Curtis Universal v. Sheboygan Emergency Med. Serv.
| Decision Date | 22 February 1994 |
| Docket Number | No. 92-C-1075.,92-C-1075. |
| Citation | 844 F. Supp. 492 |
| Court | U.S. District Court — Eastern District of Wisconsin |
| Parties | CURTIS UNIVERSAL, INC., Plaintiff, v. SHEBOYGAN EMERGENCY MEDICAL SERVICES, INC., d/b/a Orange Cross, St. Nicholas Hospital of the Hospital Sisters of the Third Order of St. Francis, Inc., Sheboygan Memorial Hospital, Inc., Defendants, and FIRST NATIONAL INSURANCE COMPANY OF AMERICA, Intervenor-plaintiff, v. SHEBOYGAN EMERGENCY MEDICAL SERVICES, INC., d/b/a Orange Cross, Defendant, and Insurance Company of North America and Empire Fire & Marine Insurance Company, Third-party defendants. |
K. Scott Wagner, Hale & Lein, Milwaukee, WI, for Curtis-Universal, Inc.
Michael D. Fischer, James T. McKeown, Foley & Lardner, Milwaukee, WI, for Sheboygan Emergency Medical Services, Inc., d/b/a Orange Cross, Sheboygan Memorial Hosp.
David R. Cross, Harry G. Holz, Darryl S. Bell, Quarles & Brady, Milwaukee, WI, for St. Nicholas Hosp. of the Hosp. Sisters of the Third Order of St. Francis, Inc.
Craig W. Nelson, Nelson, Dries & Zimmerman, Brookfield, WI, for First National Ins. Co. of America.
Timothy A. Bascom, Bascom Law Office, Milwaukee, WI, for Insurance Co. of North America.
Thomas N. Klug, Borgelt, Powell, Peterson & Frauen, Milwaukee, WI, for Empire Fire & Marine Ins. Co.
DECISION AND ORDER
This matter comes before the Court on the parties' various dispositive motions regarding the issue of insurance coverage for the defendant, Sheboygan Emergency Medical Services, Inc. d/b/a Orange Cross ("Orange Cross"). In correspondence dated January 12, 1994, the Court notified the parties of its decision that coverage does not exist under any of the policies at issue and stated that a written decision would follow. The following constitutes the Court's decision and reasoning on the matter.
The plaintiff, Curtis-Universal, Inc. ("Curtis"), is an ambulance service company located in Milwaukee, Wisconsin. (Complaint at ¶ 3.) The defendant, Orange Cross, is an ambulance service company located in Sheboygan, Wisconsin. (Complaint at ¶ 4.) As alleged, Curtis seeks damages from Orange Cross () for injuries sustained by reason of the threatened and actual restraint of competition in the Sheboygan area for ambulance services. Curtis alleges Orange Cross violated federal and state antitrust and conspiracy laws and state common law principles. Orange Cross tendered its defense of the action to its three insurers — Insurance Company of North America ("INA"), Empire Fire & Marine Insurance Company ("Empire") and First National Insurance Company of America ("First National"). INA and Empire denied coverage outright and First National accepted the defense under a standard reservation of rights. On INA's motion, the Court bifurcated the coverage and liability issues and stayed all proceedings on the liability issues until coverage was decided. (Court's Order dated November 5, 1993.) For purposes of deciding the coverage issue only, we assume the truth of the allegations contained in the complaint and determine whether such allegations fall within the coverages provided in the policies.
At all relevant times, there were only two hospitals providing health care services to the residents of the City of Sheboygan ("the City") and Sheboygan County ("the County"): Sheboygan Memorial Hospital, Inc. ("Sheboygan Memorial") and St. Nicholas Hospital of the Hospital Sisters of the Third Order of St. Francis, Inc. ("St. Nicholas"). (Complaint at ¶ 7.) Prior to 1987, there was only one private non-emergency ambulance company servicing the City and the majority of the County: Orange Cross, a wholly-owned subsidiary of Sheboygan Memorial.1 (Complaint at ¶¶ 4, 9-10.) This was all poised to change in 1987, when Curtis entered into negotiations with St. Nicholas to provide ambulance services in direct competition with Orange Cross. (Complaint at ¶ 11.) Things were poised to change further in 1988, when Curtis and other ambulance companies (including Orange Cross) were invited to submit proposals for privatizing the City's emergency 911 ambulance services. (Complaint at ¶ 13.) Curtis alleges that these developments caused Sheboygan Memorial and Orange Cross, in conjunction with St. Nicholas, to combine and conspire together to drive Curtis out of the Sheboygan market and obtain a monopoly over City and County ambulance services.
The actions allegedly taken toward this end were varied, but fall into the following categories. First, about the time Curtis entered into negotiations with St. Nicholas, Sheboygan Memorial and St. Nicholas began discussing the purchase and sale of an ownership interest in Orange Cross. (Complaint at ¶ 11.) That sale was consummated October 21, 1988, with St. Nicholas purchasing a 50% interest in Orange Cross. (Complaint at ¶ 15.) The sole purpose of the sale was to establish Orange Cross as the sole provider of ambulance services to the area's two hospitals. (Id.)
Second, Orange Cross and the hospitals took steps to try and prevent Curtis from obtaining contracts with the City and County to provide 911 emergency services. These included a "campaign of public misinformation" consisting of "defamatory statements about the relative quality of care provided by Curtis and other untrue statements to the media." (Complaint at ¶¶ 24, 51(f), & 74.) They also included a concerted effort to deprive Curtis of a "local medical control".2 (Complaint at ¶¶ 18-19, 21-22, 27-30, 40-41.) These actions began about the time that a City committee recommended Curtis for the City contract. (Complaint at ¶ 24; INA's Ex. D at 46-51.) The "campaign" ceased on or before December 31, 1990, when Curtis completely withdrew from the Sheboygan market. (Id.)
Third, after the City awarded Curtis the 911 contract, and after St. Nicholas finally conceded to provide Curtis with local medical control, the hospitals created obstacles designed to reduce Curtis' business in the area and increase its costs. (Complaint at ¶¶ 27-28, 30.) These obstacles were not placed before Orange Cross and included, inter alia, imposing a $1000 monthly medical control fee, not allowing Curtis to house its ambulances in St. Nicholas' garage, refusing to use Curtis for patient transfers (even upon a patient's request), refusing to stock Curtis' ambulances with medication, equipment and supplies, directing other health care facilities in the area (such as nursing homes) not to use Curtis and refusing to authorize Curtis personnel to use procedures which were more expensive and therefore more profitable. (Complaint at ¶¶ 28, 31-38.)
The foregoing allegations give rise to eight (8) causes of action against Orange Cross, Sheboygan Memorial and St. Nicholas: (1) Violation of § 1 of the Sherman Act (federal antitrust); (2) violation of § 2 of the Sherman Act (federal antitrust); (3) violation of § 7 of the Clayton Act (federal antitrust); (4) violation of Wis.Stat. § 134.01 (state civil conspiracy); (5) violation of Wis.Stat. § 133.03(1) (state antitrust); (6) violation of Wis.Stat. § 133.03(2) (state antitrust); (7) state common law tortious interference with contract; and (8) state common law breach of contract. (Complaint at ¶¶ 49-83.) Based on these allegations and corresponding causes of action, the Court must decide whether the insurance policies at issue provide coverage.
It is clear that the policies issued to Orange Cross by INA and Empire do not provide coverage. Orange Cross has not suggested that they do. Indeed, the only reason INA and Empire are parties to this action is because First National intervened and joined them as defendants. More importantly, it is undisputed that both the INA and the Empire policies are "occurrence" policies and that all of the "occurrences" involved here took place no later than December 31, 1990, the date by which Curtis completely withdrew from the Sheboygan market. (Complaint at ¶ 24; INA's Ex. D at 46-51.) The coverage periods for the INA and Empire policies did not begin until January 1, 1992 and January 1, 1991, respectively. (INA Ex. C at 1; Empire App.A.) As such, the "occurrences" fall outside the coverage periods and there is no duty to defend or indemnify.
The First National policy is a fairly standard Comprehensive General Liability ("CGL") policy. It contains an endorsement providing "personal injury and advertising injury liability coverage". First National and Orange Cross agree that coverage is provided, if at all, under this endorsement:
The company will pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of personal injury or advertising injury to which this insurance applies, sustained by any person or organization and arising out of the conduct of the named insured's business, within the policy territory, and the company shall have the right and duty to defend any suit against the insured seeking damages on account of such injury, even if the allegations of the suit are groundless, false or fraudulent,....
(Id.; emphasis in original.) The endorsement further defines "advertising injury" and "personal injury", in pertinent part, as follows:
(Id.; emphasis in original.)
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