Intermed Ins. Co. v. Hill, SD 31306.

• Citation: 367 S.W.3d 84
• Decision Date: 30 March 2012
• Docket Number: No. SD 31306.,SD 31306.
• Parties: INTERMED INSURANCE CO., Plaintiff–Respondent, v. Doyle B. HILL, D.O., Hartville Medical Center, P.C., and Jeffrey David Martin, Defendants–Respondents, and Penny L. Boyce, Defendant–Appellant.
• Court: Court of Appeal of Missouri (US)

367 S.W.3d 84

INTERMED INSURANCE CO., Plaintiff–Respondent,

v. Doyle B. HILL, D.O., Hartville Medical Center, P.C., and Jeffrey David Martin, Defendants–Respondents,andPenny L. Boyce, Defendant–Appellant.

No. SD 31306.

Missouri Court of Appeals,

Southern District,

Division One.

March 12, 2012.

Rehearing Denied March 21, 2012.

Application for Transfer Denied

March 30, 2012.

Application for Transfer

Denied May 29, 2012.

Robert W. Freeman, Springfield, MO, for Appellant.

Brian D. Malkmus, Springfield, MO, for Respondent Intermed Ins. Co.

DON E. BURRELL, Presiding Judge.

Penny L. Boyce (“Appellant”) appeals the trial court's grant of summary judgment in favor of Intermed Insurance Co. (“Intermed”) in a declaratory judgment action brought to determine whether a professional liability insurance policy issued by Intermed provided coverage for a medical clinic's negligent failure to supervise a physician's assistant (“PA”) who sexually assaulted Appellant under the guise of examining her. Appellant claims, among other things, that the trial court erred in finding that Clinic's failure to supervise PA did not constitute a separate, concurrent proximate cause of her injuries. Because we agree with that contention, we reverse the trial court's summary judgment in favor of Intermed and remand the matter for further proceedings consistent with this opinion.¹

Factual and Procedural Background

Doyle Hill (“Dr. Hill”) and William Berner (“Berner”) were the owners of the Hartville Medical Management Company (“Management Company”), which operated the Hartville Medical Center (“Clinic”). Management Company staffed and supervised Clinic. Clinic, Management Company, and Dr. Hill were protected by two liability insurance policies. The first was issued by Cincinnati Insurance Company and provided general liability coverage. The second was issued by Intermed and provided professional liability coverage.

The Intermed policy provided coverage for negligence in the rendering of or failure to render professional services, including liability arising out of the acts of a physician's assistant if the physician's assistant was supervised in accordance with the applicable statutes and regulations.² The Intermed policy excluded coverage for “liability arising from sexual relations, activity, acts or conduct with any person, with or without consent of any such person[.]” PA worked at Clinic and was supervised at all pertinent times by Dr. Hill.

In 2003, Clinic's office manager began getting complaints from Clinic's medical assistants that PA was telling them not to chaperone his examinations of young women as required by Clinic policy. She said female patients had also complained to her that PA was conducting medically unnecessary breast and pelvic exams. The office manager reported the situation to Berner, who told her “not to worry about it[.]” She was not aware that any investigation was made in response to these complaints, and there was no change in policy after she relayed them to Berner. Eventually, the office manager decided to resign. After resigning, she complained about the situation to the State Board of Healing Arts.

On December 14, 2004, and again on December 17, 2004, Appellant went to Clinic with complaints of hip pain and throat problems. PA was assigned to examine and treat Appellant. PA instructed Appellant to disrobe. After Appellant had done so, PA massaged her breast, explaining that “he needed to feel the nerves and the bone structure[.]” PA also placed his fingers inside Appellant's vagina. He then told Appellant that she should make an appointment to return for a cortisone shot. When Appellant returned for the shot, PA again inserted his fingers into her vagina.

In early 2005, PA was charged with six counts of deviate sexual assault related to his contact with Appellant and other females. PA subsequently pleaded guilty to three of those charges—one of which related to his contact with Appellant.

Appellant filed her underlying tort suit against PA, Dr. Hill, Clinic and Management Company, alleging one count of sexualassault and battery against PA and one count of negligent hiring, supervision, and retention against the other defendants. Appellant also sought punitive damages from each defendant. An attorney hired by Dr. Hill, Clinic, and Management Company reported the suit to Intermed and demanded a defense. Intermed replied that it would do so only under a reservation of rights. Dr. Hill, Clinic, and Management Company refused a defense under a reservation of rights, and the attorneys they hired proceeded to defend the suit. Cincinnati Insurance Company agreed to provide a defense to Clinic under its general liability policy.

Prior to trial, Dr. Hill, Clinic, Management Company, and Cincinnati Insurance Company entered into a section 537.065 settlement agreement with Appellant. ³ Under that agreement, Cincinnati Insurance Company agreed to pay Appellant $242,500 plus court costs in exchange for her agreement to dismiss her complaints against all defendants except Clinic. As for Clinic, it agreed: 1) to stipulate to many of the facts alleged in Appellant's lawsuit; and 2) that it would not oppose any evidence Appellant offered at trial. In return, Appellant agreed that she would seek to recover no more than $1,242,500 from Clinic and would seek to enforce any such judgment only against Intermed. Dr. Hill, Clinic, and Management Company also assigned their rights under the Intermed policy to Appellant.

The underlying tort case was tried on May 27, 2008. Appellant proceeded only against Clinic and requested findings of fact and conclusions of law on specific issues. At the close of all evidence, the trial court entered judgment for Appellant against Clinic in the amount of $1,242,500, plus court costs. The trial court attached and incorporated into its judgment detailed factual findings. In addition to other findings, the trial court found that Clinic had a duty to control PA “while acting outside the scope of his employment” in order to prevent him from intentionally harming patients and “from conducting himself as to create an unreasonable risk of bodily harm to [Clinic's patients] by conducting inappropriate and medically unnecessary breast and pelvic exams for his own sexual gratification[.]”

After that judgment was entered, Intermed filed the instant petition for declaratory judgment against Appellant, PA, Dr. Hill, Clinic, and Management Company. The petition sought an order declaring that the damages arising out of PA's sexual assault of Appellant were not covered by the policy Intermed had issued to Clinic because the assault was not the rendering of or failure to render professional services and because liability arising from the assault was excluded from coverage as: 1) it involved an intentional act; 2) it involved sexual acts or conduct with any person; 3) it involved criminal acts; and 4) PA was improperly supervised at the time of the act. Appellant answered the petition and, pursuant to the assignment of rights she received from Clinic, Appellant filed counterclaims for breach of contract, bad faith refusal to settle, and vexatious refusal to pay. The parties then filed cross-motions for summary judgment.

The trial court thereafter entered the summary judgment in favor of Intermed now challenged by Appellant on appeal. As pertinent to Appellant's points, the trial court specifically found that Clinic's supervision of PA was within the scope of the Intermed policy but that PA's sexual assault of Appellant was excluded from the policy's coverage by exclusion (j), which provided that the insurance did not apply to “liability arising from sexual relations, activity, acts or conduct with any person[.]” The trial court also found that Clinic's negligent supervision of PA was not a separate and distinct cause of Appellant's damages.

Applicable Principles of Review

We review de novo the trial court's grant of summary judgment. Roth v. The Equitable Life Assur. Soc'y Of the U.S., 210 S.W.3d 253, 258 (Mo.App. E.D.2006). “As such, this court reviews the trial court's determination independently, without deference to that court's conclusions.” O.L. v. R.L., 62 S.W.3d 469, 473 (Mo.App. W.D.2001). We also keep in mind that “[s]ummary judgment is ‘an extreme and drastic remedy’ and should be exercised with great care.” Id. (quoting ITT Commercial Fin. Corp. v. Mid–America Marine Supply Corp., 854 S.W.2d 371, 377 (Mo. banc 1993)). In regard to insurance contracts in particular,

[d]isputes arising from interpretations and application of insurance contracts are matters of law for the court where there are no underlying facts in dispute. Moore v. Commercial Union Insurance Co., 754 S.W.2d 16, 18 (Mo.App.1988). An insurance contract is designed to furnish protection; therefore it will be interpreted to grant coverage rather than defeat it. American Family Mutual Insurance Co. v. Turner, 824 S.W.2d 19, 21 (Mo.App.1991). Exclusion clauses in insurance policies are to be strictly construed against the insurer. Aetna Casualty & Surety Company v. Haas, 422 S.W.2d 316, 321 (Mo.1968).

Centermark Prop., Inc. v. Home Indem. Co., 897 S.W.2d 98, 100–01 (Mo.App. E.D.1995).

Analysis

Appellant's three points on appeal allege the trial court erred in: 1) determining that her claim fell within the exclusion of coverage for liability arising out of sexual acts; 2) finding that Intermed had no duty to defend under the policy because the duty to defend is broader than the duty to indemnify; and 3) finding that there was no coverage under the Intermed policy because Clinic's negligent supervision and retention of PA was a separate, concurrent proximate cause of Appellant's injuries. Finding it dispositive, we address only Appellant's third point.

Point III—Concurrent Proximate Cause

Appellant argues Clinic's negligent supervision of PA constituted a separate, concurrent proximate cause of her injuries because the elements of...