Interstate Fire & Casualty Co. v. Dimensions Assurance Ltd. , 843 F.3d 133 ( 2016 )

PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 15-1801
INTERSTATE FIRE AND CASUALTY COMPANY,
Plaintiff - Appellant,
v.
DIMENSIONS ASSURANCE LTD.,
Defendant - Appellee.
Appeal from the United States District Court for the District of
Maryland, at Greenbelt. George J. Hazel, District Judge.
(8:13-cv-03908-GJH)
Argued: September 23, 2016 Decided: December 6, 2016
Before TRAXLER, SHEDD, and FLOYD, Circuit Judges.
Vacated and remanded by published opinion. Judge Traxler wrote
the opinion, in which Judge Shedd and Judge Floyd joined.
ARGUED: Paulette Steffes Sarp, HINSHAW & CULBERTSON LLP,
Minneapolis, Minnesota, for Appellant. Robert Lawrence
Ferguson, Jr., FERGUSON, SCHETELICH & BALLEW, P.A., Baltimore,
Maryland, for Appellee. ON BRIEF: Suzanne L. Jones, HINSHAW &
CULBERTSON LLP, Minneapolis, Minnesota; Robert C. Morgan,
MORGAN, CARLO, DOWNS & EVERTON, P.A., Hunt Valley, Maryland, for
Appellant.
TRAXLER, Circuit Judge:
The question in this insurance coverage dispute is whether
a nurse employed by a staffing agency and assigned to work at a
hospital qualifies as an “employee” of the hospital under the
hospital’s insurance policy. The district court answered that
question in the negative and granted summary judgment to the
hospital’s insurer. For the reasons set forth below, we vacate
the district court’s order and remand for further proceedings.
I.
A.
Favorite Healthcare Staffing (the “Agency”) is an
employment agency that provides nurses and other health care
professionals to Laurel Regional Hospital (the “Hospital”). The
contract between the Agency and the Hospital (the “Staffing
Agreement”) states that the Agency-provided practitioners
assigned to the Hospital are the employees of the Agency, not
the Hospital.
Under the Staffing Agreement, the Hospital is responsible
for “orient[ing] [Agency practitioners] to [their] job
description responsibilities and all policies and procedures
necessary to meet [Hospital] performance standards.” J.A. 25.
The Hospital has the right under the Agreement to “float” Agency
practitioners to areas to which they were not originally
assigned and to immediately terminate any practitioner who
2
refuses to float. The Agreement also gives the Hospital the
right to “dismiss any Practitioner at any time if [the Hospital]
determines that a Practitioner is unsatisfactory.” J.A. 28.
As established through discovery, no Agency staff
supervises the practitioners on site at the Hospital or provides
medical-care instructions to the practitioners. The Hospital
dictates the type of care to be provided to patients by Agency
practitioners; whether Agency practitioners or direct-hire
employees are involved, the Hospital expects the same level of
care to be provided to patients. If an Agency practitioner
refuses to comply with Hospital directions, the Hospital may
immediately terminate the practitioner.
B.
Appellant Interstate Fire and Casualty Company issued a
professional liability insurance policy to the Agency that
covered doctors and nurses who were employed by the Agency and
placed by the Agency to work at various medical facilities.
Appellee Dimensions Assurance Ltd., an insurance company wholly
owned by the company that owns the Hospital, issued the Hospital
the liability insurance policy (the “Policy”) at issue in this
case.
The Policy provides coverage to the Hospital and to other
persons or entities who meet its definitions of “protected
person.” The Policy consists of three main parts, one providing
3
coverage for “General Liability,” another providing coverage for
“Hospital Professional Liability,” and another providing
coverage for “Group Physicians Professional Liability.” J.A.
105-06.
The professional-liability section of the Policy includes
multiple categories of persons and entities in its definition of
“protected person,” including certain administrators and
committee and board members. In a provision titled “Worker
Protection,” this section of the Policy provides that
[The Hospital’s] present and former employees,
students and authorized volunteer workers are
protected persons while working or when they did work
for you within the scope of their duties. Unless
added by amendment to this Agreement, interns,
externs, residents, or dental, osteopathic or medical
doctors are not named protected persons for
professional injury, even if they are your employees,
students or authorized volunteer workers.
J.A. 134 (emphasis added).
Under the general-liability portion of the Policy, the
“Worker Protection” clause extends “protected person” status to
certain Hospital workers:
[The Hospital’s] present and former employees,
students and authorized volunteer workers are
protected persons while working, or when they did work
for you within the scope of their duties. Persons
working for you on a per diem, agency or contract
basis are not protected persons.
4
J.A. 119 (emphasis added). The Policy does not define
“employee,” nor does it incorporate or otherwise refer to the
Staffing Agreement between the Agency and the Hospital.
C.
In 2012, a former patient brought a medical malpractice
action (the “Underlying Action”) against the Hospital and
several of its doctors and nurses. One of the defendants was
Nurse Cryer, who had been placed by the Agency at the Hospital.
Claiming that she was not an employee of the Hospital,
Dimensions refused to defend Cryer. Interstate thereafter
undertook to defend Cryer, ultimately settling the case against
her for $2.5 million and incurring nearly $500,000 in defense
costs.
Interstate subsequently filed this equitable contribution
action against Dimensions in federal district court. Interstate
alleged that, under the terms of the Policy, Nurse Cryer
qualified as an employee of the Hospital and thus a “protected
person” entitled to coverage under the Policy. Because the
coverage provided by the Dimensions policy was primary and the
coverage provided by the Interstate policy was “excess” in cases
where there was other valid insurance coverage, Interstate
alleged that Dimensions was responsible for the entire amount it
paid to defend and settle the claims against Nurse Cryer.
5
The district court granted summary judgment in favor of
Dimensions. Relying on the terms of the Staffing Agreement
between the Hospital and the Agency, the district court held
that Agency-provided workers were not employees within the
meaning of the Policy. Interstate appeals, arguing that Nurse
Cryer qualifies as an employee under the plain terms of the
Policy and that the district court erred by looking to a
separate contract between different parties to determine the
meaning of the Policy.
II.
This insurance dispute, which falls within our diversity
jurisdiction, is governed by the law of Maryland, where the
action was filed and the insurance policy delivered. See Klaxon
Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496 (1941)
(explaining that a federal court sitting in diversity must apply
the choice of law principles of the forum state);
Perini/Tompkins Joint Venture v. Ace Am. Ins. Co., 738 F.3d 95,
100 (4th Cir. 2013) (“In insurance contract disputes, Maryland
follows the principle of lex loci contractus, which applies the
law of the jurisdiction where the contract was made. For choice
of law purposes, a contract is made where the last act is
performed which makes the agreement a binding contract.
Typically, this is where the policy is delivered and the
6
premiums paid.” (internal quotation marks and citation
omitted)).
Maryland courts interpret insurance policies “with the same
principles and rules of construction . . . use[d] to interpret
other contracts.” Connors v. Gov’t Employees Ins. Co., 113 A.3d
595, 603 (Md. 2015). “Unless there is an indication that the
parties intended to use words in the policy in a technical
sense, they must be accorded their customary, ordinary, and
accepted meaning.” Maryland Cas. Co. v. Blackstone Int’l Ltd.,
114 A.3d 676, 681 (Md. 2015) (internal quotation marks omitted).
Accordingly, “the written language embodying the terms of an
agreement will govern the rights and liabilities of the parties,
irrespective of the intent of the parties at the time they
entered into the contract.” Long v. State, 807 A.2d 1, 8 (Md.
2002) (internal quotation marks and alteration omitted).
There is no dispute that, if the other requirements of the
Policy are satisfied, the claims asserted against Nurse Cryer in
the Underlying Action fall within the scope of the professional-
liability section of the Policy. The question, then, is whether
Cryer qualifies as a protected person under that section of the
Policy.
A.
Interstate argues on appeal that Nurse Cryer qualifies as a
Hospital employee and therefore a protected person under the
7
unambiguous provisions of the professional-liability section of
the Policy. As Interstate points out, the Policy clearly
excludes Agency-provided practitioners from its definition of
“employee” in the general-liability portion of the Policy, but
it does not exclude Agency-provided practitioners from the
definition in the professional-liability section of the Policy,
which is the section applicable to the claims at issue in this
case. In Interstate’s view, the fact that the general-liability
definition excludes Agency-provided practitioners while the
professional-liability definition does not exclude them
demonstrates that the Policy provides coverage for Nurse Cryer.
The presence of this language in the general-liability section
shows that Dimensions knew the Hospital was staffed by direct-
hire and Agency-provided practitioners and that the word
“employee” as used in the Policy includes direct-hire employees
and Agency-provided practitioners. After all, if “employee” did
not include Agency-provided practitioners, then there would have
been no need to specifically exclude them from the general-
liability definition of “protected person.” See Rigby v.
Allstate Indem. Co., 123 A.3d 592, 597 (Md. Ct. Spec. App. 2015)
(noting the “basic principle of contract interpretation” that
courts should “give effect to each clause of an insurance
policy, and avoid treating either term as surplusage” (internal
quotation marks and citation omitted)); see also Gates, Hudson &
8
Assocs., Inc. v. Fed. Ins. Co., 141 F.3d 500, 503 (4th Cir.
1997) (“Federal’s careful delineations of specific types of
injuries at other points in the policy suggest that the insurer
knew how to limit the term when it desired to do so.”).
We agree. Dimensions’ decision to use different language
in different sections of the Policy when addressing the coverage
available to “employees” must be understood as an intentional
decision. Cf. NISH v. Cohen, 247 F.3d 197, 203–04 (4th Cir.
2001) (“The omission by Congress of language in one section of a
statute that is included in another section of the same statute
generally reflects Congress’s intentional and purposeful
exclusion in the former section.”). Under Maryland law, we must
respect this decision and apply the Policy in a way that gives
effect to the full “Worker Protection” clause in the general-
liability section and to the full “Worker Protection” clause in
the professional-liability section. The only way to do that is,
as Interstate argues, to conclude that the term “employee” as
used in the Policy includes Agency-provided Hospital workers as
well as direct-hire Hospital workers. Accordingly, because the
professional-liability section of the Policy extends “protected
person” status to Hospital workers without excluding Agency-
provided workers, we conclude that Nurse Cryer is a protected
person under the professional-liability section of the Policy.
9
Dimensions, however, insists that the Policy itself
prevents us from considering the language of the general-
liability section as a guide to the meaning of the professional-
liability section of the Policy. The “General Rules” portion of
the Policy states that each “agreement” (the three sections of
the policy separately addressing coverage for general liability,
hospital professional liability, and group physicians’
professional liability) must “be read and interpreted separately
and independently of the other and no terms, conditions or
exceptions from one agreement shall be construed to apply to any
other agreement or provide a basis for interpretation of any
other agreement.” J.A. 110 (emphasis added). Relying on this
provision, Dimensions contends that this court may not look to
the terms of the general-liability section to determine the
scope of coverage provided under the professional-liability
section.
We need not decide whether the Policy provision operates in
the manner urged by Dimensions. Even if we examine the
professional-liability section of the Policy in isolation,
without consideration of the terms of the other sections of the
Policy, we still conclude that the Policy provides coverage for
the claims asserted against Nurse Cryer.
10
B.
If we examine the professional-liability portion of the
Policy alone, we are presented with an insurance policy that
provides coverage to Hospital “employees” but does not define
the term. In the absence of a definition or other “indication
that the parties intended to use words in the policy in a
technical sense,” Lloyd E. Mitchell, Inc. v. Maryland Cas. Co.,
595 A.2d 469, 475 (Md. 1991), unambiguous policy language must
be given its “customary, ordinary, and accepted meaning, as
determined by the fictional reasonably prudent lay person,”
Connors 113 A.3d at 603 (internal quotation marks omitted).
A policy term “is not ambiguous simply because it is
general in nature or undefined by the policy.” Walker v.
Fireman’s Fund Ins. Co., 505 A.2d 884, 886 (Md. Ct. Spec. App.
1986). Instead, a term “is considered ambiguous if, to a
reasonably prudent person, the term is susceptible to more than
one meaning.” Connors, 113 A.3d at 603 (internal quotation
marks omitted). To determine whether a policy term is
ambiguous, we look only to the policy itself; we may not look to
extrinsic sources to create an ambiguity. See Univ. of Balt. v.
Iz, 716 A.2d 1107, 1121 (Md. Ct. Spec. App. 1998); cf. Schneider
v. Continental Cas. Co., 989 F.2d 728, 731 (4th Cir. 1993) (“A
court may not, where the contractual language is clear, invite
or accept the submission of extrinsic evidence, ‘find’ ambiguity
11
in the contractual text based upon that evidence, and resolve
the found ambiguity by resort to that extrinsic evidence.”).
Interstate contends that “employee” is an unambiguous term
whose ordinary, customary meaning tracks the common-law right-
to-control test used to determine the existence of a master-
servant relationship. See Whitehead v. Safway Steel Prods.,
Inc., 497 A.2d 803, 808-09 (Md. 1985) (“This Court has
traditionally considered five criteria in determining whether or
not an employer/employee relationship exists between two
parties. These criteria . . . include (1) the power to select
and hire the employee, (2) the payment of wages, (3) the power
to discharge, (4) the power to control the employee's conduct,
and (5) whether the work is part of the regular business of the
employer.”). Interstate also contends that the ordinary meaning
of “employee” encompasses “borrowed” employees like Nurse Cryer,
who are paid by one employer but work under the direct control
of another. See, e.g., Temp. Staffing, Inc. v. J.J. Haines &
Co., 765 A.2d 602, 603 n.1 (Md. 2001).
We agree with Interstate that the undefined term “employee”
is unambiguous. See C & H Plumbing & Heating, Inc. v. Employers
Mut. Cas. Co., 287 A.2d 238, 239-40 (Md. 1972) (finding no
ambiguity in clause excluding coverage for dishonest or criminal
act of “employee of the insured”); accord Interstate Fire & Cas.
Co. v. Washington Hosp. Ctr. Corp., 758 F.3d 378, 387 (D.C. Cir.
12
2014) (policy providing coverage to all “employees” of hospital
was unambiguous); Nationwide Mut. Fire Ins. Co. v. Guman Bros.
Farm, 652 N.E.2d 684, 686 (Ohio 1995) (“[T]he term “employee” is
not defined, but does have a plain and ordinary meaning.”). And
we likewise agree with Interstate that the common and ordinary
meaning of “employee” incorporates the right-to-control test.
See Interstate Fire, 758 F.3d at 386-87 (applying common-law
“right-to-control” test to define “employee” for purposes of
insurance policy issued to hospital utilizing nurses provided by
staffing agency); see also Black’s Law Dictionary (10th ed.
2014) (defining “employee” as “[s]omeone who works in the
service of another person (the employer) under an express or
implied contract of hire, under which the employer has the right
to control the details of work performance” (emphasis added));
Mutual Fire Ins. Co. v. Ackerman, 872 A.2d 110, 113 (Md. Ct.
Spec. App. 2005) (looking to Black’s to determine the ordinary
meaning of an undefined term).
There can be no question that Nurse Cryer qualifies as an
employee of the Hospital under the right-to-control test. In
Whitehead v. Safway Steel Products, the Maryland Court of
Appeals applied the right-to-control test to conclude that
Safway was the employer of Whitehead, a worker who had been
assigned to Safway by a temporary staffing agency: “Safway
instructed Whitehead on the task to be performed, supervised his
13
work, and was free to reassign him to any other duties that
warranted attention. If Whitehead’s work was unsatisfactory,
Safway was free to dismiss him and request an additional
worker.” 497 A.2d at 809. The Hospital’s control over Cryer,
as established by the undisputed evidence in the record, mirrors
that of the staffing agency customer in Whitehead, and Nurse
Cryer therefore is an employee of the Hospital as a matter of
law. See id. (“[T]emporar[y workers] . . . who work in
employment circumstances similar to the one here present, are as
a matter of law, employees of the customer”); see also
Interstate Fire & Cas. Co., 758 F.3d at 386-87 (concluding that
nurse paid by staffing agency and assigned to work at hospital
was employee of hospital under insurance policy covering
hospital “employees”).
Accordingly, we conclude that the provision in the
professional-liability section of the Policy extending
“protected person” status to “employees” of the Hospital is
unambiguous. The plain and ordinary meaning of “employee”
includes those who qualify as employees under the right-to-
control test, and the evidence in the record establishes that
Nurse Cryer qualifies as an employee of the Hospital under that
test.
14
III.
Dimensions makes two arguments in support of its contrary
reading of the Policy. It first argues that the term “employee”
must be interpreted in light of the Staffing Agreement between
the Hospital and the Agency. It also argues that Nurse Cryer
qualifies as an “affiliated healthcare provider” under the terms
of the Policy but fails to meet the requirements for coverage to
extend to her in that capacity. We find neither of these
arguments persuasive.
A.
Dimensions first contends that we should define “employee”
as used in the Dimensions policy by reference to the Staffing
Agreement between the Agency and the Hospital. Because the
Staffing Agreement provides that Agency practitioners will be
treated as the employees of the Agency, not the Hospital,
Dimensions contends that Nurse Cryer does not qualify as an
“employee” under the Policy.
Dimensions’ argument in this regard centers on Nurse
Cryer’s status as a “borrowed” employee. Borrowed employees
have two employers -- a “general” employer, who essentially
loans the employee to a borrowing or “special” employer. See
Lovelace v. Anderson, 785 A.2d 726, 741 (Md. 2001) (noting “the
settled principle of Maryland law that a worker may
simultaneously be the employee of two employers” (internal
15
quotation marks and alteration omitted)); Temp. Staffing, 765
A.2d at 603 n.1 (“A general employer is an employer who
transfers an employee to another employer for a limited period.
A special employer is an employer who has borrowed an employee
for a limited period and has temporary responsibility and
control over the employee’s work.”). In this case, the Agency
is Nurse Cryer’s general employer, and the Hospital is her
special employer. See id. (“A temporary employment company is a
general employer and the company to which an employee is
assigned is a special employer.”).
As between the general and special employee, liability for
the employee’s act (or for the employee’s worker’s compensation
claim) turns on whose work is being done and who can control
that work:
[W]here the work to be done is the borrower’s work,
and a part of his business, and he has the power and
authority to direct when and where and how it shall be
done, and where the work is not within the scope of
the general employment of the servant, it may fairly
be said that so far as that work is concerned he is
under the control of the borrower and that the latter
will be responsible for his negligent acts.
Dippel v. Juliano, 137 A. 514, 517 (Md. 1927); see Standard Oil
Co. v. Anderson, 212 U.S. 215, 220 (1909) (“One may be in the
general service of another, and, nevertheless, with respect to
particular work, may be transferred . . . to the service of a
third person, so that he becomes the servant of that person,
16
with all the legal consequences of the new relation.”).
However, if the general employer and special employer have
entered into a contract assigning liability to one of the
parties, courts will give effect to that contract. See Temp.
Staffing, 765 A.2d at 611 (directing workers’ compensation
commission to consider contract between co-employers when
assigning liability for benefits for injured employee); Hercules
Powder Co. v. Harry T. Campbell Sons Co., 144 A. 510, 518 (Md.
1929) (reversing jury verdict in favor of special employer where
contract between general and special employer assigned liability
for employee’s negligence to special employer); see also Sea
Land Indus., Inc. v. Gen. Ship Repair Corp., 530 F. Supp. 550,
563 (D. Md. 1982) (“[U]nder Maryland law, whatever the status of
an employee under the ‘borrowed servant’ doctrine, the parties
may allocate between themselves the risk of any loss resulting
from the employee’s negligent acts.”).
It is on the latter point that Dimensions pegs its
argument. In Dimensions’ view, a contract between a special
employer and general employer assigning liability for the
borrowed employee is determinative of the “who is an employee?”
question, wherever that question might arise. See Brief of
Appellee at 4 (stating that the Staffing Agreement “should apply
to any borrowed servant analysis whether it is made in the
context of a lawsuit between the borrowing and lending employer
17
or any other entities”). Pointing to cases such as NVR, Inc. v.
Just Temps, Inc., 31 F. App’x 805 (4th Cir. 2002) (per curiam)
(unpublished), Dimensions argues that the Staffing Agreement
“controls the employee’s status,” Brief of Appellee at 19, which
makes the right-to-control or borrowed-servant analysis
“irrelevant,” id. at 17. And because the Staffing Agreement
provides that Nurse Cryer is the Agency’s employee and that the
Agency will be liable for her negligent acts, Dimensions
contends that Nurse Cryer is not a Hospital employee under the
Policy. We disagree.
The cases on which Dimensions relies establish simply that
the existence of a liability-assigning contract makes it
unnecessary to apply the right-to-control test in a dispute
between the parties to that contract. See NVR, 31 F. App’x at
807 (“Under Maryland law, in cases like this one between a
general employer and a borrowing employer, . . . the parties may
allocate between themselves the risk of any loss resulting from
the employee’s negligent acts.” (internal quotation marks
omitted; emphasis added)); Sea Land, 530 F. Supp. at 563
(“[W]hatever the status of an employee under the ‘borrowed
servant’ doctrine, the parties may allocate between themselves
the risk of any loss resulting from the employee’s negligent
acts.” (emphasis added)). Nothing in these cases supports
Dimensions’ assertion that the terms of the Staffing Agreement,
18
a contract to which neither Dimensions, Interstate, nor Nurse
Cryer were parties, determine the scope of the entirely separate
insurance contract issued by Dimensions to the Hospital or
diminish the protection provided to Cryer by the Policy. See
Mayor of Baltimore ex rel. Lehigh Structural Steel Co. v.
Maryland Cas. Co., 190 A. 250, 253 (Md. 1937) (“It seems
axiomatic that persons are only bound by the contracts they
make, and are not bound by contracts they do not make. . . .”).
Accepting Dimensions’ argument that the Staffing Agreement
controls the meaning of the Policy would be inconsistent with
Maryland principles of contract interpretation. As we have
concluded, the Policy is not ambiguous, despite its failure to
define “employee.” Maryland law therefore requires us to look
only to the Policy itself and to interpret it as written. See
100 Inv. Ltd. P’ship v. Columbia Town Ctr. Title Co., 60 A.3d 1,
22 (Md. 2013) (“[O]ur search to determine the meaning of the
contract is focused on the four corners of the agreement. When
the clear language of a contract is unambiguous, the court will
give effect to its plain, ordinary, and usual meaning, taking
into account the context in which it is used. . . .” (internal
quotation marks, citation, and internal alteration omitted));
Ray v. State, ___ A.3d ___, 2016 WL 5462963, at *15 (Md. Ct.
Spec. App. Sept. 29, 2016) (“[E]xtrinsic sources of evidence
that may be helpful in resolving an ambiguity, when it actually
19
exists, may not be used to create an ambiguity in the first
instance.”). Dimensions, however, contends we should look
beyond the Policy and define its unambiguous terms not in
accordance with their ordinary meaning, but in accordance with
the terms of a wholly separate and independent contract.
Because that argument is inconsistent with Maryland law, we are
obliged to reject it.
The common, ordinary meaning of “employee” incorporates the
right-to-control test -- that is, one who works in the service
of another who has the right to control the details of the work
is the employee of the entity with the right to control. By
arguing that the Staffing Agreement controls the “employee”
question, Dimensions is, in effect, arguing that the common,
ordinary meaning of “employee” includes a footnote that carves
out those workers who would otherwise qualify as employees but
are the subject of a contract placing liability for them on
someone other than the entity with the right to control. We
disagree. As Maryland courts have made clear, “the words of
insurance contracts [must be given] their customary, ordinary,
and accepted meaning, as determined by the fictional ‘reasonably
prudent lay person.’” Connors, 113 A.3d at 603 (emphasis
added). Lay persons do not generally footnote their words, and
we decline to append Dimension’s proposed footnote to the common
meaning of “employee.” Whether or not liability for the
20
employee has been assigned by contract between co-employers, the
common, ordinary meaning of “employee” is one who works in the
service of and subject to the direction and control of another. *
In addition to being inconsistent with Maryland principles
of contract interpretation, Dimensions’ claim that the Staffing
Agreement controls is also largely foreclosed by this court’s
decision in Travelers Property and Casualty Co. v. Liberty
Mutual Insurance Co., 444 F.3d 217 (4th Cir. 2006). In
Travelers, State Street Bank hired Ryland Mortgage Company to
service and manage mortgage loans held by State Street and to
manage any properties State Street took over through
foreclosure. By contract, Ryland was obligated to indemnify
State Street for any claims arising from Ryland’s management of
the loans and property. A visitor to a foreclosed property was
* Although we may not look to extrinsic evidence to
determine the meaning of unambiguous language contained in an
insurance policy, we must look to the actual facts of the case
to determine whether they are sufficient to trigger the coverage
provided by the policy. That is, while we may not consider the
Staffing Agreement when determining the meaning of the term
“employee” under the Policy, we must look to the facts
established through discovery to determine whether Nurse Cryer
qualifies as an “employee” as we have defined it. As to that
question, the level of control given to the Hospital through the
Staffing Agreement is a relevant and proper consideration. See,
e.g., Interstate Fire & Cas. Co. v. Washington Hosp. Ctr. Corp.,
758 F.3d 378, 384 (D.C. Cir. 2014) (concluding that “employee”
was unambiguous term encompassing the right-to-control test and
then considering contractual level of control to determine
whether nurse qualified as an employee under the right-to-
control test).
21
injured and sued State Street and Ryland. Ryland was insured by
Travelers, and State Street was insured by Liberty Mutual.
Travelers provided a defense to Ryland and subsequently sought
contribution from Liberty Mutual, arguing that Ryland was an
additional insured under the policy issued to State Street.
On appeal, we agreed with Travelers that Ryland was covered
by the Liberty Mutual policy. The Liberty Mutual policy
included State Street’s “real estate managers” as additional
insureds, and Ryland’s contractual duties qualified it as a real
estate manager. See id. at 221-22. Liberty Mutual, therefore,
had an “independent contractual obligation to provide coverage
to Ryland.” Id. at 219. And because Liberty Mutual had an
independent duty to provide coverage to Ryland, the
indemnification agreement between Ryland and State Street was
irrelevant:
The issue here is coverage for only Ryland’s
liability. Travelers concededly insured Ryland, and
because of Liberty Mutual’s insuring language, it must
also insure Ryland through its additional insureds
clause. This is not a case where we are determining
State Street’s liability vis-à-vis Ryland’s. The fact
that Ryland agreed to indemnify State Street under the
Pooling Agreement does not absolve Liberty Mutual of
its independent contractual obligation to insure
Ryland as State Street’s “real estate manager.” If
the issue in this case turned on the underlying
liability as between Ryland and State Street, we would
likely conclude, as Liberty Mutual urges, that Ryland
bore full responsibility because of its
indemnification agreement. But even then, having
determined that Ryland had legal responsibility for
[the injuries to the property-visiting plaintiff], we
22
would still have to determine who insured that
liability. In this case Travelers concededly provided
coverage, as it issued a policy directly to Ryland as
the named insured. But Liberty Mutual, which issued a
policy to State Street as its named insured, also
provided coverage to additional insureds, not because
of any indemnity clause running in favor of its
insured State Street but because of its independent
undertaking to Ryland.
Thus, because we are deciding coverage for only
Ryland’s liability to [the property-visiting
plaintiff], the indemnification agreement is
irrelevant.
Id. at 224-25 (emphasis added).
As in Travelers, this case involves only the question of
coverage for Nurse Cryer under the policy issued by Dimensions.
The Agency and the Hospital are not parties to this action, and
there is no issue before this court regarding indemnification or
liability as between the Hospital and the Agency. It may well
be that the primary purpose of the Dimensions policy was to
provide insurance coverage for the Hospital and its direct-hire
employees. Nonetheless, the policy that Dimensions chose to
issue used language whose ordinary meaning includes Agency-
provided employees as additional insureds. See United Servs.
Auto. Ass’n v. Riley, 899 A.2d 819, 833 (Md. 2006) (“Courts in
Maryland follow the law of objective interpretation of
contracts, giving effect to the clear terms of the contract
regardless of what the parties to the contract may have believed
those terms to mean.” (internal quotation marks omitted)).
23
Thus, whether or not the Hospital intended to provide insurance
for Agency-provided employees, Dimensions, by virtue of the
policy that it issued, has an “independent obligation to insure
[Cryer] as an additional insured.” Travelers, 444 F.3d at 224.
And as we made clear in Travelers, the contract between the
Hospital and the Agency simply has no impact on Dimension’s
independent obligation to provide the coverage undertaken in the
policy. See id. at 224-25.
Therefore, for the reasons set out above, we conclude that
Nurse Cryer qualifies as an “employee” of the Hospital under the
unambiguous language of the Policy, notwithstanding the contrary
language of the Staffing Agreement.
B.
Dimensions also contends that the Policy’s “affiliated
health care provider” (“Affiliated Provider”) clause operates to
exclude Nurse Cryer from coverage under the Policy.
The professional-liability section of the Policy extends
protected-person status (and therefore coverage) to “affiliated
health care providers” under certain circumstances. Under the
Policy,
An Affiliated Health Care Provider means any natural
person or organization [1] in the business of
rendering health care services directly to the general
public, and [2] who or which has an agreement to
provide such services in conjunction with those
provided by [the Hospital]. Affiliated Health Care
Providers are included as Protected Persons only when
24
[3] a written partnership or physician affiliation
agreement specifically designates the Affiliated
Health Care Provider[] as a Named Protected Person
under this Agreement. Agencies providing clinical and
other services on a per diem or contracted basis are
not protected persons under this agreement.
J.A. 133.
Dimensions contends that Nurse Cryer meets the definitional
requirements of the Affiliated Provider clause under the Policy.
According to Dimensions, Nurse Cryer provides medical care
directly to the public, thus satisfying the first Affiliated
Provider requirement. And Nurse Cryer was providing those
medical services at the Hospital through a contract with the
Agency, thus satisfying the second Affiliated Provider
requirement. Dimensions therefore contends that Nurse Cryer
qualifies as an Affiliated Provider. An Affiliated Provider is
a Protected Party, however, only if the third requirement is
satisfied -- there must be a contract expressly designating the
Provider as protected. Because there is no such contract in
this case, Dimensions contends that Nurse Cryer is an Affiliated
Provider who is not a Protected Person under the Policy.
In our view, the Affiliated Provider clause cannot carry
the meaning assigned to it by Dimensions. If Dimensions’
reading of the clause were correct, then all of the Hospital’s
medical-care-providing employees, whether direct-hire or
contract, would qualify as Affiliated Providers. If Nurse Cryer
25
is “in the business of rendering health care services directly
to the general public,” J.A. 133, then so are direct-hire nurses
and direct-hire or contract doctors. And if Nurse Cryer’s
contract with the Agency, or any implied contractual agreement
she might have had with the Hospital itself, satisfies the
requirement for an “agreement to provide [health care] services
in conjunction with those provided by [the Hospital],” J.A. 133,
then the contracts between the Hospital and its direct-hire
care-providing employees would satisfy the requirement as well.
Thus, under Dimensions’ argument, all of the Hospital’s
care-providing employees, whether contract or direct-hire, would
qualify as Affiliated Providers. All of those employees would
be precluded from Protected Person status (and therefore not
insured under the Policy) for the same reason that Dimensions
contends Nurse Cryer is not protected -- the absence of a
“written . . . agreement specifically designat[ing] the
Affiliated Health Care Provider[] as a Named Protected Person
under this Agreement.” J.A. 133.
The “Worker Protection” clause contained in the hospital-
liability section of the Policy explicitly extends Protected
Person status to the Hospital’s “present and former employees,
students and authorized volunteer workers,” J.A. 134, without
conditioning that status on the existence of a separate contract
designating them as protected. Because Dimensions’ reading of
26
the Affiliated Provider clause would render illusory the
coverage provided by the “Worker Protection” clause, we must
reject it. See Cochran v. Norkunas, 919 A.2d 700, 710 (Md.
2007) (“[A] contract must be construed in its entirety and, if
reasonably possible, effect must be given to each clause so that
a court will not find an interpretation which casts out or
disregards a meaningful part of the language of the writing
unless no other course can be sensibly and reasonably followed.”
(emphasis added and internal quotation marks omitted)); Kelley
Constr. Co. v. Washington Suburban Sanitary Comm’n, 230 A.2d
672, 676 (Md. 1967) (“[T]he courts will prefer a construction
which will make the contract effective rather than one which
will make it illusory or unenforceable.” (internal quotation
marks omitted)). Instead, we must read the Affiliate Provider
clause in a way that preserves the coverage provided in the
Worker Protection clause. See Rigby, 123 A.3d at 597
(explaining that courts should “give effect to each clause of an
insurance policy, and avoid treating either term as surplusage”
(internal quotation marks and citation omitted)).
As quoted above, the Policy defines Affiliated Provider as
a “natural person or organization in the business of rendering
health care services directly to the general public, and who or
which has an agreement to provide such services in conjunction
with those provided by [the Hospital].” J.A. 133. The phrase
27
“in conjunction with” means “in combination with” or “together
with,” see www.Merriam-Webster.com (saved as ECF opinion
attachment), which demonstrates that the clause contemplates the
provision of health care services in addition to those services
already being provided by the Hospital. Thus, the clause is
directed to entities that provide medical services to the public
independently of the Hospital and agree to provide those
services together with the services provided by the Hospital.
(For example, a medical specialist with an independent practice
who agrees to affiliate with the Hospital would qualify as an
Affiliated Provider.)
So understood, it is clear that Hospital employees (whether
contract or direct-hire) do not qualify as Affiliated Providers.
The Hospital provides its medical services through its workers,
be they contract or direct-hire. The workers do not provide
medical services directly to the public, but only to the
Hospital’s patients, and only on the terms dictated by the
Hospital. Hospital workers thus are not providing health care
services in addition to or alongside the health care services
provided by the Hospital; they are the ones providing the
Hospital’s health care services in the first instance. Because
the Hospital cannot act in concert with itself, a Hospital
worker cannot be said to be providing health care services “in
28
conjunction with” the Hospital, as the Policy requires to
qualify as an Affiliated Provider.
That the Affiliated Provider clause is directed to
independent entities rather than Hospital workers is confirmed
by the clause’s requirement of “a written partnership or
physician affiliation agreement” designating the Affiliated
Provider as a named insured under the Policy. J.A. 133
(emphasis added). This language describes the kind of contract
that the Hospital would enter into with an independently
operating medical business, not with its employees.
Accordingly, we conclude that Hospital workers, whether
contract or direct hire, do not meet the definitional
requirements of an Affiliated Provider under the terms of the
Policy. We therefore reject Dimensions’ claim that the
Affiliated Provider clause operates to preclude coverage under
the Policy for Nurse Cryer.
IV.
To summarize, we conclude that the term “employee” as used
in the Dimensions Policy is not ambiguous and that it includes
those workers who qualify as employees under the right-to-
control test. Dimensions therefore has an independent
obligation to provide coverage to those workers who meet the
definition of “employee,” without regard to how those workers
may be classified under the Staffing Agreement executed by the
29
Hospital and the Agency. Because the evidence contained in the
record establishes that Nurse Cryer is the Hospital’s employee
under the right-to-control and the borrowed-servant standards,
she is a “protected person” who qualifies for coverage under the
professional-liability portion of the Dimensions Policy.
We therefore vacate the district court’s opinion granting
summary judgment in favor of Dimensions, and we remand for
further proceedings consistent with this opinion.
VACATED AND REMANDED
30