Continental Casualty Co. v. Alabama Emergency Room Administrative Services P.C.

[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________ FILED
U.S. COURT OF APPEALS
No. 09-12385 ELEVENTH CIRCUIT
DECEMBER 3, 2009
Non-Argument Calendar
THOMAS K. KAHN
________________________
CLERK
D.C. Docket No. 07-00221-CV-A-N
CONTINENTAL CASUALTY COMPANY,
Plaintiff-Appellant,
versus
ALABAMA EMERGENCY ROOM
ADMINISTRATIVE SERVICES, P.C.,
Defendant-Appellee.
________________________
Appeal from the United States District Court
for the Middle District of Alabama
________________________
(December 3, 2009)
Before CARNES, WILSON and COX, Circuit Judges.
PER CURIAM:
Continental Casualty Company (“Continental”) filed this declaratory judgment
action against Alabama Emergency Room Administrative Services, P.C. (“the
Insured”), seeking a declaration that the Insured owed Continental additional
premium on a workers’ compensation insurance policy (“the Policy”). The Insured
provides medical staffing to hospital emergency rooms. Continental pursued its claim
on the theory that an initial premium for the Policy was calculated based on the
Insured’s statements regarding the remuneration paid its employees, but that the
doctors the Insured provided to cover shifts at hospital emergency rooms also should
be considered persons who could subject the Insured to workers’ compensation
liability and therefore their remuneration should be considered in the premium
calculation. The Insured argued that the physicians were independent contractors
rather than employees and, therefore, the doctors could not subject the Insured to
workers’ compensation liability and should not be included in the premium
calculation.
The parties agreed to submit the case to the district court for resolution based
on agreed facts and briefs. The district court found that the Policy provided coverage
only for workers’ compensation claims by employees, and that the physicians in
question were not employees of the Insured. Therefore, it entered judgment in favor
of the Insured. Continental appeals.
The parties disagree as to the proper standard of review. Continental argues
that the district court’s decision resolves questions of law and is, therefore, subject
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to de novo review. The Insured argues that, because this case originated as a suit for
declaratory relief, the abuse of discretion standard applies.
“In Alabama, the interpretation of a contract, including an insurance contract,
is a question of law reviewed de novo.” Twin City Fire Ins. Co. v. Ohio Cas. Ins.
Co., 480 F.3d 1254, 1258 (11th Cir. 2007) (citing Royal Ins. Co. of Am. v. Whitaker
Contracting Corp., 242 F.3d 1035, 1040 (11th Cir. 2001)). This rule applies
notwithstanding the fact that the complaint seeks declaratory relief. See Federal
Reserve Bank of Atlanta v. Thomas, 220 F.3d 1235, 1238 (11th Cir. 2000) (citation
omitted) (in declaratory judgment action, question of law is considered de novo).
Under Alabama law, the district court’s determination that the emergency room
physicians are independent contractors rather than employees is a factual finding. See
Liberty Mut. Ins. Co. v. D & G Trucking, Inc., 966 So. 2d 266, 268 (Ala. Civ. App.
2006). Therefore, we review that decision for clear error. Fed. R. Civ. P. 52(a)(6).
The Policy is titled “WORKERS COMPENSATION AND EMPLOYERS
LIABILITY INSURANCE POLICY.” (R.2-40, Ex. 36 at CNA0145). Part
One of the Policy is titled Workers Compensation Insurance. (Id.) Part Two of the
Policy is titled Employers Liability Insurance. (Id. at CNA0146.) The Policy
premium is calculated by multiplying a rate by “payroll and all other remuneration
paid or payable during the policy period for the services of:
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1. All [the Insured’s] officers and employees engaged in work
covered by this policy; and
2. All other persons engaged in work that could make us liable
under Part One (Workers Compensation Insurance) of this
policy.”
(Id. at CNA0148.)
Continental argues that, because Part One of the Policy not only indemnifies
the Insured for payment of all workers’ compensation benefits due but also states that
Continental has the “duty to defend at [its] expense any claim, proceeding or suit
against [the Insured] for benefits payable by this insurance,” (id. at CNA0145), the
premium should be calculated based on the remuneration payable not only to officers
and employees of the Insured but to all persons engaged in work that could make
Continental liable for the costs of defending a workers’ compensation lawsuit brought
by any such person.
We disagree. What claims Continental has the duty to defend is not at issue in
this case. The Policy states that premium is to be calculated based on the
remuneration payable to persons engaged in work “that could make [Continental]
liable” under the workers’ compensation part of the policy. (Id. at CNA0148.) We
read this phrase to mean that premium must be calculated based on remuneration
payable to persons who could be “due the benefits required . . . by the workers
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compensation law.” (Id. at CNA0145.) The parties do not dispute that, under
Alabama law, workers’ compensation is payable only to employees. Birmingham
Post Co. v. Sturgeon, 149 So. 74, 76 (Ala. 1933.) So, if the emergency room
physicians in question are not employees of the Insured, neither the Insured nor
Continental can be liable to them for payments required by the workers’
compensation laws. And, the premium cannot be calculated based on remuneration
payable to them by the Insured.
Whether Continental’s duty to defend under Part One of the Policy arises when
a workers’ compensation plaintiff alleges, truthfully or not, that he is an employee of
the Insured is not relevant. To read this Policy to calculate premium based upon the
remuneration paid to the broad universe of persons who might claim to be employees
is not reasonable.
We find no reversible error in the district court’s determination that the
physicians in question are not employees. First, we reject Continental’s argument
that the district court improperly assumed the role of Alabama state courts by making
the determination that the physicians were not employees. Continental filed this
action seeking a declaration that the Insured owed Continental premium. In order to
determine whether Continental was due the premium, the district court had to
determine whether the physicians were employees (and therefore persons who might
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be entitled to benefits under the workers’ compensation law). And, we find no clear
error in the district court’s finding that the physicians were not employees of the
Insured. Applying the “right to control” test that Alabama courts use to determine the
existence of an employer-employee relationship, the district court’s order extensively
analyzes the facts of the Insured-physician relationship (see R.6-63 at 13-21) and
concludes that the facts do not evidence the sort of control necessary to establish an
employment relationship. (Id. at 21.) There are facts in the record which support the
district court’s finding, not the least of which is that the contract between the Insured
and each physician identifies the relationship as an independent contractor
relationship in which the physician has no right to workman’s compensation. (See
id. at 14-15.)
We affirm the judgment.
AFFIRMED.
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