Ball v. NCRIC, Incorporated , 120 F. App'x 965 ( 2005 )

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 03-2100
PATRICIA BALL,
Plaintiff - Appellant,
versus
NCRIC, INCORPORATED, a/k/a National Capital
Reciprocal Insurance Company,
Defendant - Appellee.
Appeal from the United States District Court for the District of
Maryland, at Greenbelt. Alexander Williams, Jr, District Judge.
(CA-00-832-AW)
Argued: October 29, 2004 Decided: January 27, 2005
Before WILKINS, Chief Judge, and TRAXLER and GREGORY, Circuit
Judges.
Affirmed by unpublished per curiam opinion.
ARGUED: Gregory Charles Mitchell, Washington, D.C., for Appellant.
Lee Thomas Ellis, Jr., BAKER & HOSTETLER, L.L.P., Washington, D.C.,
for Appellee. ON BRIEF: Stephen C. Leckar, BUTERA & ANDREWS,
Washington, D.C., for Appellant. Amy M. Henson, BAKER & HOSTETLER,
L.L.P., Washington, D.C., for Appellee.
Unpublished opinions are not binding precedent in this circuit.
See Local Rule 36(c).
PER CURIAM:
Patricia Ball brought this action against NCRIC, Incorporated,
seeking satisfaction of a judgment she obtained against a doctor
insured by NCRIC. The district court granted summary judgment in
favor of NCRIC, and Ball appeals. We affirm.
I.
From April to November 1987, Dr. George Daniel provided in-
home treatment to Ball for migraine headaches and depression.
During these visits, Daniel injected Ball with various drugs to
which Ball became addicted. The drugs put Ball into a state of
stupor, during which time Daniel sexually assaulted her. Daniel
was arrested in November 1987 on unrelated federal charges of
selling prescriptions to undercover agents. Daniel agreed to plead
guilty to the charges in February 1988. Daniel, however, did not
appear for the plea proceeding, and he remained a fugitive until
1991.
Daniel was insured under a “claims made” medical malpractice
insurance policy issued by NCRIC that was in effect from March 19,
1987, until January 1, 1988. Ball brought a malpractice action
against Daniel, notifying NCRIC of her claim against Daniel in
December 1987. Her action was largely stalled during the time that
Daniel remained a fugitive.
2
In April 1992, Ball filed a notice of claim against Daniel
with the Maryland Health Claims Arbitration Office, in accordance
with Maryland law governing medical malpractice claims. Ball
served Daniel (then in federal prison) with notice of her claim and
also provided NCRIC with a copy of the arbitration claim. NCRIC
took the position that Ball’s claims against Daniel did not fall
within the scope of the policy issued by NCRIC. In February 1996,
the Health Claims Arbitration panel rendered a decision in favor of
Ball on her claims against Daniel and awarded $310,000 in damages.
Final judgment in that amount was entered in Maryland state court
on September 1996.
In February 2000, Ball filed an action in Maryland state court
seeking to recover the amount of the judgment through the insurance
policy issued by NCRIC. See Washington Metro. Area Transit Auth.
v. Queen, 597 A.2d 423, 425-26 (Md. 1991) (“[A] tort claimant may
not maintain a direct action against the defendant tortfeasor’s
liability insurer until there has been a determination of the
insured’s liability in the tort action. Once there is a verdict or
judgment in the tort action, a direct action may be maintained
against the liability insurer.”). NCRIC removed the case to
federal court on the basis of diversity of citizenship.
After cross-motions for summary judgment, the district court
ruled in favor of NCRIC, concluding that Daniel’s failure to
cooperate with NCRIC’s investigation of Ball’s claim relieved NCRIC
3
of any obligation under its policy. Ball appealed, and this court
reversed and remanded. We concluded that NCRIC failed to prove
that it was prejudiced by Daniel’s lack of cooperation and that
section 19-110 of the Maryland Insurance Code therefore prevented
NCRIC from denying coverage because of Daniel’s lack of
cooperation. We also rejected NCRIC’s alternative argument that
coverage could be denied on the basis of Daniel’s failure to notify
NCRIC of Ball’s claim, as required by the policy. We concluded
that because Ball’s attorney notified NCRIC of the claim, NCRIC was
not prejudiced by Daniel’s failure to give notice, and section 19-
110 therefore prevented NCRIC from denying coverage on that basis.
See Ball v. NCRIC, Inc., No. 01-1716, 2002 WL 1473355, at *2-3 (4th
Cir. July 10, 2002) (unpublished).
After the case was remanded to the district court, the parties
again filed cross-motions for summary judgment. The district court
granted summary judgment in favor of NCRIC on several alternate
grounds. The district court concluded that the notice of the claim
provided by Ball’s attorney to NCRIC did not comply with the
requirements of the policy and was therefore insufficient. The
district court also concluded that Daniel’s actions did not involve
the provision of “professional medical services” as covered by the
policy. Finally, the district court concluded that Daniel knew or
should have known about Ball’s potential claim against him when the
4
policy was issued, and that Ball’s claim therefore fell within a
policy exclusion.
II.
A.
NCRIC’s policy requires that the insurer be given written
notice of any claims made against the insured, and the policy
specifies that the notice contain “particulars sufficient to
identify the insured and also reasonably obtainable information
with respect to the time, place and circumstances thereof, and the
names and addresses of the injured and of available witnesses.”
Ball’s attorney notified NCRIC of her claim against Daniel by
letter dated December 15, 1987. Because the letter did not satisfy
all of the policy requirements, the district court concluded that
NCRIC could deny coverage on that basis.
On appeal, NCRIC recognizes that our decision in the prior
appeal precludes any argument that the insufficient notice caused
it to suffer “actual prejudice” within the meaning of section 19-
110. NCRIC, however, contends that the sufficiency-of-the-notice
question is simply a question of contract law that is unaffected by
section 19-110. That is, NCRIC contends that if the notice
provided by Ball’s attorney did not meet the requirements set forth
in the policy, then it is entitled as a contractual matter to
5
disclaim coverage, whether or not it suffered prejudice under
section 19-110. We disagree.
Section 19-110 states:
An insurer may disclaim coverage on a liability insurance
policy on the ground that the insured or a person
claiming the benefits of the policy through the insured
has breached the policy by failing to cooperate with the
insurer or by not giving the insurer required notice only
if the insurer establishes by a preponderance of the
evidence that the lack of cooperation or notice has
resulted in actual prejudice to the insurer.
Md. Code Ann. Ins. § 19-110 (emphasis added). The statute thus
applies to a claim that an insured breached the policy by failing
to provide the “required notice,” which is precisely the claim
NCRIC is making when it argues that Ball’s notice did not satisfy
the requirements of the policy.
NCRIC’s claim regarding the sufficiency of the notice thus
falls within the scope of section 19-110 and is precluded by our
conclusion in the prior appeal that NCRIC failed to establish
actual prejudice. The district court erred by granting summary
judgment to NCRIC on that basis.
B.
The policy at issue insured Daniel against claims “caused by
a medical incident which occurs . . . in the practice of the
insured’s profession as a physician or surgeon.” J.A. 71. The
policy defines “medical incident” as “any act or omission in the
furnishing of professional medical services to any person.” J.A.
75. “Professional medical services” is not defined by the policy.
6
The district court noted that “the scope of professional
services does not include all forms of Dr. Daniel’s conduct simply
because he is a doctor.” J.A. 660 (emphasis omitted). The court
concluded that Daniel’s actions with regard to Ball “were solely
for the satisfaction of his own prurient interests,” and that his
actions “in no way involved the application of any specialized
learning or skills.” J.A. 660 (internal quotation marks and
alteration omitted). The court concluded that Ball’s claims
against Daniel did not spring from Daniel’s furnishing of medical
services to Ball and that NCRIC therefore had no duty to cover the
judgment entered against Daniel.
There are no Maryland cases interpreting the precise language
used in NCRIC’s policy. When making their arguments, however, the
parties rely on cases involving Maryland’s Health Care Malpractice
Claims Arbitration Act. In general, the Act requires that claims
“against a health care provider for medical injury” must be
submitted to arbitration conducted through the Health Claims
Arbitration Office before an action can be commenced in circuit
court. Md. Code Ann., Cts. & Jud. Proc. § 3-2A-02(a)(1). The
Health Claims Arbitration Office has authority only over cases that
fall within the scope of the Act. See, e.g., Watts v. King, 794
A.2d 723, 733 (Md. Ct. Spec. App. 2002) (“It is true that, although
CJ § 3-2A-02(a) requires that all claims shall be submitted to the
HCAO for arbitration, intentional torts may be excluded from the
7
Act’s jurisdiction.” (internal quotation marks and alteration
omitted)).
The Act defines “medical injury” as “injury arising or
resulting from the rendering or failure to render health care.”
Md. Code Ann., Cts. & Jud. Proc. § 3-2A-01(f). The Maryland courts
have set forth standards for determining which claims meet this
definition and thus fall within the scope of the Act:
[T]he Act covers only those claims for damages arising
from the rendering or failure to render health care where
there has been a breach by the defendant, in his
professional capacity, of his duty to exercise his
professional expertise or skill. Those claims for
damages arising from a professional’s failure to exercise
due care in non-professional situations such as premises
liability, slander, assault, etc., were not intended to
be covered under the Act and should proceed in the usual
tort claim manner.
Cannon v. McKen, 459 A.2d 196, 201 (Md. 1983) (emphasis added).
Where a plaintiff alleges that he or she was injured by
a health care provider during the rendering of medical
treatment or services, the Act is implicated, regardless
of whether the claim sounds in negligence or intentional
tort. When confronted with such a claim, the trial court
must determine if the plaintiff’s factual allegations
remove the claim from the Act’s coverage. If the
complaint sets forth facts showing that the claimed
injury was not inflicted during the rendering of medical
services, or that the injury resulted from conduct
completely lacking in medical validity in relation to the
medical care rendered, the Act is inapplicable . . . .
Goicochea v. Langworthy, 694 A.2d 474, 479 (Md. 1997) (emphasis
added).
The language in NCRIC’s policy obviously is not identical to
the language of the Maryland statute or the standard used by
8
Maryland courts to apply that statutory language. Nonetheless, we
agree with the parties that there is sufficient similarity such
that the cases discussing the scope of the Act provide guidance on
the issue before us. The question, then, is whether Daniel’s
conduct was so completely lacking in medical validity that it
cannot be considered the “furnishing of professional medical
services” as covered by the policy.
If the only conduct at issue in this case were Daniel’s sexual
assaults, then we might agree with NCRIC and the district court
that Daniel’s actions did not arise from the furnishing of medical
services. Professional malpractice insurance does not protect
against all negligence of a person who happens to be a
professional; it is intended to protect against negligence that
occurs during the course of the professional’s exercise of his
special skills and training. Although Maryland does not appear to
have directly addressed this question, many courts have concluded
that, except in cases involving psychiatrists or other therapists,
sexual misconduct by a doctor is not covered by a professional
malpractice insurance policy. See, e.g., Niedzielski v. St. Paul
Fire & Marine Ins. Co., 589 A.2d 130 (N.H. 1991); St. Paul Fire &
Marine Ins. Co. v. Mori, 486 N.W.2d 803 (Minn. Ct. App. 1992).
Sexual assault is typically viewed as being so far beyond the
bounds of professional medical treatment and so disconnected from
an exercise of the doctor’s professional skills and training that
9
courts have concluded a sexual assault by a doctor does not amount
to medical malpractice.
In this case, however, Ball’s complaint is not based only on
Daniel’s sexual misconduct. Daniel advertised himself as providing
in-house medical treatment, and Ball sought him out for treatment
of migraines and depression. Daniel came to her house and
purported to treat those problems by injecting Ball with various
drugs, including Demerol, Vistaril, Valium, and Fiorinal. Ball’s
claim against Daniel is based, in large part, on her contention
that Daniel failed to properly administer these drugs by giving
them to her in amounts that caused her to become addicted. At
least some of the drugs given to Ball by Daniel are commonly used
to treat the problems from which Ball suffered. See, e.g., Baker
v. Apfel, 159 F.3d 1140, 1143 (8th Cir. 1998) (noting that “[t]he
only effective pain medication for the migraines is an injection of
Demerol”); Beckley v. Apfel, 152 F.3d 1056, 1058 (8th Cir. 1998)
(noting that claimant took Fiorinal to treat migraine headaches).
Under these circumstances, we cannot say that Daniel’s actions in
administering the drugs were completely lacking in medical
validity. Ball’s claim with regard to Daniel’s misuse of the drugs
therefore falls within the scope of the risk covered by NCRIC’s
policy.
NCRIC, however, contends that Daniel did not give Ball these
drugs for the purpose of treating her migraines and depression, but
10
instead gave her the drugs to carry out his scheme to addict her
and render her incapable of rejecting his sexual advances. NCRIC
bases this argument on Ball’s deposition testimony, during which
she stated that she believed that Daniel was trying to get her
addicted to drugs. Ball also stated in her deposition that she
agreed with her attorney who argued before the Health Claims
Arbitration Panel that Daniel purposefully and maliciously gave her
drugs to get her addicted. Based on these statements, NCRIC
contends that the “undisputed facts” are that Daniel never
undertook to treat Ball’s ailments. See Brief of Respondent at 20
n.7. Thus, NCRIC argues that Daniel’s administering of the drugs
was completely lacking in medical validity and does not fall within
the scope of the policy coverage.1 We disagree.
Ball’s subjective beliefs about what Daniel’s intentions may
have been simply are not determinative of the coverage question.
What matters is the actual nature of the claim, not the label that
the plaintiff attaches to the claim. See Jewell v. Malamet, 587
A.2d 474, 479 (Md. 1991) (“[T]he determination of jurisdiction in
cases involving an intentional tort of a professional nature lies
1
NCRIC also suggests that the injection of drugs requires no
specialized learning or skills, so that Daniel’s administering of
the drugs to Ball cannot be viewed as the provision of professional
medical services. NCRIC claims that to conclude otherwise “would
be to equate a street heroin addict with a doctor of more worthy
morals.” Brief of Respondent at 23. This argument is without
merit. While it may be true that shots can be given by those who
are not doctors, that does not mean that a doctor is not using his
professional skills when giving a shot.
11
not in the label given to the tort, but on the factual context in
which the tort was allegedly committed.” (internal quotation marks
and alterations omitted)); see also Goicochea, 694 A.2d at 479
(rejecting plaintiff’s attempt to turn medical malpractice case
into an intentional tort case by alleging that the doctor acted
maliciously).
As previously discussed, Ball’s claim falls within the scope
of the policy because it springs from Daniel’s furnishing of
professional medical services, services that were not completely
lacking in medical validity. Ball’s personal beliefs about why
Daniel acted as he did does not change this conclusion.
C.
Finally, we turn to the district court’s conclusion that NCRIC
was not obligated to provide coverage for Ball’s claim because
Daniel knew or should have known about her claim when the policy
was issued.
The policy issued by NCRIC states that coverage “is limited to
liability for only those claims which arise from incidents
occurring subsequent to the retroactive date stated in the
declarations and schedule page and which are first made against the
insured while the policy is in force.” J.A. 69. The retroactive
date of the NCRIC policy was March 19, 1987. Daniel began treating
Ball in April 1987, and we decided in the previous appeal that Ball
12
provided timely notice to NCRIC of her claim. Thus, Ball’s claim
seems to fall within the coverage period of the policy.
The policy, however, also contains an exclusion (“Exclusion
(f)”), which excludes coverage for liability “for any potential
claim against the insured of which the insured is aware, or
reasonably should have been aware, as of the date this policy is
issued, regardless of whether or not such claim has yet been made
or reported to any insurer.” J.A. 72 (emphasis added). Although
the policy’s retroactive date is March 19, 1987, the policy was
formally issued on May 21, 1987. The district court concluded that
by the time the policy was issued in May 1987, Daniel reasonably
should have known of Ball’s potential claim against him. The
district court therefore concluded that Exclusion (f) operated to
remove Ball’s claim from coverage under the policy.
On appeal, Ball contends that the policy is ambiguous because
it states that it covers claims arising after the retroactive date,
but then excludes claims about which Daniel should have been aware
on the issuance date, without defining issuance date. And because
the policy is ambiguous, Ball argues, we should construe it in her
favor. See, e.g., Mamsi Life & Health Ins. Co. v. Callaway, 825
A.2d 995, 1005-06 (Md. 2003) (“Although Maryland law does not
construe insurance policies as a matter of course against the
insurer, when a term in an insurance policy is found to be
ambiguous, the court will construe that term against the drafter of
13
the contract which is usually the insurer.” (citation omitted)).
We disagree with Ball’s argument.
Although the policy states that it covers claims for incidents
occurring after the retroactive date, the policy also makes clear
that the grant of coverage is subject to the other terms of the
policy, which of course includes the policy exclusions. And
contrary to Ball’s suggestion, the policy cannot be considered
ambiguous simply because it includes provisions that operate to
preclude coverage that would otherwise be granted. That is exactly
what exclusions are intended to do.
Nor can we conclude that Exclusion (f) is ambiguous because
the policy does not define date of issuance. The declarations page
of the policy expressly identifies May 21, 1987 as the policy’s
issue date. See J.A. 642. While no provision in the policy
explains the time frame under which the policy would be issued,
that omission does not make the exclusion ambiguous.
A contract term is determined to be ambiguous if a
reasonably prudent person would understand the term as
susceptible to more than one possible meaning. The
determination of whether language is susceptible to more
than one meaning includes consideration of the character
of the contract, its purpose, and the facts and
circumstances of the parties at the time of execution.
Id. at 1005 (citation and internal quotation marks omitted).
“Unless there is an indication that the parties intended to use
words in the policy in a technical sense, the terms of the contract
are accorded their customary, ordinary, and accepted meanings.”
14
Walk v. Hartford Cas. Ins. Co., 852 A.2d 98, 106 (Md. 2004). When
the policy is read as a whole, it is clear that the policy was
issued for purposes of Exclusion (f) when it was compiled and
delivered to Daniel, a date identified in the policy as May 21,
1987. That the date of issuance is different from the retroactive
date simply does not make the exclusion ambiguous.
The question, then, is whether Exclusion (f) operates to
remove Ball’s claim from the coverage provided by NCRIC’s policy.
We are constrained to answer that question in the affirmative.
The record establishes that by the time the policy was issued
on May 21, 1987, Daniel had visited Ball multiple times,
administering drugs each time, and had sexually assaulted her at
least once. Daniel had by that time told Ball that she was
addicted to the narcotics he had been giving her, and (again,
before the date of the policy issuance), Ball had checked herself
into a hospital seeking treatment for the addiction. Given these
facts, a reasonable person would have known before the policy was
issued that Ball had a claim against Daniel. While Ball had not
sued Daniel or even made a complaint against him by the time the
policy was issued, Exclusion (f) by its terms applies to potential
claims of which the insured “reasonably should have been aware,”
whether or not the claim has actually been made. Accordingly, we
agree with the district court that, by virtue of Exclusion (f),
15
Ball’s claim against Daniel is excluded from the policy issued by
NCRIC.
Ball, however, contends that because Daniel continued to treat
her after the policy was issued, Exclusion (f) does not preclude
coverage for her claim. In support of this argument, Ball relies
on Mutual Fire, Marine & Inland Insurance Co. v. Vollmer, 508 A.2d
130 (Md. 1986).
In Vollmer, a malpractice insurance policy issued to a doctor
provided coverage for malpractice committed after the policy’s
retroactive date and excluded coverage for malpractice occurring
before the retroactive date. The plaintiff’s complaint alleged a
related series of acts of malpractice, some of which occurred
before the retroactive date and some of which occurred after the
retroactive date. The Vollmer court concluded that the policy was
ambiguous because “[t]he policy is silent on its application where
malpractice is alleged to have been committed both before and after
the retroactive date.” Id. at 134. The court therefore
“resolve[d] the ambiguity against the drafter of the policy and in
favor of coverage.” Id.
The specific language of NCRIC’s policy, however, makes Ball’s
“continuing treatment” analysis inapplicable and her reliance on
Vollmer unavailing. The policy provides coverage for claims
“caused by a medical incident.” J.A. 71. As to “medical
incident,” the policy states that “[a]ny such act or omission
16
together with all related acts or omissions in the furnishing of
such services to any one person shall be considered one medical
incident.” J.A. 75. Under this provision, Daniel’s actions that
occurred before the policy issuance date were clearly related to
the actions that occurred after the issuance date. Thus, there was
only one medical incident, one that Daniel reasonably should have
known about before the policy issued. Unlike the policy at issue
in Vollmer, the NCRIC policy is not ambiguous. By treating related
actions as a single medical incident and excluding coverage for
medical incidents about which Daniel should have known by the
issuance date, the policy simply forecloses Ball’s continuing-
treatment argument.
We therefore agree with the district court that Exclusion (f)
applies so as to take outside the scope of the policy’s coverage
the claims asserted against Daniel by Ball. Although we have
concluded that the district court erred in its analysis of the
other issues in this case, our conclusion with regard to Exclusion
(f), standing alone, is sufficient to support the district court’s
judgment.2 Accordingly, for the foregoing reasons, the district
2
At oral argument, counsel for NCRIC suggested that Exclusion
(f) operates to bar coverage only as to Daniel’s actions occurring
before the policy was issued, and that coverage is barred for
actions occurring after the policy was issued because Daniel’s
conduct did not involve the provision of professional services. In
its appellate brief, however, NCRIC made it clear that each of the
district court’s bases for ruling in favor of NCRIC were
independently sufficient to support the district court’s decision.
Thus, the statement at oral argument suggesting that Exclusion (f)
17
court’s decision granting summary judgment in favor of NCRIC is
hereby affirmed.
AFFIRMED
alone would not completely preclude recovery under the policy was
likely an inadvertent misstatement. In any event, because the
relevant provisions of the NCRIC policy are unambiguous, the
meaning of the policy is a question of law to be resolved by this
court. See, e.g., Vizzini v. Insurance Co. of North Am., 273 A.2d
137, 140 (Md. 1971) (“[T]he interpretation of an unambiguous
insurance contract is a question of law for the court. . . .”).
The statement by NCRIC’s attorney, inadvertent or not, is therefore
not binding on this court. See New Amsterdam Cas. Co. v. Waller,
323 F.2d 20, 24-25 (4th Cir. 1963) (“The doctrine of judicial
admissions has never been applied to counsel's statement of his
conception of the legal theory of the case. When counsel speaks of
legal principles, as he conceives them and which he thinks
applicable, he makes no judicial admission and sets up no estoppel
which would prevent the court from applying to the facts disclosed
by the proof, the proper legal principles as the Court understands
them. . . . [A] party’s misconception of the legal theory of his
case does not work a forfeiture of his legal rights.”).
18