

v.

PLAINTIFF/
COUNTER DEFENDANT
No. 3:13-cv-157-DPM

MMIC INSURANCE INC.

DEFENDANT/
COUNTER CLAIMANT

MMIC INSURANCE INC.

THIRD PARTY PLAINTIFF

v.
DR. KARL J. HASIK; LILLIAN WILSON,
Individually and as Special Administratrix
for the Estate of J.A.W., deceased;
SAMANTHA RAY, Individually and
as next friend and guardian of A.L.R.,
a minor; DERECK RAY, Individually
and as next friend and guardian
of A.L.R., a minor;
and DOE, A.L.R., a minor
THIRD PARTY DEFENDANTS

ORDER
This case is tangled up and various motions need deciding.
1. Capson's motion to amend its complaint is granted. It's proposed

claims for rescission and about coverage run against Dr. Hasik, which Rule
14(a)(3) allows. Before it files its amended complaint, Capson should revise

its draft to show that the claims are against Dr. Hasik.
2. Dr. Hasik's motion to amend his answer is granted in part and
denied in part. He may assert counterclaims for breach and declaratory
judgment against MMIC. The Court, though, sees no adequate bad faith
claim. Popoalii v. Correctional Medical Services, 512 F.3d 488, 497 (8th Cir. 2008).
The choice-of-law issue is less than clear, but that doesn't make any real
difference. Ganey v. Kawasaki Motors Corp. USA, 366 Ark. 238, 251, 234 S.W. 3d
838, 847 (2006) (tort claims).
If Arkansas law applies, amendment would be futile because the

threshold of required affirmative misconduct is so high. State Auto Property &

Casualty Co. v. Swaim, 338 Ark. 49, 58, 991 S.W. 2d 555, 561 (1999) (collecting
Arkansas cases).
If Minnesota law applies, the claim fails in the circumstances presented.

MMIC didn't undertake Dr. Hasik' s defense and then abandon him. Compare

St. Paul Fire & Marine Ins. Co. v. A.P.L., Inc., 738 N.W. 2d 401, 407 (Minn. Ct.
App. 2007). Even a bad faith breach doesn't suffice. Morris v. America Family

Mutual Insurance Co., 386 N.W. 2d 233, 237 (Minn. 1986).
Thequestioniscloserunderlowalaw. Weitz Co., LLCv. LloydsofLondon,

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574 F.3d 885, 892 (8th Cir. 2009). But the Court concludes that Dr. Hasik's
conclusory allegations, as well as the particulars alleged about the Dr.
Hasik/Graziano and Dr. Hasik/Dr. Hofeldt conversations, NQ 55-2 at pp.
13-17, are simply too thinly pleaded to state a bad faith claim even under

Iowa law. A probing investigation and hatd ball aren't enough. Beyond those
things, Dr. Hasik pleads conclusions, not facts. Ashcroft v. Iqbal, 556 U.S. 662,
679 (2009).
3. Crawford County Memorial Hospital's motion to intervene is granted
as modified. Because MMIC wants to preserve and pursue potential
arguments that attorney's fees incurred on behalf of Dr. Hasik in defending
this case are not recoverable under Ark. Code. Ann. § 23-79-209 given that the
hospital is paying those fees, the hospital may intervene, either of right or
with permission, limited to the fee issue. FED. R. CIV. P. 24(a) & (b); Little Rock
School District v. North Little Rock School District, 378 F.3d 774, 780 (8th Cir.

2004). This will not derail the case because the hospital and Dr. Hasik share
counsel; and the hospital's interests and Dr. Hasik' s align except on the fee
issue, which will heat up later, or not, depending on the merits.
4. The Rays' motion to stay is denied. First, this coverage case is not

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parallel with the two state malpractice cases. Coverage will turn, as best this
Court can tell, on what Dr. Hasik knew (or should have known) about the
potential Ray and Wilson claims when he applied to be added to the
hospital's MMIC policy. Dr. Hasik' s patient conversations, and his
impressions about the likelihood of resulting claims, edge into standard-ofcare issues. But they do so at the margin. It's unlikely that any fact material
on the alleged malpractice will be found in resolving the coverage issues. The
Court has also protected the parties in the state cases. The Court has directed
all counsel to limittheir case-related questioning in the upcoming depositions
to coverage-related facts. And the Court has ordered the depositions of Dr.
Hasik and his wife to be taken under seal and not used beyond this case
without a prior Order from this Court. The application-related coverage
issues presented here will not be resolved in the malpractice cases; even if Dr.
Hasik wins both, who will pay the cost of defense would remain disputed;
and if he loses one or both, the indemnity issues would remain too. Deciding
the coverage issues will help, not hinder, the underlying cases-the parties
will know who has the duty to defend, and pay if need be, now. The decision
will clarify the Capson/MMIC/Dr. Hasik relationships, eliminating the

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coverage uncertainty clouding the state cases. Considering all the material
circumstances, Scottsdale Insurance Co. V. Detco Insustries, Inc., 426 F.3d 994,
996-99 (8th Cir. 2005), the Court declines to abstain.

5. Joint report, NQ 88, noted and appreciated. The Court applauds the
parties' progress on scheduling depositions. Settlements are favorites of the
law; and the Court looks forward to hearing if the mediation bears fruit. No
good cause appears, though, for modifying the scheduling Order again or
continuing the June trial date in this older case. The parties should schedule
the Capson and MMIC depositions accordingly.
6. Dr. Hasik's motion for clarification, NQ 89, which seems more like a
motion to reconsider, is denied without prejudice. The Court reminds Dr.
Hasik- and all parties-to follow the joint-report procedure on all discoveryrelated disputes. The report provides the Court each side's position (in its
own words) at the same time in brief compass. The report procedure is
helpful, fair, and efficient. Please use it.

*

*

*

Capson's motion to amend complaint, NQ 56, granted. Amended
complaint due by 25 February 2015. Dr. Hasik' s motion to amend answer, NQ

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55, granted on the counterclaims for breach of contract and declaratory

judgment, denied on bad faith. Amended answer with counterclaims due by
25 February 2015. Crawford County Memorial Hospital's motion to intervene,
NQ 57, granted as modified. Intervention is limited to the fee issue. Hospital's

complaint due by 25 February 2015. Rays' motion to stay, NQ 72, denied. Joint
report, NQ 88, noted and responded to. Dr. Hasik's motion to clarify, NQ 89,
denied without prejudice to a joint report.
So Ordered.

D.P. M~rshanfr.
United States District Judge

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