American Medical Response Northwest, Inc. et al v. Ace American Insurance Company et al
Filing
245
OPINION and ORDER: Granting Motion for Reconsideration 217 . Signed on 7/10/2014 by Judge Robert E. Jones. (sss)
IN THE UNITED STATES DISTRICT COURT
DISTRICT OF OREGON
PORTLAND DIVISION
AMERICAN MEDICAL RESPONSE
NORTHWEST, INC., AMERICAN
MEDICAL RESPONSE, INC.,
Plaintiffs,
v.
ACE AMERICAN INSURANCE
COMPANY, NATIONAL UNION FIRE
INSURANCE COMP ANY OF
PITTSBURGH, PA,
Defendants.
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Case No. 3:09-cv-01196-JO
OPINION AND ORDER
JONES, J.:
I. Background
This action arises out of the defendant insurance companies' denial of coverage to
plaintiffs American Medical Response Northwest, Inc. and American Medical Response, Inc.
(collectively, "AMR") in connection with sixteen underlying state comi actions filed by thirdpaiiy plaintiffs against AMR and its employee Lannie Haszard. Some of the complaints in the
underlying actions alleged negligence, battery and Vulnerable Person Abuse, and some alleged
just one or two of those causes of action. One of the underlying cases went to trial and the jury
found AMR and AMR Northwest guilty on the negligence claim, awarding $1.75 million in
damages and AMR Northwest guilty on the Vulnerable Person Abuse claim, awarding $1.5
million in damages. Following that trial, AMR settled six of the suits. The remaining suits are
1 Opinion and Order
pending in Oregon state court. AMR brings this action against two insurers, defendants ACE
American Insurance Company ("ACE") and National Union Fire Insurance Company ("National
Union"), requesting declaratory relief for breach of insurance contract. In their motions for
summary judgment, defendants argued that the intentional act of sexual assault cannot qualify as
an "accident" or "occurrence" within the meaning of a general commercial liability policy.
National Union also contended that exclusions within its policies preclude coverage. I granted
summary judgment in favor of defendants based on their first argument and never reached the
exclusion issue. AMR appealed the summmy judgment ruling and the Ninth Circuit Court of
Appeals reversed and remanded, holding that AMR's negligent conduct in hiring, training, and
supervising Haszard was covered under defendants' policies as an "occurrence." The Ninth
Circuit Comt directed the district cou1t to look at the allegations in each of the underlying thirdparty complaints and the 1998 jury verdict to determine whether plaintiffs alleged covered
"occurrences."
Following the remand, I ruled that settlements in some of the underlying cases rendered
the alleged causes of action legally null (#204) and that the allegation of intentional battery in the
Whalen case was not a covered occurrence within the tenns of the defendants' insurance
policies. (#213) AMR filed a Motion for Reconsideration (#217) of those rulings. After AMR
filed its Motion for Reconsideration, I allowed additional briefing from the patties as to the
exclusions provisions and the issues raised in the Motion for Reconsideration. This opinion
addresses whether summary judgment is appropriate because an exclusion provision precludes
coverage as well as the settlement and battery issues raised in the Motion for Reconsideration.
II. Standards
2 Opinion and Order
Summary judgment should be granted ifthere are no genuine issues of material fact and
the moving party is entitled to judgment as a matter oflaw. Fed. R. Civ. P. 56(c). If the moving
pmty shows that there are no genuine issues of material fact, the non-moving patty must go
beyond the pleadings and designate facts showing an issue for trial. Celotex Cmp. v. Catrett,
477 U.S. 317, 322-23 (1986). A scintilla of evidence, or evidence that is merely colorable or not
significantly probative, does not present a genuine issue of material fact. United Steelworkers of
America v. Phelps Dodge, 865 F.2d 1539, 1542 (9th Cir. 1989).
The substantive law governing a claim dete1mines whether a fact is material. Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 248 (1986); see also T W. Elec. Service v. Pacific Elec.
Contractor§., 809 F.2d 626, 630 (9th Cir. 1987). Reasonable doubts as to the existence of a
material factual issue are resolved against the moving party. T W. Elec. Service, 809 F.2d at 631.
Inferences drawn from facts are viewed in the light most favorable to the non-moving patty. Id.
at 630-31.
Although the Federal Rules of Civil Procedure do not expressly authorize a motion for
reconsideration, "[a] district court has the inherent power to reconsider and modify its
interlocutory orders prior to the entry of judgment." Smith v..Massachusetts, 543 U.S. 462, 475
(2005).
III. Exclusions
Defendants assert their policies contain exclusions that preclude coverage for the
underlying claims: specifically, the Patient Injury Exclusion Endorsement and the Expected or
Intended Exclusion. Under both Colorado and Oregon law, insurers have the burden of proving
the applicability of exclusions. Stanfordv. Am. Guar. Life Ins. Co., 571P.2d909, 911 (Or.
1977);Am. FamilyAfut. Ins. Co. v. Johnson, 816 P.2d 952, 953 (Colo. 1991). In addition,
3 Opinion and Order
exclusions are nal1'owly construed against insurers. Stariford, 571 P.2d at 911; Johnson, 816
P.2d at 955 n. 1.
A. Patient Injury Exclusions
ACE contends it is entitled to summary judgment because its policy excludes coverage
for injury sustained from patient care. ACE's policy provides:
PATIENT CARE ENDORSEMENT
This insurance does not apply to any liability arising out of any INSURED's
providing or failing to provide any services of a professional nature to a
PATIENT.
PATIENT means any person who seeks any form of medical care provided by any
INSURED whether on an in-patient, outpatient or emergency basis.
Defendant ACE argues that its policies do not cover the claims because AMR's liabilities arise
out of the provision of emergency ambulance services to patients. ACE notes that AMR
dispatched an ambulance with Haszard, a licensed EMT, to respond to and treat the plaintiffs in
the underlying cases. Those plaintiffs sought medical care provided by AMR on an emergency
basis and therefore are patients within the te1ms of the endorsement. AMR counters that for
ACE's exclusion to apply, ACE must prove that the claims arose out of providing or failing to
provide any "services of a professional nature," and Haszard's sexual conduct was not a service
of a professional nature.
Colorado and Oregon courts' analyses of the term "professional services" start with
lY!arx v. Hartford Accident & lnden1. Co., 157 N.W.2d 870 (Neb. 1968). See, Noyes Supervision,
Inc. v. Canadian lndem. Co., 487 F.Supp. 433, 438 (D. Colo. 1980) (applying Colorado law)
(relying in part on 1'1/arx to determine the meaning of the term "professional services" in an
insurance contract); lY!ultnomah Cnty. v. Oregon Auto. Ins. Co., 470 P.2d 147 (Or. 1970). In
4 Opinion and Order
.Marx, the physician/plaintiff's employee mistakenly poured benzene instead of water into a
sterilization machine. The machine exploded causing extensive damage to the physician's
building. The court held that damage to the building was not covered by physician's medical
malpractice insurance that was obligated to pay for damages "[i]n rendering or failing to render
professional services," because the act that caused the damages "was not an act requiring any
professional knowledge or training." In ruling that the pouring of benzene into a machine was
not the rendering of professional services, the court reasoned that "[a] 'professional' act or
service is one arising out of a vocation, calling, occupation, or employment involving specialized
knowledge, labor or skill, and the labor, or skill involved is predominantly mental or intellectual,
rather than physical or manual." Jvfarx, 157 N.W.2d at 872.
In Oregon Auto., the couti agreed that the nature of the services being performed is
paramount to the status of the person providing the services. "In determining whether a
patiicular act ... is of a professional nature, the act ... itself must be looked to and not the title
or character of the patiy who performs or fails to perform the act." Oregon Auto., 470 P.2d at
150. In Hedmann v. Liberty Jvfut. Fire Ins. Co., 974 P.2d 755 (Or. Ct. App. 1999), the court
applied this principle in a duty to defend case, ruling that a physician who prescribed medication
to his non-patient girlfriend for the purpose of maintaining a sexual relationship with her was not
providing "professional services" and thus the insurance policy did not cover his actions.
Here, Haszard, a licensed EMT, allegedly sexually assaulted numerous patients in the
back of an AMR ambulance. Haszm·d' s alleged acts are determinative, not his status as an EMT
or the fact that he performed the acts in an ambulance. Sexual assault is not the rendering of
professional services. ACE has not proven that the Patient Care Endorsement in its policy applies
5 Opinion and Order
as a matter of law. Accordingly, the Patient Care Endorsement does not provide ACE with a
basis for summary judgment.
National Union contends it is entitled to summary judgment under a similar exclusion.
However, the Patient Injury Exclusion Endorsement in National Union's policy is different from
ACE's policy. Unlike Ace's exclusion, National Union's exclusion is not based on "the
provision of professional services." National Union's policy provides:
Patient Injury Exclusion Endorsement
Patient Injury
This insurance does not apply to Bodily Injury, Prope1iy Damage or Personal
Injury and Advertising Injury sustained by a Patient.
This exclusion, however, does not apply to Bodily Injury sustained by a Patient if
such Bodily Injury arises out fire or lightning, windstorm or hail, explosion, riot,
strike or civil commotion, collision or upset of an Auto or Mobile Equipment or
aircraft, sonic shock waves, smoke vandalism or malicious mischief, sprinkler
leakage, elevator malfunction, earthquake or flood, or collapse of building, being
dropped while in the care, custody or control of the Insured, or ownership,
maintenance or use of premises and all operations necessary or incidental thereto.
Patient means any person seeking or receiving, either on a inpatient, outpatient or
emergency basis, any form of medical, surgical, dental or nursing care, service or
treatment.
Defendant National Union contends this exclusion precludes coverage for any bodily
injmy sustained by a "patient" arising out of the misconduct ofHaszard. National Union argues
that all of the underlying claimants were "patients" as they all were seeking medical care, on an
emergency basis, while being transp01ied to the hospital. National Union notes that all of the
underlying complaints contain repeated references to "patients" and that AMR, in its answers to
the complaints, did not deny the allegations that the claims involved "patients." AMR responds
that the underlying plaintiffs were not "patients" at any time. AMR notes that comis have held
6 Opinion and Order
that sexual assault and inappropriate sexual touching are not "medical" care, service or
treatment, citing St. Paul Fire & Marine Ins. Co. v. Alderman, 455 S.E.2d 852 (Ga. App. 1995)
and R. W. v. Schrein, 652 N.W.2d 574 (Neb. 2002). However, in both of those cases, the
insurance policies exclusions were based on "the rendering or providing of professional
services," language not present in National Union's policy.
Policies containing language as to "the rendering or providing of professional services"
focus on the person who is providing the service and whether that service requires professional
expertise. The exclusion in National Union's policy is not based on this premise. National
Union's policy focuses instead on the person receiving the services. National Union's policy
states that the insurance does not apply "to bodily injury ... sustained by a patient." A patient is
defined as "any person seeking or receiving ... any foim of medical service or treatment." The
definition applies to those either seeking or receiving medical services. While I agree with AMR
that the sexual assault the plaintiffs allegedly received was not medical care, the policy exclusion
is not limited to persons receiving medical care. The exclusion also applies to those seeking
medical care. Every plaintiff in the underlying cases called AMR because they were seeking
medical services. Furthermore, each plaintiff entered the ambulance seeking medical service and
continued that pursuit the entire time they were in the ambulance. All of the plaintiffs in the
underlying cases were patients within the te1ms of the contract.
AMR argues that using National Union's definition of"patient" results in the evisceration
of coverage; denying coverage for any bodily injury to anyone transported by AMR leaves AMR
with no practical coverage for its main risk in a policy with a $1 million premium. The scope of
National Union's exclusion is not so broad. The exclusion contains seventeen exceptions, and
although none apply here, the exceptions cover substantial areas of liability that could arise in the
7 Opinion and Order
course of providing ambulance services, such as auto collision and patients being dropped. 1
AMR also contends that the plaintiffs in the underlying cases may have entered the ambulance as
patients, but their status changed during the course of their ambulance trip. In suppo1t of its
argument, AMR cites Levi v. Heckler, 736 F.2d 848 (2d Cir. 1984) and Westchester Sq. lv!ed.
Ctr. v. ITT Hartford Ins. Group, 239 A.D. 2d 297 (N.Y. App. 1997). In those cases, individuals
who had been patients in hospitals and who received medical care were discharged from the
hospital, either to go home or to a nursing home. In both cases, those individuals were no longer
deemed to be patients. Here, the individuals in the back of the ambulances were seeking medical
care the entire time. They had not been discharged. In fact, medical care was being provided to
them while they were en route to the hospital, in addition to the unwanted sexual assault. Their
status did not change during the course of their ambulance trip.
Both AMR and National Union cite Volk v. Ace American Ins. Co., 748 F.3d 827 (8th
Cir. 2014), which appears to be the only case where language similar to the language in National
Union's exclusion provision has been litigated. In Volk, a developmentally disabled child who
required a personal care assistant was blinded in his left eye by a BB gun given to him by the
assistant, an employee of North Country Home Care, Inc. Ace provided professional and general
liability insurance to N01th Country but denied coverage, citing the exclusion in the general
liability policy for: "Any loss, cost or expense arising out of 'bodily injury' to your patients."
Volk, 748 F.3d at 828. Unlike the policy at issue here, the te1m "patient" was not defined in the
policy in Volk. While the court in Volk looked elsewhere to define "patient," here the te1m is
expressly defined in the insurance policy as "any person seeking or receiving .. on a[n] ...
1
Plaintiff argues Haszard's actions qualify as malicious mischief, but 1nalicious mischief is a term of art that refers only to
property damage. See C.R.S.A. § 18-4-501 (2009); O.R.S. §§ 164.345, 164.354, 164.365 (2012). Malicious mischief is
synonymous with criminal mischief in Oregon and Colorado law. See. e.g., People v. Blizzard, 852 P.2d 418, 420 (Colo. 1993);
Herod v. Colorado Farm Bureau Mut. Ins. Co., 928 P.2d 834, 836 (Colo. Ct. App. 1996); Hatley v. Truck Ins. Exch., 494 P.2d
426, 427 (Or. 1972).
8 Opinion and Order
emergency basis, any form of medical ... service or treatment." As I discussed above, all of the
plaintiffs in the underlying cases fit that definition. Thus, National Union has proven as a matter
oflaw that the Patient Injury Exclusion precludes coverage. 2 Because there are no issues of
material fact and National Union is entitled to judgment as a matter of law, National Union's
Motion for Summary Judgment (#56) is granted.
B. Expected or Intended Exclusion
Defendants asse1i that the "Expected or Intended Exclusion" also precludes coverage.
Both defendants policies utilize similar language for this exclusion, so I address them
concun-ently. ACE's policy states:
SECTION II (EXCLUSIONS)
WHAT IS NOT COVERED BY THIS POLICY
This insurance does not apply:
J. To BODILY INJURY or PROPERTY DAMAGE expected or intended from the
standpoint of the INSURED; however this exclusion does not apply to BODILY INJURY
resulting from the use of reasonable force to protect persons or property.
National Union's policy states:
Section V.
K.
2
EXCLUSIONS
Expected or Intended Injury
Because I grant summary judgment on the Patient Injury Exclusion, I do not address the two other exclusions
National Union asserts bar coverage.
9 Opinion and Order
This insurance does not apply to Bodily Injury, Prope1ty Damage or Personal Injury and
Advertising Injury expected or intended from the standpoint of the Insured. However, this
exclusion does not apply to Bodily Injury or Prope1iy Damage resulting from the use of
reasonable force to protect persons or prope1iy.
Both policies bar coverage ifthe injury or damage was "expected or intended from the
standpoint of the insured." AMR is the insured in this case. There is no doubt that Haszard
himself "expected or intended" hmm. The question is whether AMR did.
Under both Oregon and Colorado law, the Expected or Intended Exclusion only applies if
the insured subjectively intended to cause hmm. Hecla Mining Co. v. NH Ins. Co., 811 P .2d
1083, 1088 (Colo. 1991); Allstate Ins. Co. v. Stone, 876 P.2d 313, 314 (Or. 1994). In Oregon, "it
is not sufficient that the insured's intentional, albeit unlawful, acts have resulted in unintended
hmm; the acts must have been committed for the pwpose of inflicting the injury and harm before
either a policy provision excluding intentional harm applies or the public policy against
insurability attaches." Ledfordv. Gutoski, 877 P.2d 80, 83 (Or. 1994) (emphasis added) (quoting
Nielsen v. St. Paul Cos., 583 P.2d 545, 547 (Or. 1978)).
In Colorado, the language "neither expected nor intended" is read to exclude only those
damages that the insured knew would flow directly and immediately from its intentional act.
Hecla }.fining, 811 P.2d at 1088. The Supreme Comt of Colorado held "what makes injuries or
damages expected or intended rather than accidental is the knowledge and intent of the insured.
It is not enough that an insured was wained that damages might ensue from its actions, or that,
once wamed, an insured decided to take a calculated risk and proceed as before. Recovery will
be baffed only if the insured intended the damages." Hecla }.fining, 811 P.2d at 1088 (quoting
10 Opinion and Order
Johnstown v. Bankers Standard Ins. Co., 877 F.2d 1146, 1150 (2d Cir. 1988)). Use of the te1m
"expected" "does not mean the damage was foreseen as possible ... the phrase 'expected or
intended' operates almost identically to an intentional act exclusion predicated solely on intent."
Fire Ins. Exch. & Farmers Ins. Exch. v. Pring-Wilson, 831 F. Supp. 2d 493, 506 (D. Mass. 2011)
(citing Hecla lvfining, 811 P.2d at 1087-88).
Thus, to prove that this exclusion applies under both Oregon and Colorado law,
defendants must show that AMR had the subjective intent to cause harm. In Oregon, comts
may only "infer that the insured had a subjective intent to cause hatm or injury as a matter of
law when such subjective intent is the only reasonable inference that may be drawn from the
insured's conduct." Allstate Ins. Co. v. Stone, 876 P.2d at 315 (emphasis added). Absent such
an inference, dete1mining the subjective intent of the insured is a question of fact. Allstate Ins.
Co. v. Stone, 876 P.2d at 314. In Colorado, to show that the insured had the subjective intent to
cause the alleged hatm defendants must show that "the insured desired to cause the
consequences of his act" or "'knew that they would flow directly and immediately from the
insured's intentional act' ... the damage must be practically certain." Fire Ins. Exch. & Farmers
Ins. Exch. V. Pring-Wilson, 831 F. Supp. 2d 493, 506 (D. Mass. 2011) (citing Hecla },;fining,
811 P.2d at 1087-88).
Under these standards, defendants have not established as a matter of law that AMR
subjectively expected or intended to harm any of the people injured by Haszard. The majority
of cases defendants cite establish the subjective intent of the assaulter, not the intent of the
assaulter's employer. See Cole v. State Farm Fire & Cas. Co., 25 Fed. App'x 791 (10th Cir.
2002); Lopez ex rel. Lopez v. American Family lvfut. Ins. Co., 148 P.3d 438 (Colo. App. 2006);
11 Opinion and Order
Nikolai v. Farmers Alliance lvfut. Ins. Co., 830 P.2d 1070 (Colo. App. 1991); Allstate Ins. Co. v.
Stone, 876 P.2d 313 (Or. 1994). Haszard's intent is not at issue, so these cases inelevant.
The only case defendants discuss that finds the employer to have the required subjective
intent is },;fountain States lvfut. Cas. Co. v. Hauser, 221 P.3d 56 (Colo. App. 2009). In Hauser,
the employer acted intentionally by willfully and wantonly allowing an employee to sexually
assault another employee. Hauser, 221 P.3d at 61. The Ninth Circuit has already distinguished
Hauser from the matter at hand. Am. i'vfed. Response Nw., Inc. v. ACE Am. Ins. Co., 526 F.
App'x 754, 756 (9th Cir. 2013). The insured employers in Hauser were the father and uncle of
the assaulter, and they knew that the assaulter had sexually abused other female employees.
Am. lv!ed. Response Nw, 526 F. App'x at 756. The insured was found guilty of intentional
conduct and the jury awarded damages against the insured because the insured "knew full well
what was potentially going to happen with [the supervisor] and the female employees and did
not care." Am. }.fed. Response Nw, 526 F. App'x at 756 (quoting Hauser, 221 P.3d at 58).
AMR did not know for a fact that Haszard had sexually assaulted women in the past, and
AMR has not been found guilty of intentional conduct. Haszard worked for AMR and its
predecessor from November 1991 to December 2007, and for fifteen years, Haszard showed no
indication of aberrant behavior. AMR first received a complaint of inappropriate physical
contact by Haszard in December 2006. They received a second complaint in March 2007.
AMR investigated both complaints, and found them to be unsubstantiated. The investigating
police officer found no tangible leads and no physical or forensic evidence to substantiate the
claim. As soon as AMR received a third complaint, they notified the police and accepted
Haszard's resignation.
12 Opinion and Order
Based on these facts, I conclude as a matter of law that AMR did not subjectively intend
or expect to cause harm. The defendants have not produced any evidence that AMR desired to
hurt the women Haszard allegedly assaulted. Moreover, defendants present no cases that support
their allegation that AMR's subjective intent to hmm these women can be infened. At best, the
two complaints in this case served as a warning to AMR, and they took a calculated risk by
continuing to employ Haszard. However, the Supreme Court of Colorado has held that intent
cannot be inferred from this type of conduct. Hecla Mining, 811 P.2d at 1088 (quoting
Johnstown v. Bankers Standard Ins. Co., 877 F.2d at 1150). Therefore, subjective intent cannot
be found as a matter oflaw under Colorado law.
Fmihe1more, more than one reasonable inference can be drawn from AMR's decision to
keep Haszard as an employee after the first two complaints. It is reasonable to infer that AMR
believed Haszard to be innocent of the alleged touching, since the claims were unsubstantiated
and Haszard worked for AMR for fifteen years without incident. Thus, subjective intent cannot
be found as a matter oflaw under Oregon law. Allstate Ins. Co. v. Stone, 876 P .2d at 315.
Therefore, I find that AMR did not subjectively expect or intend to harm any of the
women in this case and the exclusion cannot be applied.
IV. Settled Cases
AMR contends it is entitled to pursue coverage for the claims it settled and is entitled to
indemnification for the full amount of the settlements because all of the claims alleged in the
settled cases are "occmTences" and therefore covered. The duty to indemnify arises only when
the insurance policy actually covers the hmm. Nw. Pump & Equipment Co. v. American States
Ins. Co., 925 P.2d 1241, 1243 (Or. Ct. App. 1996) (en bane); Cyprus Amax lvlinerals Co. v.
Lexington Ins. Co., 74 P.3d 294, 301 (Colo. 2003). Thus, AMR is only entitled to
13 Opinion and Order
indemnification for the settlements based on claims covered by the defendants' policies. In
looking at the complaints of the six underlying actions that settled, all six alleged negligence and
battery. In addition, four of the six cases allege a violation of the VPA statute or its precursor the
Elder Abuse statute. Under the Ninth Circuit's mandate, the negligence claims are covered
occmTences. Am. Med Response Nw., 526 F. App'x at 755. However, as discussed below in
Section V, the battery claims are not covered occunences. The VPA claims may or may not be
covered occunences, depending on the outcome of a case that is pending in the Oregon Comi of
Appeals.
To what extent AMR may be indemnified for the settlements depends on the factual
bases for the settlements. The insurer's obligation to indemnify is "determined on the basis of
the ultimate facts ... that formed the basis for the settlement." Bresee Homes, Inc. v. Farmers
Ins. Exchange, 293 P.3d 1036, 1044 (Or. 2012). Whether the cases settled on the basis of
negligence, battery, VPA, or some combination of those allegations is a question of fact. These
ultimate facts must demonstrate a right to coverage. Nw. Pump, 925 P.2d at 1243. See also,
Cyprus Amax lY!inerals Co., 74 P.3d at 302 ("The dete1mination of whether a duty to indemnify
exists requires factual development. .. ")
AMR claims that defendants/insurers have the burden to prove any settlement amount is
not covered. Defendants counter that under Oregon law, the burden is on the plaintiffs/insured to
prove the basis for the settlement is a covered claim within the terms of the policy, citing an
unpublished opinion Clackamas Cnty. v. lvfidWest Employers Cas. Co., 2009 U.S. Dist. LEXIS
118195 (D. Or. Oct. 8, 2009), adopted by 2009 U.S. Dist. LEXIS 118205 (D. Or. Dec. 14, 2009).
While not authoritative, the reasoning in ivfidWest is instructive. Oregon courts have not
addressed which paiiy bears the burden of proof to app01iion a settlement that encompasses both
14 Opinion and Order
covered and non-covered claims. As a general matter, plaintiffs bear the burden to prove
damages in a breach of contract cause of action, see Davis v. Wilson, 493 P .2d 31 (Or. 1972), and
the burden is on the insured to allocate settlement between covered and non-covered claims. See
Raychem Corp. v. Federal Ins. Co., 853 F.Supp. 1170, 1176 (N.D.Cal.1994) (holding the insured
bears the primafacie burden to produce evidence that the settlement related to covered claims).
However, where the insurer behaved wrongfully, courts place the burden on the insurer to
allocate settlement between covered and non-covered claims. See lvJW Builders, Inc. v. Safeco
Ins. Co. ofAm., No. 02-1578, 2009 WL 995039, at *6 (D. Or. Apr. 9. 2009) (finding "clear
authority for concluding that under some circumstances it is appropriate that insurers shoulder ...
responsibility" for allocating the settlement between covered and non-covered claims). In
addition, some courts have held that the burden of proof is on the insurer if the insurer breached
its duty to defend. See, e.g., Sentinel Ins. Co., Ltd. v. First Ins. Co. ofHawaii, 875 P.2d 894
(Haw. 1994) ("Where the insured seeks indemnification after the insurer has breached its duty to
defend, (1) coverage is rebuttably presumed, (2) the insurer bears the burden of proof to negate
coverage, and (3) where relevant, the insurer cmTies its traditional burden of proof that an
exclusionary clause applies.").
There appears to be no reason to assign the burden to defendants to prove which claims
were covered and which were not. Their contractual obligation to AMR is to indemnify AMR
for covered claims. As a pmty to the underlying settlements, AMR is in the best position to
know the bases for the settlements in the underlying cases. Therefore, AMR has the burden to
prove the underlying settlements were for covered claims. As for the four underlying settled
cases which alleged a violation of the VP A statute (Howard, Rotting, Pries and Hines), a
15 Opinion and Order
dete1mination as to which claims are covered and which are uncovered will be stayed pending
the outcome of the case at the Oregon Comi of Appeals.
V. Battery
AMR asserts the Whalen complaint does not state a claim for direct liability for battery
under Oregon law; rather, it alleges a cause of action against AMR for vicarious liability.
Further, AMR argues that the Ninth Circuit's comment that "AMR does not seek coverage for
any vicarious liability for Haszard's intentional acts" was made in the context of the negligent
hiring and supervision claims against AMR and did not expressly decide whether the Whalen
battery claim was vicarious or direct liability. The Ninth Circuit said "the district comi will need
to look at the allegations in each of the ... underlying third-party complaints ... to determine
whether coverage applies to our analysis." Am. JI.fed. Response Nw Inc., 526 Fed. App'x. at 756.
In looking at the underlying complaint ih the Whalen case, it is clear that the claim against AMR
is for battery and not for negligence. The caption reads "Complaint for Battery." The only cause
of action in the complaint is "against defendant Lannie Haszard, AMR Nmihwest and American
Medical Response, Inc. for battery." The complaint then sets out myriad intentional physical
activities perpetrated by Haszard on the third-party plaintiff. The complaint is devoid of any
allegations supporting a claim that AMR was vicariously liable for the negligent hiring, training,
or supervising Haszard. The intentional battery that is alleged in Whalen is not an "accident"
and therefore not an "occul1"ence" under the defendants' policies, whether Oregon or Colorado
law is applied. See St. Paul Fire & lvfarine Ins. Co. v. lvfcCormick & Baxter Creosoting Co., 923
P.2d 1200 (Or. 1996); Hauser, 221 P.3d at 56. Defendants' Motions for Summary Judgment
(## 56, 110, 132) are granted as to the battery claims.
16 Opinion and Order
VI. Conclusions
ACE's Patient Care Endorsement does not preclude coverage. National Union's Patient
Injury Exclusion Endorsement applies and precludes coverage. Both ACE's and National
Union's Expected or Intended Exclusions do not preclude coverage.
Settlement of the underlying cases does not nullify the insurance coverage. Whether
AMR is entitled to coverage for the full amount of the settlements is a question of fact.
Defendant's obligation to indemnify is determined by the ultimate facts that formed the bases for
the settlements. These ultimate facts must demonstrate a right to coverage and AMR has the
burden to prove those facts.
The cases3 alleging a violation of the VPA statute remain stayed and the four settled
cases4 in which VP A was alleged are now also stayed.
The intentional battery that is alleged in the Whalen complaint is not an "occurrence"
under defendants' policies.
ACE's Motions for Summary Judgment (#110 and #132) are DENIED as to the
exclusions and GRANTED as to the battery claims. National Union's Motion for Summary
Judgment (#56) is GRANTED. AMR's Motion for Reconsideration is GRANTED.
.
.
,(\
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DATED this _Iv_ day of July, 2014
3
Slusher, Akre, Kendrick,Shaftel, Asbury, Terpening, Webb, and Coming
4
Ho,vard, Pries, Hines and Rotting
17 Opinion and Order
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