Williams v. Sif Consultants of La., Inc.

• Decision Date: 09 April 2014
• Docket Number: No. 13–972.,13–972.
• Citation: 133 So.3d 707
• Parties: George Raymond WILLIAMS, M.D., et al. v. SIF CONSULTANTS OF LOUISIANA, INC., et al.
• Court: Court of Appeal of Louisiana — District of US

133 So.3d 707

George Raymond WILLIAMS, M.D., et al.

v.SIF CONSULTANTS OF LOUISIANA, INC., et al.

No. 13–972.

Court of Appeal of Louisiana,Third Circuit.

Feb. 26, 2014.

Rehearing Denied April 9, 2014.

John Stanton Bradford, William B. Monk, Stockwell, Sievert, Viccellio, Clements, & Shaddock, L.L.P., Lake Charles, LA, for Plaintiff/Appellee, George Raymond Williams, M.D., Orthopaedic Surgery, A ProfessionalMedical, L.L.C.

Charles Thach Curtis Jr., Gerard George Metzger, Attorney at Law, New Orleans, LA, for Defendant/Appellee, Med–Comp USA, Inc.

Harry Alston Johnson, III, Phelps, Dunbar, L.L.P., Baton Rouge, LA, for Defendant/Appellant, Executive Risk Specialty Ins. Co.

Patrick Craig Morrow, Sr., James P. Ryan, Morrow, Morrow, Ryand, & Bassett, Opelousas, LA, for Plaintiff/Appellee, George Raymond Williams, M.D., Orthopaedic Surgery, A ProfessionalMedical, L.L.C.

Randall Kurt Theunissen, Michael Edward Parker, D. Paul Gardner, Jr., Allen & Gooch, Lafayette, LA, for Defendant/Appellee, Homeland Ins. Co. of New York.

Steven William Usdin, Edward R. Wicker, Jr., Stephen L. Miles, Barrasso, Usdin, Kupperman, Freeman, & Sarver, New Orleans, LA, for Defendant/Appellant, Executive Risk Specialty Ins. Co.

Michael Kevin Cox, Thomas Allen Filo, Cox, Cox, Filo, Camel & Wilson, Lake Charles, LA, for Plaintiff/Appellee, George

Raymond Williams, M.D., Orthopaedic Surgery, A ProfessionalMedical, L.L.C.

Stephen B. Murray, Stephen B. Murray, Jr., Arthur M. Murray, Nicole A. Ieyoub–Murray, Murray Law Firm, New Orleans, LA, for Plaintiff/Appellee, George Raymond Williams, M.D., Orthopaedic Surgery, A ProfessionalMedical, L.L.C.

Michael J. Rosen, Boundas, Skarzynksi, Walsh, & Black, L.L.C., Chicago, IL, for Defendant/Appellee, Homeland Ins. Co. of New York.

Court composed of ULYSSES GENE THIBODEAUX, Chief Judge, JOHN D. SAUNDERS, and JIMMIE C. PETERS, Judges.

SAUNDERS, Judge.

This is a class action wherein the plaintiff class was granted a partial motion for summary judgment on the issue of coverage. After a de novo review of the record, we find that policy issuer's appeal is without merit and affirm the trial court's judgment that the plaintiff class is entitled to its motion for partial summary judgment that the policy provides coverage to the claims asserted by the plaintiff class.

FACTS AND PROCEDURAL HISTORY:

The plaintiff class of medical providers filed suit against Executive Risk Specialty Insurance Company (Executive Risk) and Homeland Insurance Company of New York (Homeland) under the direct action statute. Executive Risk and Homeland had each issued a claims-made errors and omissions policy to CorVel, Corp. (CorVel) during consecutive time periods. Executive Risk issued policies to CorVel for annual periods from October 31, 1999, to October 31, 2005. Homeland issued policies for annual periods from October 31, 2005, to present. CorVel settled with the plaintiff class for failure to comply with the mandatory notice provisions of billing discounts in the Louisiana PPO Act, La.R.S. 40:2203.1.

After the trial court certified the plaintiff class, a partial motion for summary judgment was filed by the plaintiff class on the issue of coverage by the Executive Risk policies. The trial court granted the motion.

Executive Risk appealed the judgment. They alleged that the trial court's grant of partial summary judgment was premature because it had outstanding discovery propounded to the plaintiff class. Further, Executive Risk alleged that the trial court's grant of partial summary judgment was improper because: it was based entirely on an untested document never before produced in this case; the trial court incorrectly found that a claim existed against CorVel during Executive Risk's policy period; the trial court never made a necessary determination that any claim against CorVel relates to any other later claims; the trial court improperly found that the relief sought by the plaintiff class under Title 40 was not a penalty, and; the trial court failed to give full faith and credit to a Delaware judgment. Finally, Executive Risk alleged that the trial court improperly found coverage under Executive Risk's policy where CorVel failed to notify Executive Risk of any claim under Title 40 and where CorVel settled its alleged liability with the plaintiff class without ever notifying or obtaining consent from Executive Risk.

ASSIGNMENTS OF ERROR:

1. The trial court improperly granted summary judgment before there was any discovery on insurance coverage issues— e.g., the types of any “Claims,” the dates of any “Claims,” and whether a “Claim” even exists under the Policy. Indeed, the plaintiff class failed and refused to respond to discovery requests issued by Executive Risk on the disputed factual issues, and instead on summary judgment ambushed Executive Risk with evidence that requires full and complete discovery. Summary judgment was premature.

2. The trial court improperly granted summary judgment based solely on argument by the plaintiff class. The plaintiff class failed to present any competent evidence—whether through an affidavit or other sworn testimony—to prove coverage. The plaintiff class presented no evidence that a Title 23 or other action against CorVel ever truly existed during the Policy period, and presented no evidence that any “Claim” against CorVel related to another later “Claim.” In fact, the trial court never made a determination that any “Claim” against CorVel related to another later “Claim.”

3. The trial court improperly determined that the relief sought by the plaintiff class under Title 40 is not a penalty, and instead constitutes covered statutory damages covered under the Policy. The trial court's holding is out of step with Louisiana appellate courts, including the Third Circuit, and federal courts which repeatedly and consistently have characterized the relief under Title 40 as an uninsured penalty. It also directly contradicts the earlier-rendered Delaware Action Opinion, which has preclusive effect here, involving the very same issues, policies, and parties.

4. The trial court erred in finding coverage because CorVel failed to notify Executive Risk of any “Claim” under Title 40. It is a condition precedent to coverage that a “Claim” be made within the Policy period and reported to Executive Risk no later than 90 days after the end of the Policy period. It is undisputed that CorVel failed to satisfy this condition, and thus under Louisiana Supreme Court jurisprudence, there is no coverage under the Policy.

5. Even if a “Claim” exists, the trial court erred in finding coverage because CorVel settled its alleged liability with the plaintiff class without ever notifying or obtaining the consent of Executive Risk, in clear violation of the terms of the Policy. As a result, there is no coverage.

DISCUSSION OF THE MERITS:

Executive Risk presents various arguments in its five assignments of error as to why the plaintiff class' partial summary judgment should not have been granted. We will address these arguments under one heading as each issue raised is subject to the same standard of review and requests the reversal of the trial court's grant of the plaintiff class' motion for partial summary judgment.

The standard of review applicable when an appeal is taken from a granted motion for summary judgment is de novo. Covington v. McNeese State Univ., 08–505 (La.App. 3 Cir. 11/5/08), 996 So.2d 667,writ denied,09–69 (La.3/6/09), 3 So.3d 491.Louisiana Code of Civil Procedure Article 966(A)(2) states that “[t]he summary judgment procedure is designed to secure the just, speedy, and inexpensive determination of every action.... The procedure is favored and shall be construed to accomplish these ends.” Under La.Code Civ.P. art. 966(B)(2), a motion for summary judgment “shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to material fact, and that mover is entitled to judgment as a matter of law.” Louisiana Code of Civil Procedure Article 966(C)(2) outlines the burden of proof that a party must carry in order to have a motion for summary judgment granted. It states:

The burden of proof remains with the movant. However, if the movant will not bear the burden of proof at trial on the matter that is before the court on the motion for summary judgment, the movant's burden on the motion does not require him to negate all essential elements of the adverse party's claim, action, or defense, but rather to point out to the court that there is an absence of factual support for one or more elements essential to the adverse party's claim, action, or defense. Thereafter, if the adverse party fails to produce factual support sufficient to establish that he will be able to satisfy his evidentiary burden of proof at trial, there is no genuine issue of material fact.

La.Code Civ.P. art. 966(C)(2).

Here, the plaintiff class was granted a motion for partial summary judgment against Executive Risk on the issue of coverage. The trial court found that the Executive Risk errors and omissions policies provided coverage for the plaintiff class' claims which it asserted. As such, we will review whether that policy does provide for coverage of the claims asserted by the plaintiff class.

An insurance policy is a contract between the parties and should be construed using the general rules of interpretation of contracts set forth in the Civil Code. If the words of the policy are clear and explicit and lead to no absurd consequences, no further interpretation may be made in search of the parties' intent and the agreement must be enforced as written. An insurance policy should not be interpreted in an unreasonable or strained manner so as to enlarge or restrict its provisions beyond what is reasonably contemplated by its terms or so as to achieve an absurd conclusion. The policy should be construed as a...