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Interstate Fire and Casualty Co. v. Dimensions Assurance Ltd.

United States District Court, D. Maryland, Southern Division

June 24, 2015

INTERSTATE FIRE AND CASUALTY COMPANY, Plaintiff,
v.
DIMENSIONS ASSURANCE LTD., Defendant.

MEMORANDUM OPINION

GEORGE J. HAZEL, District Judge.

Plaintiff Interstate Fire and Casualty Company ("IFCC") is the insurer of Favorite Healthcare Staffing ("FHS"), and Defendant Dimensions Assurance, Ltd. ("Dimensions") has a reimbursement agreement with Laurel Regional Hospital (the "Hospital"). See ECF No. 32-1 at 4.[1] IFCC brings this action against Dimensions to recoup the costs of defending a medical malpractice claim against a nurse who was working at the Hospital pursuant to a stalling agreement between FHS and the Hospital. Id. The parties have filed cross motions for summary judgment. See ECF No. 25 & 35. The Court finds that a hearing is unnecessary. See Local Rule 105.6. For the reasons stated below, Plaintiff's Motion for Summary Judgment. ECF No. 25, is DENIED, and Defendant's Motion for Summary Judgment, ECF No. 35, is GRANTED.

I. BACKGROUND

The material facts of this case are not in dispute. Defendant Dimensions contracted to provide reimbursement insurance coverage to a list of named protected persons, which included the Hospital, from January 1, 2010 to January 2, 2011.[2] See ECF No. 25-10 at 30 & 45. The contract included three Reimbursement Agreements-one for general liability, one for hospital professional liability, and one for group physician professional liability. See id. at 2-3. Subject to specified limitations, Dimensions agreed to reimburse the Hospital, under the hospital professional liability agreement, for amounts any "protected person" was legally required to pay as damages in suits resulting from professional injury. See id at 28. The hospital professional liability agreement also contains a section on "worker protection, " which states:

Your present and former employees, students and authorized volunteer workers are protected persons while working or when they did work for you within the scope of their duties. Unless added by amendment to this Agreement, interns, externs, residents, or dental osteopathic or medical doctors are not named protected persons for professional injury, even if they are your employees, students or authorized volunteer workers.

Id. at 31 (emphasis added).[3] The term "employees" is not defined in the contract. Notably, however, affiliated healthcare providers are specifically excluded from coverage unless there is "a written partnership or physician agreement" designating them as named protected persons. See id. at 30. An affiliated healthcare provider is "any natural person or organization in the business of rendering healthcare services directly to the general public, and who or which has an agreement to provide such services in conjunction with those provided by [the Hospital]." Id. In the provision excluding affiliated healthcare providers from coverage, the agreement also states specifically that "[a]gencies providing clinical and other services on a per diem or contracted basis are not protected persons... Id.

The general liability reimbursement agreement between Dimensions and the Hospital covers claims for damages for bodily injury, property damages, or fire damages. See id. at 11. Like the hospital professional liability agreement, it also contains a section on worker protection. See id. at 16. In contrast to the hospital professional liability agreement, however, this section specifically excludes employees of contract agencies from protection. It provides that

Your present and former employees, students and authorized volunteer workers are protected persons while working, or when they did work for you within the scope or their duties. Persons working for you on a per diem, agency or contract basis are not protected persons.

Id. at 16 (emphasis added) (emphasis in original omitted). The general liability agreement also specifically states, as the professional liability agreement does, that "agencies providing per diem, contracted clinical, or contracted services are not protected persons under this agreement." Id. at 15.

On April 1, 2007, the Hospital entered into a starling agreement with FHS for FHS to provide the Hospital with nurses to accommodate the Hospital's additional starling needs. See ECF No. 25-3 at 2: ¶ 1.2. As part of the agreement, FHS and the Hospital agreed that "[u]nder no circumstances will [FHS] practitioners be considered employees of H[ospital]. At all times. [FHS] staff are and Will be considered employees of [FHS]." Id. [4] Under the employment status portion of the agreement. FHS and the Hospital agreed that "[p]ractitioners shall be deemed employees of [FHS].... Practitioners shall in no event be considered employees of H[ospital] for purposes of compensation, benefits, or otherwise. [FHS] shall be solely responsible for the actions or omissions of any practitioner." Id. at 5: ¶ 7. FHS agreed that it would obtain general and professional liability insurance for its employees. Id. at ¶ 7.3. FHS employees were not eligible for Hospital benefit plans and were to be paid by FHS. Id. at ¶¶ 7.0-7.2. In the event that the Hospital was found liable on the grounds of apparent agency or vicarious liability for the acts or omissions of an FHS employee, the Hospital's insurance was to be passive and secondary to FHS' insurance, which was to be active and primary. Id. at ¶ 8.1.

The staffing agreement further indicated that the Hospital was to orient each FHS nurse to their job responsibilities and "all policies and procedures necessary to meet H[ospitall performance standards." See id. at 4: ¶ 3.3. Additionally, starting on their first day of work, all FHS nurses were responsible for knowing the Hospital's policies and procedures. Sec. ECF No. 25-4 at 7:18-8:1. The Hospital expected FHS nurses to provide the same standard of care as direct hire nurses, and had the right to terminate a nurse immediately for not complying with directions for patient care. See id. at 9:1-5 & 11:5-9. Also, no FHS supervisors were on site at the Hospital to provide direction to the FHS nurses. See id. at 14:10-20.

Effective September 10, 2010. Plaintiff IFCC agreed to provide FHS with professional liability insurance coverage. See ECF No. 25-11 at 3 & 51. Subject to some limitations, IFCC agreed to pay legally required "damages" for "bodily injury" for FHS, the named insured. See id. Additionally. "current or former employee[sl" are also named insureds when acting within the "employees' duties." See id. at 3-1. If other valid insurance could also apply to a loss or claim that was covered under IFCC's policy, the IFCC insurance was to be excess insurance over and above the applicable limit of the other valid insurance. See id. at 11-12.

On February 16, 2012, a lawsuit was filed against the Hospital, several doctors, and nurses, alleging negligent care and treatment. See ECF No. 25-6. One of the nurses was working at the Hospital as a result of the Hospital's agreement with FHS. See id. at 15. The lawsuit named FHS as vicariously liable for the nurse's actions. See id. On February 20, 2013, the FHS nurse demanded that the Hospital and Dimensions provide defense and indemnity coverage. See ECF No. 25-7. Dimensions refused and FHS's insurance. IFCC. defended the ...


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