The Med. Protective Co. v. Crafton Chiropractic, Inc., Civil Action 20-00414-KD-B
| Decision Date | 01 November 2021 |
| Docket Number | Civil Action 20-00414-KD-B |
| Parties | THE MEDICAL PROTECTIVE COMPANY, Plaintiff, v. CRAFTON CHIROPRACTIC, INC., KATHERINE CRAFTON, DOUG JOHNSON, and EMILY JOHNSON as Personal Representative of the Estate of Patricia Johnson, Defendants. |
| Court | U.S. District Court — Southern District of Alabama |
Defendant Doug Johnson's wife Patricia died from breast cancer in May 2018. In January 2019, he filed a civil action against the Craftons in the Circuit Court of Mobile County, Alabama based on treatment Patricia received at Crafton Chiropractic, Inc. In May 2020, the complaint was amended to add plaintiff Emily Johnson, as personal representative for the estate of Patricia Johnson (doc. 1-3). The complaint was amended two additional times (docs. 29-1, 29-2).
Crafton Chiropractic, Inc. had a “HealthCare Professional Professional Liability Policy” (sic) No. 815125 with MedPro during the relevant period of time that Patricia received treatment at the clinic (doc. 1-4, p. 5). MedPro has defended the Craftons in the underlying action, subject to a reservation of rights (doc. 1, p. 3).
In August 2020, MedPro filed its complaint seeking a declaratory judgment regarding the parties' rights and obligations with respect to the Policy (doc. 1). MedPro claims that the Policy “does not afford coverage for the underlying lawsuit because the Crafton Defendants cannot satisfy the definition of professional services” (doc. 1, p. 5). MedPro also claims that material misrepresentations and omissions allegedly made by the Craftons (i.e., that no specialties other than chiropractic services were offered at the clinic), “further limit coverage under the Policy” and that under the Policy terms and Ala. Code § 27-14-7, it is entitled to rescind the Policy and disclaim coverage for the underlying lawsuit (Id., p. 9-10).
MedPro seeks a declaration that the Craftons “were not performing ‘professional services' in their treatment” of Patricia; that the listed exclusions “exclude and/or limit” coverage for the claims asserted by the Johnsons; and that “if material misrepresentations and omissions were made in the Application and/or if the Crafton Defendants failed to ‘inform [MedPro] of any change to [their] practice' then MedPro is entitled to a declaration of no coverage” (Id., p. 11). MedPro also seeks a declaration of permission to withdraw from defending the Craftons in the underlying lawsuit (Id.).
MedPro and the Craftons filed cross-motions for summary judgment, which are now before the Court.
The 2016 “Healthcare Professional Professional Liability Insurance Application” (sic) identifies the Applicant as “Crafton Chiropractic, Inc.” a “Professional Corporation: sole shareholder” (doc. 1-5, p. 1). Katherine Crafton identified herself as a “Doctor of Chiropractic”, identified her “Specialty” as “Chiropractor”, and that she was the 100% shareholder of Crafton Chiropractic, Inc. (Id., p. 3). The Application also includes a Chiropractic Supplemental Application (Id., p. 9). The Supplemental Application requests “the number” of service providers in the practice who provide services in certain “Specialty” areas. Specifically, Chiropractor, Dietician/Nutritionist, Chiropractic Assistant/Technician, Acupuncturist, Acupuncturist Technician, Message (sic) Therapist, Physician MD/DO, Occupational Therapist, Occupational Therapist Aide/Asst., Physical Therapist, Physical Therapist Aide/Asst., X-Ray Technician, and “Other (List Specialty)” (Id.) Crafton identified one service provider in her practice with a specialty of Chiropractor (Id.).
(Doc. 52-1).
Crafton also averred that in December 2016, when the Application was completed, Crafton Chiropractic did not employ any physician, whether a medical doctor or doctor of osteopathic medicine, or “anyone within the vague description ‘Other (List Specialty)'” (Id.). Crafton further states that Crafton Chiropractic's only other employees were part-time aides who work at the front desk, direct the movement of patients from check-in to check-out, etc., and that Alabama law does not require aides to be licensed, certified or degreed to perform the work that the aides performed (Id.). Crafton states that “not stating any number for employees employed as a ‘Dietician/Nutritionist.' ‘Physician MD/DO (List Specialty),' or ‘Other (List Specialty,' was truthful to the best of Crafton's knowledge and belief and did not knowingly or intentionally misrepresent or conceal information.” (Id.).
Section VIII, captioned Notices and Agreements, states that a signature represents the applicant's agreement that the representations on the Application are “full and complete to the best of our combined knowledge and belief.” (doc. 1-5, p. 6.) Section VIII provides that the Application and any Attachments “shall be the basis of the contract “with MedPro and an agreement to notify MedPro “if there are any future material changes in any answer to this application, or its Attachments, including without limitation, any change in professional specialty . . .” (Id.)
Section VIII also provides:
I understand that any material misrepresentation or omission made by me or any other applicant on this application may act to render any contract of insurance null and void and without effect or provide the Company the right to rescind it....
(Id., emphasis in original).
And, also provides:
I AGREE THAT IF I, OR ANY APPLICANT, FAIL TO COMPLY WITH THESE TERMS WE WILL HAVE NO COVERAGE FOR ANY CLAIM UNDER ANY POLICY OF INSURANCE FOR WHICH WE ARE APPLYING.
(Id., capitalization, and emphasis in original).
MedPro issued “HealthCare Professional Professional Liability” (sic) Policy No. 815125 to Crafton Chiropractic, Inc. for the period of December 10, 2018 to December 10, 2019 (doc. 14). The Policy provides coverage on a claims-made basis, i.e., for claims made during the policy period. The Policy has a retroactive date of December 10, 2014 (Id., p. 4). The Policy provides coverage up to $1, 000, 000 for each covered “wrongful act, event or personal injury offense.” (Id., p. 3). The Policy defines a “wrongful act” as “any actual or alleged negligent act, error or omission in the performance of professional services as a Healthcare Professional” and “professional services” include “medical treatment for those specialties listed on the Declarations”, specifically, “Chiropractor.” (Id., p. 21-22).
The named insureds were Katherine B. Crafton and Crafton Chiropractic, Inc. The Policy was issued to a “Renewal Business” (Id.). The Policy provided limits of insurance for (Id., p. 3, 5-6).
The Professional Liability Insuring Agreement of the Policy affords coverage for “those amounts an Insured is legally obligated to pay to compensate others for damages resulting from an Insured's wrongful act in the rendering of, or failure to render, professional services as a Healthcare Professional that results in injury” (Id., § I.A). The Policy defines “professional services” as:
Medical treatment for those specialties listed on the Declarations or any other services listed, by endorsement, for which an Insured is licensed as required by law, trained, and qualified to perform in the Insured's capacity as a Healthcare Professional.
(Id., § XII.X). The Declarations Page contains a “Professional Services Specialty” section which states “See Schedule of Insureds.” (Id., p. 3). In the “Schedule of Insureds Endorsement” the...
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