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American Medical Response Northwest, Inc. v. Ace America Ins. Co.

United States District Court, D. Oregon, Portland Division

July 10, 2014

AMERICAN MEDICAL RESPONSE NORTHWEST, INC., AMERICAN MEDICAL RESPONSE, INC., Plaintiffs,
v.
ACE AMERICAN INSURANCE COMPANY, NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA, Defendants

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[Copyrighted Material Omitted]

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For American Medical Response Northwest, Inc., American Medical Response, Inc., Plaintiffs: Michael E. Farnell, LEAD ATTORNEY, Parsons Farnell & Grein, LLP, Portland, OR, USA; Michael H. Ginsberg, LEAD ATTORNEY, PRO HAC VICE, Jones Day, Pittsburgh, PA, USA; Rebekah Byers Kcehowski, PRO HAC VICE, Pittsburgh, PA.

For Ace American Insurance Company, Defendant: Thomas M. Jones, LEAD ATTORNEY, PRO HAC VICE, William F. Knowles, Cozen O'Connor, Seattle, WA, USA.

For National Union Fire Insurance Company of Pittsburgh, PA, Defendant: Jenny M. Churas, LEAD ATTORNEY, PRO HAC VICE, Johnson Andrews & Skinner PS, Seattle, WA, USA; Lee S. Aronson, LEAD ATTORNEY, Schulte Anderson Downes Aronson Bittner, PC, Portland, OR, USA; Stephen G. Skinner, LEAD ATTORNEY, PRO HAC VICE, Andrews Skinner, PS, Seattle, WA, USA; William F. Knowles, Cozen O'Connor, Seattle, WA, USA.

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OPINION AND ORDER

Robert E. Jones, Senior United States District Judge.

I. Background

This action arises out of the defendant insurance companies' denial of coverage to plaintiffs American Medical Response Northwest, Inc. and American Medical Response, Inc. (collectively, " AMR" ) in connection with sixteen underlying state court actions filed by third-party plaintiffs against AMR and its employee Lannie Haszard. Some of the complaints in the underlying actions alleged negligence, battery and Vulnerable Person Abuse, and some alleged just one or two of those causes of action. One of the underlying cases went to trial and the jury found AMR and AMR Northwest guilty on the negligence claim, awarding $1.75 million in damages and AMR Northwest guilty on the Vulnerable Person Abuse claim, awarding $1.5 million in damages. Following that trial, AMR settled six of the suits. The remaining suits are pending in Oregon state court. AMR brings this action against two insurers, defendants ACE American Insurance Company (" ACE" ) and National Union Fire Insurance Company (" National Union" ), requesting declaratory relief for breach of insurance contract. In their motions for summary judgment, defendants argued that the intentional act of sexual assault cannot qualify as an " accident" or " occurrence" within the meaning of a general commercial liability policy. National Union also contended that exclusions within its policies preclude coverage. I granted summary judgment in favor of defendants based on their first argument and never reached the exclusion issue. AMR appealed the summary judgment ruling and the Ninth Circuit Court of Appeals reversed and remanded, holding that AMR's negligent conduct in hiring, training, and supervising Haszard was covered under defendants' policies as an " occurrence."

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The Ninth Circuit Court directed the district court to look at the allegations in each of the underlying third-party complaints and the 1998 jury verdict to determine whether plaintiff's alleged covered " occurrences."

Following the remand, I ruled that settlements in some of the underlying cases rendered the alleged causes of action legally null (#204) and that the allegation of intentional battery in the Whalen case was not a covered occurrence within the terms of the defendants' insurance policies. (#213) AMR filed a Motion for Reconsideration (#217) of those rulings. After AMR filed its Motion for Reconsideration, I allowed additional briefing from the parties as to the exclusions provisions and the issues raised in the Motion for Reconsideration. This opinion addresses whether summary judgment is appropriate because an exclusion provision precludes coverage as well as the settlement and battery issues raised in the Motion for Reconsideration.

II. Standards

Summary judgment should be granted if there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c). If the moving party shows that there are no genuine issues of material fact, the non-moving party must go beyond the pleadings and designate facts showing an issue for trial. Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). A scintilla of evidence, or evidence that is merely colorable or not significantly probative, does not present a genuine issue of material fact. United Steelworkers of America v. Phelps Dodge, 865 F.2d 1539,1542 (9th Cir. 1989).

The substantive law governing a claim determines whether a fact is material. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); see also T. W. Elec. Service v. Pacific Elec. Contractors, 809 F.2d 626, 630 (9th Cir. 1987). Reasonable doubts as to the existence of a material factual issue are resolved against the moving party. T. W. Elec. Service, 809 F.2d at 631, Inferences drawn from facts are viewed in the light most favorable to the non-moving party. Id. at 630-31.

Although the Federal Rules of Civil Procedure do not expressly authorize a motion for reconsideration, " [a] district court has the inherent power to reconsider and modify its interlocutory orders prior to the entry of judgment." Smith v. Massachusetts, 543 U.S. 462, 475, 125 S.Ct. 1129, 160 L.Ed.2d 914 (2005).

III. Exclusions

Defendants assert their policies contain exclusions that preclude coverage for the underlying claims: specifically, the Patient Injury Exclusion Endorsement and the Expected or Intended Exclusion. Under both Colorado and Oregon law, insurers have the burden of proving the applicability of exclusions. Stanford v. Am. Guar. Life Ins. Co., 280 Or. 525, 571 P.2d 909, 911 (Or. 1977); Am. Family Mut. Ins. Co. v. Johnson, 816 P.2d 952, 953 (Colo. 1991). In addition, exclusions are narrowly construed against insurers. Stanford, 571 P.2d at 911; Johnson, 816 P.2d at 955 n. 1.

A. Patient Injury Exclusions

ACE contends it is entitled to summary judgment because its policy excludes coverage for injury sustained from patient care. ACE's policy provides:

PATIENT CARE ENDORSEMENT
This insurance does not apply to any liability arising out of any INSURED'S

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providing or failing to provide any services of a professional nature to a PATIENT.
PATIENT means any person who seeks any form of medical care provided by any INSURED whether on an in-patient, ...

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