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."'

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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 (1939»). 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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