UnitedHealth Group Inc. v. Executive Risk Specialty Insurance Co. ( 2017 )

United States Court of Appeals
For the Eighth Circuit
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No. 15-1076
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UnitedHealth Group Incorporated, a Minnesota corporation,
lllllllllllllllllllll Plaintiff - Appellant,
v.
Executive Risk Specialty Insurance Company; First Specialty Insurance
Corporation; Starr Excess Liability Insurance International Limited; National
Union Fire Insurance Company of Pittsburgh, PA,
lllllllllllllllllllll Defendants - Appellees.
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Appeal from United States District Court
for the District of Minnesota - Minneapolis
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Submitted: October 19, 2016
Filed: September 7, 2017
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Before LOKEN, SMITH,1 and COLLOTON, Circuit Judges.
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1
The Honorable Lavenski R. Smith became Chief Judge of the United States
Court of Appeals for the Eighth Circuit on March 11, 2017.
COLLOTON, Circuit Judge.
UnitedHealth Group sued several insurers in the District of Minnesota, seeking
indemnity and defense costs for underlying litigation settlements under its
professional liability excess insurance policies. UnitedHealth appeals the district
court’s2 grant of summary judgment in favor of four insurance companies.
UnitedHealth contends that the court erred in three ways: (1) by granting National
Union Fire Insurance Company’s summary judgment motion based on UnitedHealth’s
failure to provide adequate notice of its claim; (2) by determining that UnitedHealth
presented insufficient evidence on how a settlement was allocated between covered
and non-covered claims; and (3) by granting summary judgment sua sponte on
UnitedHealth’s claim for certain defense costs. We conclude that the district court
did not err on the allocation issue, and that UnitedHealth waived its objection to the
asserted sua sponte order on defense costs. Because the district court’s rulings on
those issues mean that National Union’s coverage would not be implicated, it is
unnecessary to address the court’s separate order on the adequacy of notice to
National Union. We therefore affirm.
I.
This appeal involves a dispute over insurance coverage for settlement amounts
arising from two different lawsuits. UnitedHealth reached a single lump-sum
settlement for the two actions together. There was potential insurance coverage for
claims in one lawsuit but not for claims brought in the other. A dispute then arose
over how to allocate the settlement amount between the covered and non-covered
claims.
2
The Honorable Patrick J. Schiltz, United States District Judge for the District
of Minnesota.
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The first lawsuit was filed in New York in 2000. A group of plaintiffs,
including several group health plans insured or administered by UnitedHealth or its
subsidiaries, sued UnitedHealth in New York state court, and United Health removed
the action to federal court. One plaintiff was the American Medical Association, and
we refer to this litigation as the AMA suit. The case involved databases used by
UnitedHealth. UnitedHealth’s subsidiary, Ingenix, owned two databases that
UnitedHealth and other insurers used to calculate the usual, customary, and
reasonable charges for medical services. UnitedHealth used the databases’
calculations to determine the amount that it was required to pay for out-of-network
services. The AMA plaintiffs alleged that UnitedHealth conspired with other insurers
to provide inaccurate information to the Ingenix databases to reduce payment for out-
of-network benefit claims. The plaintiffs brought claims under the Employee
Retirement Income Security Act, Racketeer Influenced and Corrupt Organizations
Act, Sherman Act, and state law. The district court, Judge Lawrence M. McKenna,
dismissed most of the ERISA and RICO claims. The antitrust claims under the
Sherman Act proceeded until the case eventually was settled.
The second action was filed in 2008 in New Jersey. In February 2008, a group
of plaintiffs sued Oxford Health, an entity that UnitedHealth acquired in 2004, in the
United States District Court for the District of New Jersey. One of the plaintiffs was
named Malchow, and we refer to this action as the Malchow suit. The Malchow
plaintiffs asserted claims under ERISA and violations of a state regulation, arising
from breaches of contract and claims regarding Oxford’s billings and payments.
That same month, the New York Attorney General served UnitedHealth with
a Notice of Proposed Litigation based on allegations similar to those in the AMA suit.
We refer to this action as the NYAG suit. On January 13, 2009, UnitedHealth settled
the NYAG suit by entering into an agreement known as an Assurance of
Discontinuance, under which UnitedHealth agreed to discontinue operating and using
the Ingenix database once an independent database was created. See N.Y. Exec. Law
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§ 63(15). As part of this settlement, UnitedHealth was required to pay $50 million
to help establish this independent database.
The following day, UnitedHealth signed a settlement agreement to resolve both
AMA and Malchow suits for $350 million. The settlement agreement did not state
how the $350 million was to be allocated between the AMA plaintiffs and Malchow
plaintiffs.
The AMA and Malchow plaintiffs moved to be certified as a settlement class
before Judge McKenna in New York. The court reviewed the settlement agreement
and held a seven-day evidentiary hearing to determine whether the settlement was fair
and reasonable. In October 2010, Judge McKenna certified the settlement class,
approved the $350 million settlement, and dismissed the AMA suit. Following the
court’s approval, and in accordance with the settlement agreement, the Malchow
plaintiffs stipulated to the dismissal of the Malchow suit in New Jersey.
After signing the settlement agreement, UnitedHealth filed an amended
complaint in this ongoing lawsuit in the District of Minnesota against its professional
liability excess insurers. UnitedHealth sought damages for the insurers’ failure to
indemnify it for: (1) the AMA portion of the $350 million settlement under the
Antitrust Endorsement of its professional liability insurance policy and $35 million
in AMA defense costs; (2) the NYAG settlement; and (3) certain denied claims arising
out of lawsuits alleging that UnitedHealth failed to reimburse certain medical
expenses. In counts III and IV of its second amended complaint, UnitedHealth sought
a declaratory judgment and damages for certain denied claims that are not at issue in
this appeal. In counts V and VI, UnitedHealth sought a declaratory judgment and
damages for an alleged breach of contract to reimburse UnitedHealth for the costs to
defend and settle the AMA suit. In counts VII and VIII, UnitedHealth sought the
same relief for alleged breaches related to the NYAG suit.
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After several years of litigation, four excess insurers remain in this action:
Executive Risk Specialty Insurance Company, First Specialty Insurance Corporation,
Starr Excess Liability Insurance International Limited, and National Union Fire
Insurance Company (collectively, the “Insurers”). Executive Risk holds the first
excess insurance policy relevant to this appeal; coverage attaches at $95 million in
damages. The others provide coverage at higher levels of damages.
In January 2013, the Insurers moved for partial summary judgment. National
Union argued that UnitedHealth had failed to provide proper notice of the AMA claim
during the policy period and thus was not entitled to any recovery from National
Union for that claim. The district court agreed and dismissed UnitedHealth’s claims
against National Union based on the AMA suit. The court also ruled that
UnitedHealth had the burden to allocate the settlement between the potentially
covered AMA claims and the non-covered Malchow claims.
In October 2013, the district court ordered the parties to brief three issues
relating to the allocation of UnitedHealth’s $350 million settlement between covered
and non-covered claims. The court stated that it would, if necessary, issue a
scheduling order to address any remaining issues, including the allocation of
UnitedHealth’s defense costs in the AMA suit. After briefing and a hearing on the
issues, the district court granted summary judgment for the Insurers on counts V and
VI. The court ruled that UnitedHealth failed to meet its burden to present sufficient
evidence to support an allocation between the potentially covered AMA claims and
the non-covered Malchow claims. The court also ruled that the Insurers were entitled
to summary judgment on UnitedHealth’s claim for defense costs in the AMA suit.
Following the district court’s grant of summary judgment on those claims,
UnitedHealth and the Insurers entered into a stipulation for entry of final judgment
because the remaining claims (counts III, IV, VII, and VIII) did not involve an
amount of damages that was sufficient to trigger coverage under the excess policies.
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The district court granted judgment in favor of the Insurers pursuant to the parties’
stipulation. UnitedHealth now appeals, arguing that the district court erred in
determining that UnitedHealth failed to provide adequate notice of the AMA claim to
National Union, incorrectly placed the burden of allocation on UnitedHealth and then
erred in concluding that UnitedHealth failed to present sufficient evidence to meet
that burden, and erroneously adjudicated its AMA defense cost claims sua sponte.
Summary judgment is appropriate if there is no genuine issue of material fact
for trial. Fed. R. Civ. P. 56(a). Where the nonmoving party will bear the burden of
proof at trial on an essential element, the nonmoving party must put forward
sufficient facts showing that there is a genuine issue for trial. Celotex Corp. v.
Catrett, 477 U.S. 317, 323-24 (1986); Barge v. Anheuser-Busch, Inc., 87 F.3d 256,
258 (8th Cir. 1996). We review de novo the district court’s grant of summary
judgment, viewing the evidence and drawing all reasonable inferences in
UnitedHealth’s favor. Larson v. Nationwide Agribusiness Ins. Co., 739 F.3d 1143,
1146 (8th Cir. 2014).
II.
We address first the district court’s ruling on allocation of the settlement. First,
UnitedHealth argues that it had no duty to allocate between the covered and non-
covered claims under the plain language of its insurance policies. Second, it argues
that under Minnesota law, it had no burden to allocate between the covered and non-
covered claims and it was required to show only that it suffered a loss that would
trigger coverage. Third, UnitedHealth maintains that even if it did bear the burden
to allocate, then it presented sufficient evidence to survive summary judgment.
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A.
UnitedHealth argues that it had no duty under its insurance policies to allocate
the $350 million settlement. The company contends that under the Antitrust
Endorsement of the policy issued by the primary insurance carrier Lexington, which
it asserts is incorporated into the excess insurance policies, UnitedHealth is entitled
to coverage for the entire $350 million settlement so long as the settlement included
covered antitrust claims. The district court determined that this argument was
untimely and meritless. We agree. In its amended complaint, UnitedHealth sought
indemnity for only the “portion” of the $350 million settlement attributable to the
AMA suit. Its claim that it can recover the entire $350 million, including the amount
attributable to the Malchow suit, was not timely advanced.
The claim also lacks merit. The AMA suit qualifies for coverage under the
Antitrust Endorsement. The Endorsement provides that notwithstanding any other
provisions of the policy, the Insurers must pay for UnitedHealth’s “claims that
directly or indirectly result from or are related to, a Wrongful Act consisting or
allegedly consisting in whole or in part of anti-trust, price fixing or restraint of trade
activities.” But the Malchow claim was separate from the AMA claim, so the
Endorsement generates coverage only for the AMA claim. In any event, as the district
court observed, the excess insurance policies provide coverage described in the
Endorsement only insofar as the coverage would not conflict with a provision of the
excess policies. And it is undisputed that the excess policies did not cover the
Malchow claims, because the defendant in Malchow, a predecessor-in-interest of
UnitedHealth, was never an insured under those policies. UnitedHealth is therefore
not entitled to the portion of the settlement that is allocated to the Malchow lawsuit.
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B.
UnitedHealth also argues that under Minnesota law, it was not required to
submit proof about allocation of the settlement between covered and non-covered
claims. The company contends that it was sufficient to show simply that the
settlement resulted in a covered loss of unspecified amount above $95 million, where
coverage under the first excess policy is triggered.
Under Minnesota law, the initial burden is on the insured to prove prima facie
coverage of a third-party claim under a liability insurance policy. Remodeling
Dimensions, Inc. v. Integrity Mut. Ins. Co., 819 N.W.2d 602, 617 (Minn. 2012). “If
the insured meets its burden of establishing coverage of the claim, the burden shifts
to the insurer to prove the applicability of an exclusion under the policy as an
affirmative defense.” Id. Although this general burden-shifting scheme is clearly
established, the Minnesota Supreme Court has not squarely addressed who bears the
burden to allocate between covered and non-covered insurance claims. “Where the
state law is uncertain, our task is to predict how the state supreme court would resolve
the issue if faced with it.” Marvin Lumber & Cedar Co. v. PPG Indus., Inc., 223 F.3d
873, 876 (8th Cir. 2000).
Our best guidance comes from the Minnesota Supreme Court’s decisions in
Remodeling Dimensions and Bor-Son Building Corp. v. Employers Commercial
Union Insurance Co. of America, 323 N.W.2d 58 (Minn. 1982). These cases support
the conclusion that the Minnesota court would place the burden on the insured to
allocate between covered and non-covered claims.
In Bor-Son, a local housing authority brought several claims against Bor-Son
and others for faulty workmanship on two building projects. 323 N.W.2d at 60. Bor-
Son, the plaintiff-insured, eventually settled the lawsuit, but the settlement did not
allocate the amount paid among the various claims. Bor-Son then sought a
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declaratory judgment that its insurers were liable to indemnify it for the settlement.
Under Bor-Son’s insurance policy, the insurers were liable for claims based on loss
of rent, but not for claims based on damage to buildings as the result of a breach of
contract. The Minnesota Supreme Court held that because “there was no allocation
of damage monies . . . that would establish the amount Bor-Son paid toward the
settlement of that loss of rental claim, and since Bor-Son, in this case, furnished no
evidence to establish that fact, Bor-Son failed to meet its burden of proving its claim
for reimbursement.” Id. at 64.
More recently, in Remodeling Dimensions, the Minnesota court concluded that
an insurer who assumes the duty to defend an insured has a duty to disclose to its
insured the availability of obtaining a written explanation of an arbitration award.
819 N.W.2d at 617-19. The court stated that “‘the insured’s ordinary burden to
allocate a verdict between covered and non-covered claims’ does not shift to the
insurer unless the insurer had an affirmative duty to defend the underlying claims.”
Id. at 617-18 (quoting Camden-Clark Mem’l Hosp. Ass’n v. St. Paul Fire & Marine
Ins. Co., 682 S.E.2d 566, 576 (W. Va. 2009)). The court later concluded that “[t]he
burden to prove allocation of an arbitration award remains with the insured unless”
the insurer took on the duty to defend the insured and failed to disclose the
availability of a written explanation of the award. Id. at 619 (emphasis added). Only
when the insurer fails to disclose, and this failure results in prejudice to the insured,
is the insurer “estopped from claiming that the insured has the burden of proving
allocation of the award.” Id. at 618.
In light of Bor-Son and Remodeling Dimensions, we conclude it is not enough
under Minnesota law for UnitedHealth to show simply that its $350 million
settlement included a covered claim of an unspecified amount. UnitedHealth bears
the burden to allocate the settlement between the potentially covered AMA suit and
the non-covered Malchow suit with enough specificity to permit a reasoned judgment
about liability.
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C.
To prove allocation, parties can present testimony from attorneys involved in
the underlying lawsuits, evidence from those lawsuits, expert testimony evaluating
the lawsuits, a review of the underlying transcripts, or other admissible evidence.
See, e.g., Nodaway Valley Bank v. Cont’l Cas. Co., 916 F.2d 1362, 1365-66 (8th Cir.
1990); Remodeling Dimensions, Inc., 819 N.W.2d at 618 n.4; Zurich Reinsurance
(UK) Ltd. v. Canadian Pac. Ltd., 613 N.W.2d 760, 764-65 (Minn. Ct. App. 2000).
To survive summary judgment, an insured need not prove allocation with precision,
but it must present a non-speculative basis to allocate a settlement between covered
and non-covered claims. The district court concluded that UnitedHealth failed to
provide non-speculative evidence to allocate the $350 million settlement between the
potentially covered AMA suit and non-covered Malchow suit.
UnitedHealth complains that the district court excluded evidence that would
have supported an allocation of the settlement. The company argues that the district
court erroneously excluded both Judge McKenna’s rulings and expert testimony in
the underlying lawsuits that occurred after the settlement agreement was signed on
January 14, 2009. The allocation inquiry examines how a reasonable party in
UnitedHealth’s position would have valued the covered and non-covered claims. In
evaluating the claims, we look to what the parties knew at the time of settlement. Cf.
Zurich Reinsurance (UK) Ltd., 613 N.W.2d at 764-65 (examining settlement
negotiations and internal memoranda to determine whether the settlement included
non-covered damages); St. Paul Fire & Marine Ins. Co. v. Nat’l Chiropractic Mut.
Ins. Co., 496 N.W.2d 411, 415 (Minn. Ct. App. 1993) (“In determining what claims
were settled, it is appropriate to consider the circumstances and events leading up to
the settlement.”). Events and circumstances happening after settlement are relevant
only insofar as they inform how a reasonable party would have valued and allocated
the claims at the time of settlement.
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UnitedHealth argues that even if events after the settlement are irrelevant, the
settlement date was really October 5, 2010—the date on which Judge McKenna
approved the settlement. The settlement agreement for $350 million, however, was
signed on January 14, 2009. The court approved that same agreement in October
2010. UnitedHealth points to no evidence suggesting that allocation of the $350
million settlement between the two lawsuits changed after the agreement was signed
in January 2009. The signing date is therefore the relevant date.
The process that occurred after the settlement on January 14, 2009—including
Judge McKenna’s rulings and expert testimony and a report admitted at the settlement
hearings—was inadmissible for purposes of allocating the $350 million settlement,
because it did not address information that was available to the settling parties in
January 2009. A reasonable settling party could not have relied on Judge McKenna’s
post-January rulings to inform its allocation of the $350 million settlement in January.
The expert’s testimony at the settlement hearings was based on an affidavit that he
produced months after UnitedHealth executed the settlement agreement, so that
evidence does not inform how a reasonable person would have allocated the
settlement at the time it was reached.
In any event, the district court also properly excluded Judge McKenna’s rulings
as inadmissible hearsay. A court’s prior judgment or ruling is inadmissible hearsay
if it is offered to prove the truth of the matter asserted. See Fed. R. Evid. 801(c);
United States v. Boulware, 384 F.3d 794, 806 (9th Cir. 2004); cf. United States v.
Jeanpierre, 636 F.3d 416, 423 (8th Cir. 2011). Only judicial rulings that are offered
for a different purpose, such as to show effect on the listener, are admissible.
Boulware, 384 F.3d at 806; see United States v. Wright, 739 F.3d 1160, 1170 (8th Cir.
2014).
UnitedHealth seeks to offer Judge McKenna’s rulings as evidence of what a
reasonable person would consider when making an objective allocation
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determination. The company purports to offer the rulings only to show the effect of
the rulings on the listener, UnitedHealth. But Judge McKenna’s rulings after January
14, 2009, could not have affected UnitedHealth’s determination of the value of the
AMA and Malchow lawsuits, because that valuation was made in January 2009 when
the settlement agreement was signed. The district court similarly excluded the expert
testimony from the October 2010 hearing as hearsay, and UnitedHealth does not
challenge that ruling on appeal.
UnitedHealth also argues that the court abused its discretion when it ruled that
UnitedHealth’s expert, James Halverson, could not testify to the allocation of the
$350 million settlement between the AMA suit and the Malchow suit. Federal Rule
of Evidence 702 governs the admissibility of expert testimony. It provides:
A witness who is qualified as an expert by knowledge, skill, experience,
training, or education may testify in the form of an opinion or otherwise
if: (a) the expert’s scientific, technical, or other specialized knowledge
will help the trier of fact to understand the evidence or to determine a
fact in issue; (b) the testimony is based on sufficient facts or data; (c) the
testimony is the product of reliable principles and methods; and (d) the
expert has reliably applied the principles and methods to the facts of the
case.
The district court has broad discretion to determine the admissibility of expert
testimony under Rule 702. Weisgram v. Marley Co., 169 F.3d 514, 518 (8th Cir.
1999).
Halverson is an expert on antitrust law, and the district court allowed him to
testify about the value of the antitrust claims asserted in the AMA suit. But Halverson
admitted that he is not an expert on ERISA, and he testified in his deposition that he
did not analyze the Malchow lawsuit. Without analyzing the Malchow suit,
Halverson could not provide an expert opinion about its value. And without knowing
the value of the Malchow suit, Halverson could not testify as to the relative value of
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the AMA suit compared to the Malchow suit. Thus, the district court did not abuse its
discretion in determining that Halverson was not qualified to testify about the
settlement value of the ERISA claims or how the $350 million settlement should be
allocated between the AMA and Malchow claims.
At oral argument, UnitedHealth suggested that because the Malchow complaint
alleged only $160,000 in damages, a jury reasonably could calculate the value of
Malchow as no more than $160,000 and allocate the rest of the $350 million
settlement to the AMA suit. But UnitedHealth did not present this argument to the
district court, and it is forfeited. The amount of damages cited in the complaint,
moreover, does not by itself support a finding on how a reasonable party in
UnitedHealth’s position would have valued the Malchow suit when it settled the
cases. The Malchow suit was a putative class action; the damages enumerated were
attributable only to the named individual plaintiffs. The exposure to the defendants
in damages, costs of litigation, injury to reputation, and other categories could have
been much greater. The Insurers point out that UnitedHealth suggested in a previous
lawsuit, which is subject to judicial notice, that the Malchow suit might have
triggered insurance coverage of $120 million. We cannot say based on the Malchow
complaint alone that the settlement value of the case was de minimis.
Finally, UnitedHealth argues that even without the excluded evidence, and
aside from the individual damages asserted in the Malchow complaint, it still
presented sufficient evidence for a jury to allocate the settlement. UnitedHealth relies
on pre-settlement rulings from the AMA and Malchow suits, which show that the AMA
suit involved primarily antitrust claims, and that the Malchow suit’s monetary claims
centered on ERISA. UnitedHealth contends that this evidence, together with
evidence about UnitedHealth’s insurance policies and Halverson’s testimony about
the value of the AMA suit, provided a sufficient basis for a jury to decide allocation
and award damages.
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It is well settled that a jury may not base its damages award on speculation.
See Faust v. Parrott, 270 N.W.2d 117, 120 (Minn. 1978). The evidence presented
by UnitedHealth fails to give a jury more than a speculative basis on which to allocate
the $350 million settlement between the AMA and Malchow suits. These were
complex lawsuits involving different claims and legal theories. Allocation required
either contemporaneous evidence of valuation or expert testimony on relative value
to provide a reasonable foundation for a jury’s decision. Without more evidence
about the relative value of the claims, a reasonable jury could only speculate as to
how the settlement should be allocated. UnitedHealth made strategic decisions to
invoke attorney-client privilege and work-product protection to avoid presenting
evidence from its own representatives about contemporaneous valuations of the
settlement. The company declined to present additional expert testimony about the
value of the Malchow suit to complement Halverson’s testimony about the AMA suit,
or to identify an expert who was qualified to address both. On the record that was
presented, the district court properly concluded that UnitedHealth failed to present
sufficient evidence to submit the issue to a jury. We therefore affirm the district
court’s grant of summary judgment for the Insurers on UnitedHealth’s indemnity
claim for a portion of the $350 million settlement attributable to the AMA suit.
III.
UnitedHealth also contends that the district court erred when it granted
summary judgment for the Insurers on UnitedHealth’s claim for $35 million in
defense costs in the AMA suit. The company complains that the court ruled without
giving notice and an opportunity to address the issue. In an order directing the parties
to brief three discrete issues “relating to allocation of the AMA settlement between
covered and uncovered claims,” the court had informed the parties that issues
regarding allocation of defense costs would be addressed in a later briefing schedule
if a trial was still required. UnitedHealth objects that the court then granted summary
judgment on the defense costs without further notice.
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Federal Rule of Civil Procedure 56(f)(2) provides that a district court may grant
a motion on grounds not raised by a party if the parties had notice and a reasonable
time to respond. But a court “commits reversible error when it grants summary
judgment on an issue not raised or discussed by the parties.” Heisler v. Metro.
Council, 339 F.3d 622, 631 (8th Cir. 2003).
The Insurers respond that if the district court erred by acting sua sponte, then
UnitedHealth waived any objection to the procedure when it failed to alert the district
court while the case was still pending. After the disputed order, UnitedHealth entered
into a stipulated judgment that dismissed the remaining claims, but never informed
the court that it sought to be heard on its claim for defense costs.
In two decisions, this court has held that a party waived any objection to a
district court’s sua sponte order granting summary judgment by failing to raise the
matter in the district court after the order was entered. Figg v. Russell, 433 F.3d 593,
597 (8th Cir. 2006); Shur-Value Stamps, Inc. v. Phillips Petroleum Co., 50 F.3d 592,
595 (8th Cir. 1995). UnitedHealth says that these cases are distinguishable because
the parties there had advance notice that the court might act sua sponte, whereas
UnitedHealth was led by the court’s briefing order to believe that there would be no
action on defense costs until a later time. We did say in Figg that the losing party was
on notice that the court might grant summary judgment without a new motion from
the other side. But Figg emphasized that “more importantly, ‘a party waives the
notice requirement when it fails to object based on insufficient notice and fails to
assert prejudice.’” 433 F.3d at 597 (emphasis added) (quoting Shur-Value, 50 F.3d
at 595). Whether or not a party receives an advance signal that the court might act
sua sponte, Shur-Value and Figg say that any objection to that procedure is waived
if the party does not at least object after the court enters its order while the action is
still pending. Accord Spring St. Partners-IV, L.P. v. Lam, 730 F.3d 427, 435-36 (5th
Cir. 2013).
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UnitedHealth points to American Red Cross v. Community Blood Center of the
Ozarks, 257 F.3d 859 (8th Cir. 2001), where this court “[r]eluctantly” reversed a grant
of summary judgment because the district court ruled sua sponte. Id. at 863. The
court in American Red Cross, however, did not discuss whether the appellant objected
in the district court or waived its objection to the procedure. Shur-Value was not
cited. The appellee might have waived the waiver. The same can be said for Heisler,
339 F.3d at 631-32, and Walker v. Missouri Department of Corrections, 138 F.3d
740, 742 (8th Cir. 1998) (per curiam). Because the issue of waiver was not joined in
these cases, we do not consider them precedent on that point. “Questions which
merely lurk in the record, neither brought to the attention of the court nor ruled upon,
are not to be considered as having been so decided as to constitute precedents.”
Webster v. Fall, 266 U.S. 507, 511 (1925).
UnitedHealth had an opportunity to raise its objection to the district court’s
summary-judgment procedure before it stipulated to the entry of final judgment.
Nothing in the district court’s letters to counsel precluded the company from alerting
the court to this alleged mistake. When UnitedHealth failed to raise the point, it
waived the notice requirement under our precedents in Shur-Value and Figg. We
therefore decline to disturb the district court’s grant of summary judgment for the
Insurers on the matter of defense costs in the AMA litigation.
IV.
The district court dismissed UnitedHealth’s claims against National Union for
failure to give adequate notice of the AMA claim under the policy. The district
court’s later rulings, however, make it unnecessary to address the notice issue,
because there is not a sufficient amount of alleged damages remaining in the case to
trigger coverage under the National Union policy even if notice had been adequate.
We therefore affirm the dismissal of the claims against National Union on this
alternative ground.
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* * *
For the foregoing reasons, the judgment of the district court is affirmed.
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