Interstate Fire and Casualty Company v. Dimensions Assurance Ltd.
Filing
70
MEMORANDUM OPINION. Signed by Judge George Jarrod Hazel on 7/21/2017. (tds, Deputy Clerk)
IN THE UNITE I>STATES DISTRICT COURT
FOR THE J)JSTRICT OF MARYLANI>
Southern D;I';s;o/l
INTERSTATE FIRE ANI>
CASUALTY COMPANY,
"".
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r
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Plaintiff,
v.
Case No.: G,J11-13-3908
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DIMENSIONS ASSURANCE LTD.,
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Defendant.
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MEMORANDUM OI'INION
Plaintiff
equitable
Interstate
contribution
("Dimcnsions"
Fire and Casualty Company
and dcclaratory
or "DAL")
following
grant cd summary judgmcnt
Court of Appeals
Prcsently
1961.
an insurance
alternative
Cross-Motion
dispute.
ECF No. 43. On appeal. thc United Statcs
rencwed Cross-Motion
for Summary
Judgment.
to this Court f(l!'
Requcst for Entry of
for Summary
with post-judgmcnt
Judgmcnt.
ECF No. 53. Thc Court
is granted. and the cross-motions
is now cntered against Dimcnsions
Ltd.
ECF No. I. Thc Court previously
See Loc. R. 105.6 (D. Md. 2016). For thc lollowing
Rcquest for Entry ofJudgmcnt
$3.591.847.28.
Assurancc
pending before the Court is Interstatc's
ECF No. 51. Intcrstate's
held a hearing on July 14.2017.
Judgment
Dimensions
in favor of Dimcnsions.
ECF No. 56. and Dimcnsions'
Interstate's
lilcd this suit 1(lr
for the Fourth Circuit vacated the opinion and rcmanded
1(lrther proccedings.
Judgment.
or "I FCC')
against Defendant
judgmcnt
("Interstate"
reasons.
are denicd as moot.
and in favor of Interstatc in thc total amount of
interest to accrue at thc statutory
ratc pursuant to 28 U.S.c.
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I.
BACKGROUND
A. Factual Background
Thc 1~ICts f this casc wcre fully set lorth in the Court's previous Opinion. ECF No. 43 at
o
1
1-5. In 2012. a patient at Laurel Regional Ilospital (the "Hospital") brought a mcdieal
malpracticc action against the Hospital and several physicians and nurscs who workcd at thc
Hospital. See ECF No. 25-6. One of thc nurscs namcd in thc action. Nurse Crycr. was working at
thc Ilospitalunder
a StafIing Agrecmcnt betwecn her cmploycr. Favoritc Hcalthcarc StafIing.
Inc. ("FilS" or "thc Agency"). and the Hospital. See ill. at 15. Plaintiff Intcrstate provided a
professional liability insurance policy to the Agency. covcring doctors and nurses who were
cmployed by the Agency but placed in various medical ccnters. See ECF No. 25-11. Thc
Interstatc policy stated that "[i]fthere is other valid insuranec (whether primary. cxccss.
contingent. or self~insuranee) which may apply against a loss or claim covered by this policy. the
insurance provided hereunder shall be deemed excess insurance over and above thc applicablc
limit of all other insurance or selt~insuranee:' III. at 11.
Defendant Dimensions provided liability protection to the Hospital through a
rcimbursemcnt agreement (the "Policy" or "Rcimbursement AgreemenC). which 10rms thc basis
Ill[ the dispute in this action. See ECF No. 25-10. The Dimcnsions Policy artlmls covcragc Illl'
the Hospital and other persons or entities that meet the Policy's dcfinition of"protectcd
pcrsons:'
See id Although sometimes rclCrred to jointly as thc Rcimbursemcnt Agrccmcnt. thc Policy
actually consists ofthrcc scparatc rcimbursemcnt agrcemcnts delineatcd as (A) "Gcncral
Liability:' (B) "HospitaIProlessional
at 2-3. Thc IlospitalProlessional
L.iability:' and (C) "Group Professional Liability:' See ill.
Liability agreemcnt. at issuc herc. statcs in relcvant part that
I Pin cites to documents tiled ollihe Court"s electronic tiling system (CM/ECF)
by that system.
2
refer to the page numbers generated
"[The Hospital's]
proteeted
present and fimner employees.
students. and authorized
volunteer
workers are
persons while working or when they did work for you within the scope of their duties'"
It!. at 31. Similar to the Interstate policy. the Dimensions
valid and collectible
this agreement
payment."'
sources of payment
Policy states that "[i]fthere
are other
tiJr injury or damage covered by this agreemcnt.
will be excess reimbursement
over any part of any other reimbursement
but limits the excess function to three specific circumstances
then
or
that were not applicable
here. Id at 362
When the underlying
Nurse Cryer. claiming
"employee"
medical malpractice
that. as an Agency-placed
of the Ilospitai.
practitioner.
tiJr equitable
contribution
was therefore
obligated
settlement.
and declaratory
Cryer should have been covered under the Dimensions
Dimensions
Nurse Cryer was not an
settling the case for $2.5 million and incurring $465.044.96
tees and costs. See ECF No. 26-1 at 2. Following
against Dimensions
refused to indemnify
See ECF No. 32-1 at 9. Interstate thus undertook to delend Nurse
Cryer in the lawsuit. ultimately
defense
action arose. Dimensions
to reimburse
Interstate brought suit
judgment.
arguing that Nurse
Policy as a "protected
Interstate
in
person."' and
fiJr the full amount Interstate had
paid to litigate and settle the lawsuit. ECF No. I at 10-11.
B. Procedural Background
The parties filed cross motions
argued that the Dimensions
Policy unambiguously
Nurse Cryer as an "employee."'
.1
tiJr summary judgment.
and provided
ECF Nos. 26 and 34. Interstate
provided professional
primary "other insurance."'
liability coverage to
regardless
of whether
Unlike Interstate's morc expansive "other insurance" limitation. Dimensions' reimbursement scheme nctcd as
"excess reimbursement" only when the "other reimbursement or payment"' provides (I) "propcl1y or other similar
compensation for damage to your \vork:" (2) "compensation for fire damage:' or (3) reimbursement for damage
resulting. from the use of certain auto. aircraft or \I,!alcrcran. See ECF No. 25- I 0 at 36. Dimensions has nol pursued
the argulllent that any of these circumstances applied here. or that its Policy was otherwise not the primary coverage
for Nurse Cryer.
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the Policy was characterized as a reimbursement agreement or otherwise. ECF No. 26.
Dimensions countered that Nurse Cryer was not an employee ofthc Hospital as a matter of law.
and that the agreemcnt betwcen the Hospital and Dimcnsions was not an insurance policy. but a
"reimbursemcnt agrccment."" ECF No. 34. llence. Dimensions claimed that undcr this agreemcnt.
reimburscmcnt paymcnts werc to bc made to the Ilospitai. and only f(lI"
expenses incurred or
approved by the Hospital. Ill. at 19. Because the Hospital had declined to defend Nurse Cryer.
Dimcnsions argued. therc wcre no expenses to be reimbursed. Id at 22. This Court granted
summary judgmcnt in favor of Dimcnsions. holding that the Rcimburscment Agreemcnt with thc
Hospital did not cover Nursc Cryer. because she was not an cmploycc of the Hospital as a mattcr
of law. See ECF No. 43.
On appcal. the Fourth Circuit held that thc tcrm "employcc" ineludcd workcrs who
qualificd as employees undcr the "right-to-control"' tcst. which cncompasscd Nursc Crycr. ECF
No. 51 at 19-20. and Dimcnsions thereforc had "an indepcndcnt obligation to providc covcragc
to those workers:' ill. at 35. Thc Fourth Circuit further found that the Staffing Agrcement
bctwecn the Hospital and the FHS Agency. to which ncither Interstate. Dimensions. nor Nurse
Crycr wcrc partics. did not control whethcr Nurse Cryer was covcrcd undcr thc Dimcnsions
Policy. See ill. at 21-30. Accordingly. the Fourth Circuit stated that "[wJhether or not thc
Ilospital intendcd to providc insurancc for Agcncy-providcd cmployecs. Dimcnsions. by virtuc
of the policy that it issucd. has an independent obligation to insure Cryer as an additional
insurcd:' Id at 30 (intcrnal citations omitted). Thus. this Court's summary judgment dccision
was vacatcd. and thc casc was remandcd.
Interstatc has now filed a Rcqucst l(lI"Entry of Judgmcnt. and altcrnatively. rcncws its
motion f(lr summary judgmcnt. ECF Nos. 51 and 56. Dimcnsions opposes Intcrstatc's Rcquest
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and also renews its motion for summary judgment. arguing that ..[n leither this Court nor the U.S.
Court of Appeals for the Fourth Circuit has addressed the issue of how much. ifany.must
be
paid to Nurse Cryer or Interstate under the terms of the Reimbursement Agreemcnt." ECl' No.
53 at I. Dimensions assel1s that they are only obligated to reimburse the Ilospital under the
Reimbursement Agreement. and therefore have no obligation to make any payment since the
Hospital neither authorized nor made a payment regarding the claims against Nurse Crycr. Id at
3. The Court disagrees.
II.
ANALYSIS
The mandate rule is the "more powerful version of the law of the case doctrine:' Doe
Chao. 511 l'.3d 46 L 465 (4th Cir. 2007) (citing Inl'eJ71ion Suhll/ission
I',
Clup. \'. Dut/as. 413 l'Jd
411. 414 (4th Cir. 2005)). "Few legal precepts are as Iirmly established as the doctrine that the
mandate ofa higher court is 'controlling as to matters within its compass .... Id (quoting "iJl'l/gue
I'.
Timnic
Nal '/ flank. 307 U.S. 161. 168 (1939ยป). The mandate rule "does not simply preclude a
district court
11'0111
doing what an appellate court has expressly I(lrbidden it li'om doing:' S. All.
Ltd P'ship o{Tennessee.
LP \'. Riese. 356 FJd 576. 584 (4th Cir. 2004). It "compels compliance
on remand with the dictates of a superior court and !(lrecloses relitigation of issues expressly or
impliedly decided by the appellate court:' Vo/\'o hat/ell/ark
Iloiding Aklieho/agel
\'. Clark
Mach. Co .. 510 l'.3d 474. 481 (4th Cir. 2007). The Court must. "except in rare circumstances.
implement both thc letter and the spirit of the mandate:' considering both the appellate court's
opinion and ..the circumstances it embraces:' S. All. Ltd I' 'ship. 356 l'.3d at 584 (4th eir. 2004)
(internal citations omitted). "rAJ remand proceeding is not the occasion I(lr raising new
arguments or legal theories:'
Vol\'{) 7i'at/ell/ark. 510 F.3d at 481. The rule also "I()rccloses
litigation of issues decided by the district court but foregone on appeal or otherwise waived. I()r
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example because thcy werc not raised in the district court," Uniled Slales \', Bell. 5 I'.3d 64, 66
(4th Cir. 1993).
Here, the Fourth Circuit held that "Dimcnsions. by virtuc of the policy that it issucd, has
an 'independcnt obligation to ensurc [Cryer] as an additional insurcd," ECF No. 51 at 30. Thc
Fourth Circuit reasoncd that "[b]ccausc the cvidence contained in the record cstablishcs that
Nurse Cryer is thc Hospital's cmployce under the right-to-control and borrowcd-scrvant
standards, she is a 'protcctcd pcrson' who qualities for coverage under thc professional liability
portion of thc Dimcnsions Policy," ECF No. 51 at 36. On remand, thc Court is obligatcd to
implement not only the Ictter ofthc appellate court mandate, but its spirit as wcll. See S All. Lid
l' 'ship. 356 F.3d at 584. However, because neithcr this Court nor the Fourth Circuit has
explicitly addressed the argument. Dimensions argues that the mandate rule does not apply to
their current assertion that the Policy only obligatcs Dimensions to reimburse the Hospital. which
has neithcr authorized nor made payments in this case.
In Dimcnsions' lirst Motion for Summary Judgmcnt betorc this Court. ECF No. 34.
Dimcnsions raiscd the argument that the agreement between thc Hospital and Dimcnsions is not
an insurancc policy but a "reimbursemcnt agreement," ECF No. 34 at 18. In so arguing,
Dimensions assert cd that "[iJt is clear that any reimbursement is to bc paid to the Ilospital and
only the Ilospital," and that "reimbursement payments are to be ...
only fiJr expcnses incurred
or approved by thc Ilospital." III. at 19. Because this Court rulcd in Dimcnsions' Itl\'or based on
its detemlination that Nurse Cryer was not a covered employee under the Policy, it did not reach
the secondary question of whether the reimbursement agreement was actually "an insurance
policy," Interstatc then appealcd thc Court's dccision to the Fourth Circuit, and addrcssed this
argument again in its appcllatc brief: stating that .'[tJhe Dimensions Policy providcs primary
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'other insurance' regardless of whether it can be characterized as la] reimbursement policy:' and
that "although the insured technically may be required to make the initial payment to scttle a
claim or satisfy a judgment. Dimensions is ultimately relluired by the terms of its policy to
reimburse the insured for this payment:' Doc. 113 at 66 (emphasis in original). In Dimensions'
appellate brief: Dimensions focused nearly exclusively on the issue of whether
urse Cryer was
a covered employee under the Policy. but also dedicated a lengthy tiJotnote to its arguments
regarding its characterization of the reimbursement agreement:
Dimensions eontinues to hold that the Reimbursement Agreement
is a funding agreement and not an insurance policy ....
This is
rellected by the reimbursement language relating who is to be
reimbursed. It is clear that any reimbursement is to be paid to the
Hospital and only the Hospital. and in the casc of expenselsl
incurred by other protected persons. only those expenses incurred
and authorized by the Hospital. ...
Doc. 18 at 8.
It follows. there lore. that the Fourth Circuit had these arguments before it in rendering
judgment. and. in that context. the Fourth Circuit's decision used broad language. unequi\'oeally
stating that Dimensions "has an independent obligation to provide coverage" to Nurse Cryer.
ECF No. 51 at 30. 35: see also ill. at 16 ("[W]e still conclude that the [Dimensions] Policy
provides coverage liJr the claims asserted against Nurse Cryer."). Moreover. the argument that
the Reimbursement Agreement was not actually an insurance policy was. at the very least.
implicitly Ii.lreclosed by the plain language of the Fourth Circuit opinion. See ECF No. 51 at
<)
("Appellee Dimensions Assurance Ltd.. an insurance company wholly owned by the company
that owns thc I lospital. issued the Ilospital the liability insurance I'0lily (the "Policy") at issue in
.' Documents on the appellate record are cited herein as "Doc:" and reference Appeal No. 15-180 I. See /mer.'ilafl!
{-"ire& Cas. Co. \'. Diml!f1.\";oIlS Assurance Ltd. 843 F.3d 133. 136 (4th Cir. 2016). Pin dies to these doculllents refer
to the page numbers generated by the U.S. Court of Appeals for the Fourth Circuit electronic tiling system.
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this case.") (emphasis
dctermincd
that the Ilospital
was obligated
while the Fourth Circuit may not havc cxprcssly
was not rcquired to makc or authorizc
paymcnt
to pay for Nurse Cryer. thc Fourth Circuit did so by ncccssary
under thc mandatc
cxpcnscs
added). Thercfore.
rule. this Court linds that Dimcnsions
is obligatcd
bcfore Dimcnsions
implication.~
Thus.
to pay 1(11" thc undcrlying
in this casco
Evcn if it could be argucd that thc mandatc of thc Fourth Circuit dircctcd this Court to
reopcn and rc-asscss
whcthcr thc "othcr rcquiremcnts"
thcy wcrc. "In Maryland
contracts
gcncrally:'
Dimcnsions
protccted
insurancc
Co//ia
1".
of thc Policy wcrc satislicd.
policics ordinarily
are construcd
MD-ll1di,'idua/l'roclice
Policy clcarly provides
11.1'.1"/1,
profcssional
injury occurring
whilc this agreement
Dimensions
argues that the use of the word "you" -
party having a right to reimbursement
in thc samc man ncr as
Il1c 3"27 Md. J. 5 (199"2). Thc
..
that "we agrcc that we will reimbursc
pcrson is Icgally required to pay as damages
because the Hospital did not "authorize"
obligated
you I()r amounts any
for covercd claims or suits rcsulting
li'om
is in effect." ECF No. "25-10 at "28.
as in the Hospital -
is the Ilospitai.
contends.
it is c1car that
means that the only
ECF No. 53-1 at 3-4. Thus. Dimcnsions
a paymcnt to Nursc Crycr. Dimensions
to insure Nurse Cryer.
Such a reading dclies thc plain language of the Policy. The Dimensions
disburse
protcctcd
funds lor any amounts
a protected
mcdicalmalpractice
Policy agrecs to
pcrson is Icgally rcquircd to pay. Nursc Crycr. a
pcrson. was legally rcquircd to pay the cost of scttlcmcnt
thc undcrlying
is not
action. Dimcnsions'
insistence
and associated
that paymcnts
defensc fccs in
"must lirst bc
Dimensiolls highlights the portion of the Fourth Circuit opinion stating that. "ifthe other requirements or tile
Policy are satisfied. the claims asscI1cdagainst Nurse Cryer in the Underlying Action HIli within the st.'opeof the
professional-liability
section of the Policy." EeF No. 51 at 7. Dimensions argues that this statement indicates that
the Fourth Circuit was leaving it f{Jrthis Court to determine whether .'the other requirements of the Policy aTC
.J
satisfied:' But the vcry next sentence in the Fourth Circuit"s opinion reads, ..Itlhc qucstion thcn, is whether Crycr
qualifies as a protected person under that section of the Policy:' hI., indicating that was the remaining questioll.
which thi.' Fourth Circuit has now answered.
approved
by .. the Hospital is a misleading.
language.
While the Policy provides
settlement
of claims. and Dimensions
ifnot inaceurate.
that Dimensions
..agreelsl
interpretation
..will not directly pay .. for the defense or
to reimburse
you for expenses authorizcd
you .. ECF No. 25-10 at 29. nowhere does thc Policy bestow the unilateral
Ilospitalto
approve or rejeet reimbursement
required to pay. Moreover.
that coverage
authority
at thc motions hearing. Dimensions
of Nurse Cryer was initially not authorized
all but conceded
by
upon the
of amounts a protected person is otherwise
believe Nurse Cryer to be a covered employee
determined
of the contractual
legally
that the reason
was because Dimensions
did not
under the Policy.; As the Fourth Circuit has
that Nurse Cryer is a covered employee
as a matter of law. that effectively
ends the
IIlqUlry.
In support of its Motion for Summary
underlying
Judgment.
Interstate submitted
was $2.5 million. and that assoeiated
settlement
evidence
defense fees and costs were
$465.044.96. See ECF No. 26-1 at 1-260. Interstate also requests pre-judgment
amount of $626.802.32 and post-judgment
the day this Court enters judgment
Dimensions
response
judgment
to Intcrstatc.s
until judgment
01'$3.591.847.28 -
of the settlement
Motion for Entry of Judgment.
represcnting
Dimensions
rate. pursuant to 28 U.s.c.
interest -
agreement
Interstate.s
Eel' No. 51 at 2.
or the costs of the
claimed damages
in
Having now ruled on the issue of liability.
and in lilvor of Interstate in the total amount
the $2.500.000 settlement.
costs. and $626.802.32 in pre-judgment
statutory
is satisfied by Dimensions.
stage. and has not disputed
is entered against Defendant
interest in the
interest to accrue at the rate of 0.8% per annum from
did not dispute the reasonableness
defense at the summary judgment
that the
$465.044.96 in dciense Ices and
with post-judgment
interest to accrue at the
~ 1961.
At the Illotions hearing. Dimensions also highlighted the Policy language "Isjubjecl to the limitations and
restrictions set f0l111 in this Agreement ... :" ECF No. 25-10 at 28. but was unable to actually identify additional
restrictions or grounds for denying coverage beyond what has oeen nddrcsscd in this casco
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III.
CONCLUSION
For the foregoing reasons. Interstate's Request for Entry of Judgment is granted. and the
cross-motions are denied as moot. A separate Order shall issue.
Date: Julv
1- {
.2017
GEORGE J. HAlEL
United States District Judge
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