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)

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IN THE UNITE I>STATES DISTRICT COURT FOR THE J)JSTRICT OF MARYLANI> Southern D;I';s;o/l INTERSTATE FIRE ANI> CASUALTY COMPANY, "". - r * * Plaintiff, v. Case No.: G,J11-13-3908 * DIMENSIONS ASSURANCE LTD., * Defendant. * * * * * * * * * * * * * * 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. * 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. 3 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 4 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 5 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 6 '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. 7 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 5 9 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 10

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