The Medical Protective Co. v. Watkins D.D.S.

• Decision Date: 26 November 1999
• Docket Number: No. 98-7515,98-7515
• Citation: 198 F.3d 100
• Parties: (3rd Cir. 1999) THE MEDICAL PROTECTIVE COMPANY, a Corporation v. WILLIAM WATKINS, D.D.S.; LEONARD MEDURA, D.D.S.; JOSEPH MAZULA, D.D.S.; DAVID WALSKI; LISA WALSKI; DAVID WALSKI, Administrator of the Estate of Jonathan Walski, Deceased; WATKINS AND MEDURA, a partnership WILLIAM WATKINS, D.D.S.; WATKINS AND MEDURA Appellants
• Court: U.S. Court of Appeals — Third Circuit

Page 100

198 F.3d 100 (3rd Cir. 1999)

THE MEDICAL PROTECTIVE COMPANY, a Corporation v. WILLIAM WATKINS, D.D.S.; LEONARD MEDURA, D.D.S.; JOSEPH MAZULA, D.D.S.; DAVID WALSKI; LISA WALSKI; DAVID WALSKI, Administrator of the Estate of Jonathan Walski, Deceased;

WATKINS AND MEDURA, a partnership WILLIAM WATKINS, D.D.S.; WATKINS AND MEDURA Appellants

No. 98-7515

UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT

Argued March 23, 1999

Filed November 26, 1999

Appeal from the United States District Court, for the Middle District of Pennsylvania, (D.C. Civil Action No. 97-cv-00123), District Judge: Honorable A. Richard Caputo

John W. Jordan, IV, Esquire, (Argued), Gaca, Matis, Baum, & Rizza, Four PPG Place, Suite 300, Pittsburgh, PA 15222, Attorney for Appellee, The Medical Protective Company

James F. Mundy, Esquire, Raynes, McCarty, Binder, Ross, & Mundy, 1845 Walnut Street, Suite 2000, Philadelphia, PA 19103, Attorney for Appellees Lisa and David Walski, David Walski, Administrator of the Estate of Jonathan Walski, Deceased

Carl A. Solano, Esquire (Argued), Philip G. Kircher, Esquire, Schnader, Harrison Segal & Lewis, 1600 Market Street, Suite 3600, Philadelphia, PA 19103, Attorneys for Appellants William Watkins, D.D.S. and Watkins and Medura, a partnership

Before: GREENBERG and ROTH, Circuit Judges, and POLLAK,¹ District Judge

OPINION OF THE COURT

ROTH, Circuit Judge.

The facts of this case are tragic. A dentist, defendant William Watkins, decided to anesthetize a three-year old boy in order to repair dental cavities. Watkins used the services of an independent dental anesthesiologist to administer general anesthesia in Watkins's office. While the boy was anesthetized, he suffered cardiac arrest and died. This appeal is from a declaratory judgment action in which Watkins' insurance company, Medical Protective Co., sought a ruling that Watkins and his partnership were not covered by the Medical Protective policies. The significant policy language was a clause that excluded coverage for "any liability arising from the administration of any form of anesthesia in dosage designed to render the patient unconscious unless administered in a hospital."

The District Court granted summary judgment in favor of the insurance company, holding that the language of the exclusionary clause was unambiguous and applicable to the case at hand. In addition, the District Court held that the doctrine of reasonable expectations was inapplicable.

For the reasons stated below, we will reverse and remand the case to the District Court.

I. FACTS

William Watkins, D.D.S., is a licensed dentist in Dallas, Pennsylvania, practicing in a partnership known as Watkins and Medura. Dr. Watkins does not have, and never has had, a license to administer anesthesia. Rather, throughout the period that Dr. Watkins and Watkins and Medura (collectively, the "Watkins defendants") were covered under the policies at issue, they had made arrangements with Dr. Joseph Mazula, a licensed oral surgeon and dental anesthesiologist, to administer anesthesia to patients, when needed, in the Watkins offices. Dr. Mazula had administered general anesthesia in Dr. Watkins' office since as early as 1979, up until May 1996. Although Dr. Mazula performed these services at Dr. Watkins' office and used some equipment supplied by Watkins and Medura, Dr. Mazula was not employed by Dr. Watkins or the partnership.

In January 1985, Dr. Watkins completed a Medical Protective insurance application that contained numerous questions about his and the partnership's dental practice. He provided the following answers to Question 13 on the application:

Do you or an employee of your administer general anesthesia? [yes or no] no . In a dental office? [yes or no] no . In a hospital? [yes or no] no . Other? [yes or no] ___. Types of anesthetic used? .

No question on Medical Protective's application asked the applicant whether anyone other than the applicant or the applicant's employee ever administered general anesthesia in the applicant's office.

Plaintiff Medical Protective Company issued malpractice insurance policies to the Watkins defendants that provided coverage for "any claim for damages, at any time filed, based on professional services rendered or which should have been rendered, by the insured or any other person for whose acts or omissions the insured is legally responsible in the practice of the insured's profession." The policies also contained a clause, referred to as Exclusion 100:

This policy does not cover any liability arising from the administration of any form of anesthesia in dosage designed to render the patient unconscious unless administered in a hospital.

Dr. Watkins' policy also contained an "expanded coverage endorsement" (Endorsement 540) that stated that the policy was amended to add Paragraph A(7), an exclusion for:

any liability the insured, named in the policy, incurs under a contract or agreement; provided that this exclusion does not apply to:

. . .

(c) Any liability the insured incurs in rendering professional services under any contract or agreement with another dentist or other provider of professional services in the practice of the insured's profession; or

(d) Any liability the insured incurs in rendering professional services in connection with furnishing therapeutic agents or supplies in the practice of the insured's profession.

In light of the various policy provisions and the application he filled out, Dr. Watkins concluded when he read Exclusion 100 that "since I was not administering the anesthesia, that didn't really pertain to me, that I would have coverage if someone else was administering the anesthesia."

On March 5, 1996, David and Lisa Walski brought their three-year old son, Jonathan, to Dr. Watkins' office for a dental examination. During the examination, Dr. Watkins discovered four cavities and scheduled an appointment in May 1996 to fill them. Because Jonathan would not sit still, Dr. Watkins decided during the March visit that general anesthesia should be used while treating Jonathan. As was his practice, Dr. Watkins arranged for Dr. Mazula to administer the anesthesia to Jonathan in Dr. Watkins' office during the May appointment. On May 1, Dr. Mazula did administer general anesthesia to Jonathan, and Dr. Watkins began the repair of Jonathan's teeth. During the procedure, Jonathan experienced cardiac arrest and underwent emergency treatment. Dr. Watkins, who had been trained and previously certified in cardio-pulmonary resuscitation (CPR), but lacked a current certification, administered CPR to Jonathan. Emergency medical personnel were also called to the scene, but Jonathan could not be revived.

On July 10, 1996, the Walskis filed a wrongful death action, in their own right and as administrators of Jonathan's estate, against Dr. Mazula (and his professional corporation) and the Watkins defendants in the Court of Common Pleas of Luzerne County, Pennsylvania. The Walskis' cause of action against Dr. Mazula alleged, among other things, that he "administered a general anesthetic" to Jonathan "in a negligent, careless, and reckless and wanton manner as a result of which Jonathan D. Walski suffered a cardiac arrest leading to his death." Ultimately, the Walskis settled their claims against Dr. Mazula.²

The Walski's cause of action against the Watkins defendants asserted that Dr. Watkins did not obtain their informed consent before prescribing the anesthesia for Jonathan in March 1996 and that Dr. Watkins was negligent in various ways during that March visit with respect to his decision to anesthetize the boy and to employ Dr. Mazula to administer the anesthesia. The action against the Watkins defendants also alleged that Dr. Watkins was negligent in his treatment of Jonathan in May 1996 after Jonathan had suffered the cardiac arrest.

Medical Protective provided a defense to the Watkins defendants, subject to a reservation of its right to seek a declaration that its policies did not cover the Watkins defendants with respect to the Walskis' claims. Medical Protective then brought this declaratory judgment action in the United States District Court for the Middle District of Pennsylvania against the Watkins defendants and the Walskis, seeking a declaration that the Watkins defendants were not covered by the Medical Protective policies because the claims "arise from the administration of anesthesia." The case was submitted to the District Court on a joint stipulation of facts and cross-motions for summary judgment. On August 20, 1998, the District Court ruled that the policies provided no coverage for any liability which arises from the administration of anesthesia. He therefore granted summary judgment in favor of Medical Protective. Specifically, the court found that the language of Exclusion 100 was unambiguous and applicable, see District Court Memorandum at 4-5, and that the doctrine of reasonable expectations was inapplicable, id. at 5-6. The Watkins defendants appealed.

II. DISCUSSION

The District Court had subject matter jurisdiction under 28 U.S.C. S 1332(a), as the diversity and amount-in- controversy requirements were met. We have jurisdiction under 28 U.S.C. S 1291, as this appeal is from a final judgment that disposed of all parties' claims.

"When reviewing an order granting summary judgment we exercise plenary review and apply the same test the district court should have applied." Armbruster v. Unisys Corp., 32 F.3d 768, 777 (3d Cir. 1994). "Under Federal Rule of Civil Procedure 56(c), that test is whether there is a genuine issue of material fact and, if not, whether the moving party is entitled to judgment as a matter of law." Id. "As to materiality, the substantive law will identify which facts are material. Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment." Anderson v. Liberty Lobby, Inc., 477 U.S....