Medicus Insurance Company v. Pellegrini et al

Filing 79

MEMORANDUM OPINION AND ORDER granting the 43 , 49 , 53 , 70 , 73 , and 75 MOTIONS to Join; denying the 36 , 55 , 57 , 59 , 61 , 63 , and 65 MOTIONS to Dismiss; directing lead counsel for the parties to confer and file a joint report wi th an update of the state proceedings with the Court by 3/25/2016, as more fully set forth herein; holding in abeyance Plaintiff's 76 MOTION for Entry of Default and Default Judgment against Defendant John Pellegrini. Signed by Judge Robert C. Chambers on 3/16/2016. (cc: attys; any unrepresented parties) (mkw)

IN THE UNITED STATES DISTRICT COURT FOR
THE SOUTHERN DISTRICT OF WEST VIRGINIA
HUNTINGTON DIVISION

MEDICUS INSURANCE COMPANY,
Plaintiff,
v.

CIVIL ACTION NO. 3:15-6015

JOHN PELLEGRINI, D.O., et al.,
Defendants.

MEMORANDUM OPINION AND ORDER
Pending before the Court are a number of motions by the parties, including: (1)
Defendants Jennifer Bailey, Stephanie Brown, Mary Clevenger, Amy Faulkner, Angie Simon, and
Mary Simpkins’ Motion to Dismiss Medicus Insurance Company’s Complaint for Declaratory
Judgment (ECF No. 36); (2) Defendants Donna Dillard, Kathy Dillon, Stephanie Gilkerson,
Camilla Ramsey, Erika Sturgill, Amanda Ward, and Beverly York’s Joinder in Defendants
Jennifer Bailey, Stephanie Brown, Mary Clevenger, Amy Faulkner, Angie Simon, and Mary
Simpkins’ Motion to Dismiss Medicus Insurance Company’s Complaint for Declaratory Judgment
(ECF No. 43); (3) Defendants Drema Bailey, Rebecca Bailey, Cathy Kennedy and Barbara Wills’
Joinder in Defendants Jennifer Bailey, Stephanie Brown, Mary Clevenger, Amy Faulkner, Angie
Simon, and Mary Simpkins’ Motion to Dismiss Medicus Insurance Company’s Complaint for
Declaratory Judgment (ECF No. 49); (4) Defendant Misty Skinner’s Joinder in Defendants
Jennifer Bailey, Stephanie Brown, Mary Clevenger, Amy Faulkner, Angie Simon, and Mary
Simpkins’ Motion to Dismiss Medicus Insurance Company’s Complaint for Declaratory Judgment
and Memorandum of Law in Support of Motion to Dismiss Medicus Insurance Company’s

Complaint for Declaratory Judgment (ECF No. 53); (5) Defendant Cheryl Bragg’s Motion to
Dismiss Medicus Insurance Company’s Complaint for Declaratory Judgment (ECF No. 55); (6)
Defendant Caresta Click’s Motion to Dismiss Medicus Insurance Company’s Complaint for
Declaratory Judgment (ECF No. 57); (7) Defendant Michelle Dalton’s Motion to Dismiss Medicus
Insurance Company’s Complaint for Declaratory Judgment (ECF No. 59); (8) Defendant Kathy
Keen’s Motion to Dismiss Medicus Insurance Company’s Complaint for Declaratory Judgment
(ECF No. 61); (9) Defendant Elisha Riffe’s Motion to Dismiss Medicus Insurance Company’s
Complaint for Declaratory Judgment (ECF No. 63); (10) Defendant Billie Jo Smith’s Motion to
Dismiss Medicus Insurance Company’s Complaint for Declaratory Judgment (ECF No. 65); (11)
Defendant PMP Services, LTD’s Joinder in Defendants Jennifer Bailey, Stephanie Brown, Mary
Clevenger, Amy Faulkner, Angie Simon, and Mary Simpkins’ Motion to Dismiss Medicus
Insurance Company’s Complaint for Declaratory Judgment (ECF No. 70); (12) Defendant Hope
Clinic PLLC’s Joinder in Defendants Jennifer Bailey, Stephanie Brown, Mary Clevenger, Amy
Faulkner, Angie Simon, and Mary Simpkins’ Motion to Dismiss Medicus Insurance Company’s
Complaint for Declaratory Judgment (ECF No. 73); (13) Defendant Brittanny Burdette’s Joinder
in Defendants Jennifer Bailey, Stephanie Brown, Mary Clevenger, Amy Faulkner, Angie Simon,
and Mary Simpkins’ Motion to Dismiss Medicus Insurance Company’s Complaint for Declaratory
Judgment (ECF No. 75); and (14) Plaintiff’s Motion for Entry of Default and Default Judgment
against Defendant John Pellegrini, D.O. ECF No. 76. Initially, the Court GRANTS the motions
to join (ECF Nos. 43, 49, 53, 70, 73, and 75).1 In addition, for the following reasons, the Court

Although the “Joinder” documents are not framed as motions, the Court will treat them as
such for purposes of this Memorandum Opinion and Order to make it clear that the Court permits
the joinder of those named Defendants to the substantive motion to dismiss filed by Defendants
Jennifer Bailey, Stephanie Brown, Mary Clevenger, Amy Faulkner, Angie Simon, and Mary
Simpkins.
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DENIES the motions to dismiss (ECF Nos. 36, 55, 57, 59, 61, 63, and 65) and HOLDS IN
ABEYANCE Plaintiff’s Motion for Entry of Default and Default Judgment against Defendant
John Pellegrini, D.O. ECF No. 76.

On March 11, 2015, the Circuit Court of Kanawha County, West Virginia, entered
an Order consolidating twenty-seven similarly related civil actions. Order Granting Defs.’ Joint
Mot. to Consolidate, ECF No. 44-1. In the actions, the plaintiffs allege, inter alia, “that they were
sexually harassed and/or sexually abused by Defendant Dr. [John H.] Pelligrini, during the course
of their medical examinations and treatment at the Defendant New Hope Clinic.” Id. at 15. Also
named as defendants in the consolidated cases was PMP Services, Inc., the ERx Group, LLC,
PPPFD, Inc., and the West Virginia Board of Osteopathic Medicine. Approximately two months
after the cases were consolidated in state court, Medicus Insurance Company (hereinafter Medicus)
filed a Complaint for Declaratory Judgment in this Court, seeking a determination that it is not
required to defend or indemnify PMP Services, Hope Clinic, and/or Dr. Pelligrini in the state court
actions. The plaintiffs in the state actions, who are named as Defendants herein, and PMP
Services, LTD, then filed the aforementioned motions asking this Court to dismiss Medicus’
federal action.

In this case, there is no question that complete diversity exists, and this Court has
jurisdiction pursuant to 28 U.S.C. § 1332(a)(1) to entertain Medicus’ declaratory judgment action.
See also 28 U.S.C. § 2201 (providing “any court of the United States, upon the filing of an
appropriate pleading, may declare the rights and other legal relations of any interested party
seeking such declaration, whether or not further relief is or could be sought”). The Fourth Circuit

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has “held that a federal district court should normally entertain a declaratory judgment action
within its jurisdiction when it finds that the declaratory relief sought (i) ‘will serve a useful purpose
in clarifying and settling the legal relations in issue,’ and (ii) ‘will terminate and afford relief from
the uncertainty, insecurity, and controversy giving rise to the proceeding.’” Nautilus Ins. Co. v.
Winchester Homes, Inc., 15 F.3d 371, 375 (4th Cir. 1994)2 (quoting Aetna Cas. & Sur. Co. v.
Quarles, 92 F.2d 321, 324 (4th Cir. 1937) (other quotation marks and citations omitted). Indeed,
declaratory judgment actions often are used to resolve insurance coverage disputes prior to a
judgment on the underlying claim. Id. at 375-76. However, merely because a federal court has
jurisdiction over a declaratory judgment action regarding an insurance coverage issue, the court
has discretion on whether it should exercise that jurisdiction.

As this Court found in First Financial Insurance Co. v. Crossroads Lounge, Inc.,
140 F. Supp.2d 686 (S.D. W. Va. 2001), “[f]ederal courts are . . . afforded great latitude in
determining whether to assert jurisdiction over such cases.” 140 F. Supp.2d at 689 (quoting United
Capitol Ins. Co. v. Kapiloff, 155 F.3d 488, 493 (4th Cir. 1998); Aetna Cas. & Sur. Co. v. IndCom
Elec. Co., 139 F.3d 419, 422 (4th Cir. 1998) (internal quotation marks and other citations omitted)).
However, “‘a district court may not refuse to entertain a declaratory judgment action out of “whim
or personal disinclination,” [Public Affairs Assoc., Inc. v. Rickover, 369 U.S. 111, 112, 82 S. Ct.
580, 7 L.Ed.2d 604 (1962)], but may do so only for “good reason.” [Quarles, 92 F.2d at 324].’”
Id. at 690 (quoting Nautilus, 15 F.3d 371, 375 (4th Cir. 1994) (other citations omitted)).

2

Overruled on other grounds, Wilton v. Seven Falls Co., 515 U.S. 277 (1995) (overruling
portions of Nautilus dealing with appellate standards of review).
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In making this decision, the Fourth Circuit has set forth several criteria a court
should consider. For instance, in Aetna Casualty & Surety Co. v. Quarles, 92 F.2d 321 (4th Cir.
1937), the Fourth Circuit directed that courts should not allow parties to use declaratory judgments
“to try a controversy by piecemeal, or to try particular issues without settling the entire
controversy, or to interfere with an action which has already been instituted.” Quarles, 92 F.2d at
325. In the interests of comity, efficiency, and federalism, the Fourth Circuit further stated in
Nautilus, that the district court should weigh:
(i) the strength of the state's interest in having the issues
raised in the federal declaratory action decided in the state
courts; (ii) whether the issues raised in the federal action can
more efficiently be resolved in the court in which the state
action is pending; and (iii) whether permitting the federal
action to go forward would result in unnecessary
“entanglement” between the federal and state court systems,
because of the presence of “overlapping issues of fact or
law[.]”
Nautilus, 15 F.3d at 377 (quoting Mitcheson v. Harris, 955 F.2d 235, 237-40 (4th Cir. 1992)). In
addition, the Nautilus court held a court should consider “whether the declaratory judgment action
is being used merely as a device for ‘procedural fencing’—that is, ‘to provide another forum in a
race for res judicata’ or ‘to achiev[e] a federal hearing in a case otherwise not removable.’” Id.
(citation omitted).

Upon review of the briefs in this case, however, the Court finds that it does not have
sufficient information at this point to apply these criteria to fairly assess the pending motions to
dismiss. Specifically, in their briefs, the parties do not agree on the scope and content of the
claims pending before the state court. For instance, Medicus asserts that none of the twenty-seven
individual state court complaints expressly assert a medical malpractice claim, mention the West

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Virginia Medical Professional Liability (MPLA) statute, seek a declaratory judgment under the
policies issued by Medicus, or name Medicus as a party. Pl.’s Resp. in Opp’n to Defs.’ Jennifer
Bailey, Stephanie Brown, Mary Clevenger, Amy Faulkner, Angie Simon, and Mary Simpkins’ Mot.
to Dismiss Medicus Ins. Co.’s Compl. for Dec. J., at 4 ¶7, ECF No. 67. Thus, Medicus argues
that none of the issues presented to this Court are pending in state court. Id. at ¶8. Additionally,
Medicus asserts that it is not alleged in any of the state complaints “that Dr. Pellegrini engaged in
sexual conduct under the guise or false pretense of medical necessity.” Id. at 6 ¶17. Moreover,
even if claims were directly asserted under the MPLA, Medicus insists such claims are not covered
by the policy because it only covers claims of “negligent medical malpractice, not intentional
medical malpractice[.]” Id. at 7 ¶17. It also only “covers claims for physical injury, not emotional
distress, and specifically excludes coverage for any claim resulting from any unlawful, fraudulent,
intentional, or criminal acts, including sexual intimacy, sexual molestation, sexual harassment,
sexual exploitation or sexual assault.” Id. Medicus argues that the resolution of whether or not
there is coverage for the underlying claims under the terms of the policy is well within this Court’s
authority and the Court should exercise such authority to resolve the issues presented. Id. at 11
¶38.

On the other hand, Defendants Bailey, Brown, Clevenger, Faulkner, Simon, and
Simpkins reply that, at the same time they filed their motion to dismiss, they moved to amend their
state complaints to add a declaratory judgment action under state law against Medicus. In
addition, Defendants claim they each have “pled a medical malpractice cause of action under the
West Virginia Medical Professional Liability statute and ha[ve] filed a certificate of merit relating
to the same.” Reply to Pls.’ Resp. in Opp’n of Defs. Jennifer Bailey, Stephanie Brown, Mary

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Clevenger, Amy Faulkner, Angie Simon, and Mary Simpkins’ Mem. in Supp. of their Mot. to
Dismiss Medicus Ins. Co.’s Compl. for Dec. J., at 2, ECF No. 71. Specifically, Defendants assert
that they have alleged, inter alia, that Dr. Pellegrini used his position as a doctor to make sexual
advances towards them; “he deviated from the applicable standard of care by prescribing
medication after they exhibited signs of dependence on pain medication; and, that Hope Clinic,
PMP Services, ERx, and PPPFD all knew or should have known of Dr. Pelligrini’s history of at
least twenty-four prior suits claiming sexual harassment and/or sexual abuse against him.” Defs.’
Jennifer Bailey, Stephanie Brown, Mary Clevenger, Amy Faulkner, Angie Simon, and Mary
Simpkins’ Mot. to Dis. Medicus Ins. Co.’s Compl. for Dec. J.¸ at 2 ¶¶ 1-2, ECF No. 36.
Defendants argue that resolution of the declaratory judgment action will require this Court “to
examine the claim for punitive damages, which torts are intentional versus negligent, and whether
all claims are excluded or only certain claims are excluded.” Reply to Pls.’ Resp. in Opp’n of Defs.
Jennifer Bailey, Stephanie Brown, Mary Clevenger, Amy Faulkner, Angie Simon, and Mary
Simpkins’ Mem. in Supp. of their Mot. to Dismiss Medicus Ins. Co.’s Compl. for Dec. J., at 3.
Defendants contend that it will result in a significant overlap and entanglement between the two
courts, with potentially conflicting findings.

Given these conflicts, this Court finds that it cannot properly evaluate the pending
motions to dismiss. Specifically, it is unclear to the Court whether the state court granted the
motions to amend and what is the status of any of the underlying claims. Importantly, the Court
also is unaware what, if any, rulings the state court has made with respect to the declaratory
judgment action filed against Medicus. Without knowing the current status of the state court
proceedings, the Court DENIES the pending motions to dismiss and DIRECTS lead counsel for

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the parties to confer and file a joint report with an update of the state proceedings with the Court
on or before March 25, 2016. The update should include the procedural posture of the state
court proceedings, the upcoming scheduling deadlines, what claims remain pending before the
state court, the status of the declaratory judgment action, and any other information the parties
believe would be helpful for the Court to know with respect to the declaratory judgment action
pending here. If counsel disagrees as to any matter, such disagreement should be noted in the
report, and counsel shall set forth their respective positions in an addendum to the report. In the
meantime, those parties who have not filed an Answer to the Declaratory Judgment action should
do so, and the Court will HOLD IN ABEYANCE Medicus’ Motion for Entry of Default and
Default Judgment against Defendant John Pellegrini, D.O. ECF No. 76.

The Court DIRECTS the Clerk to send a copy of this Order to counsel of record
and any unrepresented parties.

ENTER:

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March 16, 2016