Med. Assurance Co. v. Weinberger, CAUSE NO. 4:06-CV-117 JD
| Decision Date | 17 October 2012 |
| Docket Number | CAUSE NO. 4:06-CV-117 JD |
| Parties | THE MEDICAL ASSURANCE COMPANY, INC. Plaintiff, v. MARK S. WEINBERGER, M.D., et al. Defendants. |
| Court | U.S. District Court — Northern District of Indiana |
Before the Court are certain Defendants' Motions for Review [DE 416, 417] of Magistrate Judge Andrew P. Rodovich's April 26, 2012, order denying the Motion to Stay or in the Alternative to File Documents in Camera by Stephen Robinson, Commissioner of the Indiana Patient's Compensation Fund (the "PCF"). See DE 371. Both the Weinberger defendants—Dr. Mark S. Weinberger and related entities—and the PCF have objected to the order, but because the Weinberger defendants are now in default, their motion for review has been dismissed and the Court will consider only the PCF's motion. The motion is ripe, and for the following reasons, the Court DENIES the motion for review.
The premise of this lawsuit is simple, although its procedural history is complex. Medical Assurance seeks a declaratory judgment that it does not owe a duty to defend or indemnify the Weinberger defendants in more than 350 medical malpractice suits pending (or already resolved) in Indiana state court. The basis for the claim is that Dr. Weinberger has not participated in the defense of those cases, as required by the insurance contract. Since the outset, the PCF has sought to have this case stayed until the underlying malpractice litigation is complete. It'sprevious attempt succeeded initially in the district court, where Judge Allen Sharp concluded that a stay was appropriate because Medical Assurance would not be able to show actual prejudice without interfering with the state court proceeding. But the Seventh Circuit lifted that stay, reasoning that it was too early in the litigation to determine whether and to what extent the declaratory judgment action would interfere with the state court cases, and noting that it could "imagine ways in which Medical Assurance might try to establish actual prejudice that would unacceptably intrude on the state cases, but other ways might not run the risk." Medical Assurance Co. v. Hellman, 610 F.3d 371, 381 (7th Cir. 2010).
Now that the case has proceeded some and Medical Assurance has clarified its position in a motion for summary judgment, the PCF once again seeks a stay.1 In its summary judgment motion,2 Medical Assurance argues that by fleeing the country, failing to participate in his defense, and then asserting his Fifth Amendment right against self-incrimination to refuse to respond to discovery requests or give deposition testimony, Weinberger has prejudiced Medical Assurance's defense in the underlying suits in five ways: (1) his refusal to participate in discovery has resulted in sanctions in state court preventing Weinberger from testifying in any of the trials; (2) because Weinberger has refused to participate in his defense and provide information regarding his thought processes, evaluations, and diagnoses, no meaningful defense of his claims has been possible; (3) without Weinberger's cooperation, meaningful arms-lengthsettlement negotiations with plaintiffs have been impossible; (4) Weinberger's refusal to cooperate has made Medical Assurance's defense more costly because it has had to hire experts to determine what Weinberger did and why; and (5) Medical Assurance has "irretrievably lost" the opportunity to determine whether some of the claims are excluded from the policy due to criminal behavior, fraudulent billing, or fraudulent consents. See DE 169 at 5-7. In light of these arguments, the PCF argues that a stay is appropriate at this point because Medical Assurance has elected to demonstrate prejudice in a manner that will interfere with the state suits. Moreover, the PCF itself wishes to pursue a defense in this case—that Medical Assurance cannot show prejudice because the malpractice cases are indefensible—that would be inconsistent with the position it would take if Medical Assurance is eventually successful in this case and the PCF assumes Weinberger's defense in the underlying cases.
When reviewing a magistrate judge's order on a non-dispositive matter, a district court must "modify or set aside any part of the order that is clearly erroneous or is contrary to law." Fed. R. Civ. P. 72(a); 28 U.S.C. § 636(b)(1)(A); see also Weeks v. Samsung Heavy Indust. Co., 126 F.3d 926, 943 (7th Cir. 1997). "Clear error is an extremely deferential standard of review, and will only be found to exist where the 'reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed.'" Pinkston v. Madry, 440 F.3d 879, 888 (7th Cir. 2006) (quoting Anderson v. City of Bessemer, 470 U.S. 564, 573 (1985)). As detailed below, the Court finds no error in Judge Rodovich's commendable opinion: it correctly states the law and applies it to the facts of this case. A stay is not appropriate in this case.
To begin with, Judge Rodovich correctly stated the law regarding the appropriateness ofa stay in declaratory judgment proceedings when there are related state court cases pending. As the Seventh Circuit clarified in this very case, the question the Court must answer is not simply whether there are related, or even "parallel" proceedings in state court, nor whether there is overlap between the factual issues in the federal and state cases, but rather "'how real [is the] prospect' that 'the declaratory action may present factual questions that the state court has also been asked to decide.'" Hellman, 610 F.3d at 379 (quoting Nationwide Ins. v. Zavalis, 52 F.3d 689, 693 (7th Cir. 1995). This is a broad inquiry, in which "the federal court should consider (among other matters) whether the declaratory suit presents a question distinct from the issues raised in the state court proceeding, whether the parties to the two actions are identical, whether going forward with the declaratory action will service the useful purpose in clarifying the legal obligations and relationships among the parties or will merely amount to duplicative and piecemeal litigation, and whether comparable relief is available to the plaintiff seeking a declaratory judgment in another forum or at another time." Nationwide Ins., 52 F.3d at 692.
The PCF objects, however, that although Judge Rodovich cited the correct standard, he in fact applied a different standard and focused on whether the two cases presented the same legal issues—whether Medical Assurance has suffered prejudice—rather than whether there are overlapping factual issues. The PCF elaborates that in one of the already decided state cases, Weinberger v. Boyer, 956 N.E.2d 1095 (Ind. Ct. App. 2011), the trial court admitted evidence related to Weinberger's flight—which is central to the federal case and some of which originated in discovery in this case—as evidence of his consciousness of guilt and his abandonment of the patient. See DE 417 at 10. The PCF adds that two of Medical Assurance's other bases for prejudice would involve overlapping factual issues in state court. First, the PCF claims thatwhether Medical Assurance has been unable to determine coverage defenses, such as fraudulent billing practices or fraudulent consents, overlaps with state law claims that Weinberger performed unnecessary surgeries, billed for surgeries not actually performed, and performed surgeries without informed consent. Second, the PCF claims that the issue of whether Weinberger's lack of cooperation impeded Medical Assurance's ability to investigate, evaluate, defend, or settle the state law claims overlaps with the central issue in the underlying cases of whether Weinberger breached the applicable standard of care.
The Court disagrees that Judge Rodovich applied the wrong standard of review. Whether Medical Assurance can show "actual prejudice" is an element of its declaratory judgment claim with both legal and factual elements, neither of which are duplicated in the state court litigation. To wit, the prejudice actually suffered by Medical Assurance is a factual issue, whereas whether that prejudice suffices under Indiana law to relieve Medical Assurance of its duty to defend is a legal issue. The legal issue, as the PCF acknowledges, is not at play in the state court. Nor are the factual issues the same, such that a decision by this Court would bind the state court or in any way limit its decision to render its own decision on the factual (or legal) issues before it. As Judge Rodovich explained: "Medical Assurance has not presented any questions that, if decided by this court, would interfere with decisions the state courts must make." DE 408 at 16. This was correct and, in fact, simply a restatement of the standard set out by the Seventh Circuit, that Medical Assurance could proceed with this case if it could do so "without interfering with the state processes." Hellman, 610 F.3d at 381.
That is not to say there is no factual overlap between the federal and state cases—after all, they both arise from the same series of events. Some of the overlap is not at the level of thefactual issues that need be decided by each court but at the level of the evidence that might establish those issues. For example, Weinberger's flight from the country—a predicate factual premise that seems beyond dispute at this point—is evidence both of his complete refusal to cooperate (the issue in federal court) and his consciousness of guilt (the issue in state court). But the mere fact that the same evidence may be relevant to both issues does not mean that this Court's decision on the former issue will have any impact of the latter. For example, the PCF complains that in Gill v. Weinberger, et al., a video-taped deposition from this case was admitted into evidence against Weinberger in that case. The PCF does not explain how the mere use of this evidence—which, according to Medical Assurance's motion for...
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