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

United States District Court, D. Maryland, Southern Division

July 21, 2017



          GEORGE J. HAlEL United States District Judge.

         Plaintiff Interstate Fire and Casualty Company ("Interstate" or "IFCC") filed this suit for equitable contribution and declaratory judgment against Defendant Dimensions Assurance Ltd. ("Dimensions" or "DAL") following an insurance dispute. ECF No. 1. The Court previously granted summary judgment in favor of Dimensions. ECF No. 43. On appeal, the United States Court of Appeals for the Fourth Circuit vacated the opinion and remanded to this Court for further proceedings. Presently pending before the Court is Interstate's Request for Entry of Judgment. ECF No. 51. Interstate's alternative renewed Cross-Motion for Summary Judgment. ECF No. 56. and Dimensions' Cross-Motion for Summary Judgment, ECF No. 53. The Court held a hearing on July 14. 2017. See Loc. R. 105.6 (D. Md. 2016). For the following reasons. Interstate's Request for Entry of Judgment is granted, and the cross-motions are denied as moot. Judgment is now entered against Dimensions and in favor of Interstate in the total amount of $3, 591, 847.28. with post-judgment interest to accrue at the statutory rate pursuant to 28 UJS.C. $ 1961.

         I. BACKGROUND

         A. Factual Background

         The facts of this case were fully set forth in the Court's previous Opinion. ECF No. 43 at 1-5.[1] In 2012. a patient at Laurel Regional Hospital (the " Hospital") brought a medical malpractice action against the Hospital and several physicians and nurses who worked at the Hospital. See ECF No. 25-6. One of the nurses named in the action. Nurse Cryer, was working at the Hospital under a Staffing Agreement between her employer. Favorite Healthcare Staffing. Inc. ("FHS" or "the Agency"), and the Hospital. See Id. at 15. Plaintiff Interstate provided a professional liability insurance policy to the Agency, covering doctors and nurses who were employed by the Agency but placed in various medical centers. See ECF No. 25-11. The Interstate policy stated that ''[i]f there is other valid insurance (whether primary, excess, contingent, or self-insurance) which may apply against a loss or claim covered by this policy, the insurance provided hereunder shall be deemed excess insurance over and above the applicable limit of all other insurance or self-insurance." Id. at 11.

         Defendant Dimensions provided liability protection to the Hospital through a reimbursement agreement (the "Policy" or "Reimbursement Agreement"), which forms the basis for the dispute in this action. See ECF No. 25-10. The Dimensions Policy affords coverage for the Hospital and other persons or entities that meet the Policy's definition of "protected persons." See Id. Although sometimes referred to jointly as the Reimbursement Agreement, the Policy actually consists of three separate reimbursement agreements delineated as (A) "General Liability." (B) "Hospital Professional Liability." and (C) "Group Professional Liability." See Id. at 2-3. The Hospital Professional Liability agreement, at issue here, states in relevant part that "[The Hospital's] 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." Id. at 31. Similar to the Interstate policy, the Dimensions Policy states that "[i]f there are other valid and collectible sources of payment for injury or damage covered by this agreement, then this agreement will be excess reimbursement over any part of any other reimbursement or payment." but limits the excess function to three specific circumstances that were not applicable here. Id. at 36.[2]

         When the underlying medical malpractice action arose. Dimensions refused to indemnify Nurse Cryer. claiming that, as an Agency-placed practitioner. Nurse Cryer was not an "employee" of the Hospital. See ECF No. 32-1 at 9. Interstate thus undertook to defend Nurse Cryer in the lawsuit, ultimately settling the case for $2.5 million and incurring $465, 044.96 in defense fees and costs. See ECF No. 26-1 at 2. Following settlement. Interstate brought suit against Dimensions for equitable contribution and declaratory judgment, arguing that Nurse Cryer should have been covered under the Dimensions Policy as a "protected person." and Dimensions was therefore obligated to reimburse Interstate for the full amount Interstate had paid to litigate and settle the lawsuit. ECF No. 1 at 10-11.

         B. Procedural Background

         The parties filed cross motions for summary judgment. ECF Nos. 26 and 34. Interstate argued that the Dimensions Policy unambiguously provided professional liability coverage to Nurse Cryer as an "employee, " and provided primary "other insurance." regardless of whether the Policy was characterized as a reimbursement agreement or otherwise. ECF No. 26. Dimensions countered that Nurse Cryer was not an employee of the Hospital as a matter of law. and that the agreement between the Hospital and Dimensions was not an insurance policy, but a "reimbursement agreement." ECF No. 34. Hence. Dimensions claimed that under this agreement, reimbursement payments were to be made to the Hospital, and only for expenses incurred or approved by the Hospital. Id. at 19. Because the Hospital had declined to defend Nurse Cryer, Dimensions argued, there were no expenses to be reimbursed. Id. at 22. This Court granted summary judgment in favor of Dimensions, holding that the Reimbursement Agreement with the Hospital did not cover Nurse Cryer, because she was not an employee of the Hospital as a matter of law. .See ECF No. 43.

         On appeal, the Fourth Circuit held that the term "employee" included workers who qualified as employees under the "right-to-control'" test, which encompassed Nurse Cryer. ECF No. 51 at 19-20, and Dimensions therefore had "an independent obligation to provide coverage to those workers." id at 35. The Fourth Circuit further found that the Staffing Agreement between the Hospital and the FHS Agency, to which neither Interstate. Dimensions, nor Nurse Cryer were parties, did not control whether Nurse Cryer was covered under the Dimensions Policy. See id at 21-30. Accordingly, the Fourth Circuit stated that "[w]hether or not the Hospital intended to provide insurance for Agency-provided employees. Dimensions, by virtue of the policy that it issued, has an independent obligation to insure Cryer as an additional insured." Id. at 30 (internal citations omitted). Thus, this Court's summary judgment decision was vacated, and the case was remanded.

         Interstate has now tiled a Request for Entry of Judgment, and alternatively, renews its motion for summary judgment. ECF Nos. 51 and 56. Dimensions opposes Interstate"s Request and also renews its motion for summary judgment, arguing that "[n]either this Court nor the U.S. Court of Appeals for the Fourth Circuit has addressed the issue of how much, if any. must be paid to Nurse Cryer or Interstate under the terms of the Reimbursement Agreement." ECF No. 53 at 1. Dimensions asserts that they are only obligated to reimburse the Hospital 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 Cryer. Id. at 3. The Court disagrees.

         II. ANALYSIS

         The mandate rule is the "more powerful version of the law of the case doctrine." Doe v. Chuo.5W F.3d 461. 465 (4th Cir. 2007) (citing Invention Submission Corp. v. Dudas. 41 3 F.3d 411. 414 (4th Cir. 2005)). "Few legal precepts are as firmly established as the doctrine that the mandate of a higher court is 'controlling as to matters within its compass."" Id. (quoting Spragm v. Ticonic Nat'l Bank. 307 U.S. 161. 168 (1939)). The mandate rule "does not simply preclude a district court from doing what an appellate court has expressly forbidden it from doing." S. All. Ltd. P'ship of Tennessee. LP v. Riese. 356 F.3d 576, 584 (4th Cir. 2004). It "compels compliance on remand with the dictates of a superior court and forecloses relitigation of issues expressly or impliedly decided by the appellate court." Volvo Trademark Holding Aktieholaget v. Clark Mach. Co.. 510 F.3d 474. 481 (4th Cir. 2007). The Court must, "except in rare circumstances, implement both the letter and the spirit of the mandate." considering both the appellate court's opinion and "the circumstances it embraces." S. All. Ltd. P 'ship. 356 F.3d at 584 (4th Cir. 2004) (internal citations omitted). "[A] remand proceeding is not the occasion for raising new arguments or legal theories." Volvo Trademark. 510 F.3d at 481. The rule also "forecloses litigation of issues decided by the district court but foregone on appeal or otherwise waived, for example because they were not raised in the district court." United Slates v. Bell. 5 F.3d 64, 66 (4th Cir. 1993).

         Here, the Fourth Circuit held that "Dimensions, by virtue of the policy that it issued, has an independent obligation to ensure [Over] as an additional insured." ECF No. 51 at 30. The Fourth Circuit reasoned that "[b]ecause the evidence contained in the record establishes that Nurse Cryer is the Hospital's employee under the right-to-control and borrowed-servant standards, she is a "protected person' who qualities for coverage under the professional liability portion of the Dimensions Policy." ECF No. 51 at 36. On remand, the Court is obligated to implement not only the letter of the appellate court mandate, but its spirit as well. See S. All. Ltd. P ship. 356 F.3d at 584. However, because neither this Court nor the Fourth Circuit has explicitly addressed the argument. Dimensions argues ...

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