Insurance Coverage Dispute

Case Unripe for Summary Judgment

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Source: Montana Law Week

INSURANCE: Uncertainty and unresolved facts & claims in sewer line easements suit make this declaratory action as to defend/indemnify duties unripe for summary
judgment… Gilbert.

Gardiner-Park Co. Water & Sewer Dist. claims that Donald & Gina Knight constructed 2 homes on their property that improperly overlay and endanger its sewer line. It claims that they constructed a house for their son Landon in 2014 over its sewer lines despite its objections. It claims that this house could crush the old clay tile line, causing disruption or leakage into the Yellowstone River. It claims that they constructed a 2nd
house over the line subsequent to and in violation of a 2015 easement signed by Donald Knight. Knights contest validity of his signature, claiming that he signed following surgery and while under the influence of medication. The District alleges that prior to construction it agreed to pay for and construct a new manhole to reroute the line and accommodate the 2nd house.

This rerouting allegedly involved obtaining another easement from Knights’ neighbors, Obers. Both easements prohibited construction within 5 feet of the line without the District’s permission. However, the District’s underlying suit claims that Knights constructed the 2nd house over the line in violation of both easements. A survey prepared for the District concluded that parts of both homes were within the easements. The District also alleges that Knights caused a retaining wall to collapse, threatening support for part of the line above the river. Its underlying suit accordingly brought claims of intentional trespass, intangible trespass, public & private nuisance, negligence/strict liability, and breach of contract against Knights. Its underlying
suit seeks a declaration that Knights violated the easements, an award of damages, costs, and attorney fees, and an order directing removal of structures threatening the line and violating the easements (both homes and a shed) at Knights’ expense.

Knights counterclaimed against the District alleging that it was aware of placement of the homes and improperly waited to raise concerns until 4/16. They dispute validity of the 2015 easements, claiming that Donald Knight was taking strong pain killers at
the time of signing. They claim that the District improperly forced them to remove parts of the 2nd home’s roof & porch, causing damage to their property. They request damages, attorney  fees & costs, denials of the District’s claims, and injunctive orders prohibiting removal of any structures and directing that the homes “remain in place.”

MACo Joint Powers Insurance Authority filed a declaratory action asking the Court to declare that it has no duty to defend or indemnify the District based on “clear exclusions” in the policy. MACo and the District request summary judgment. The Court heard argument 2/11/19. A notice and affidavit of Todd Shea filed 2/8/19 indicate that the District has filed a contribution & indemnification claim against Standish Excavation as a 3rdparty Defendant in the underlying suit. Further, there are expected amendments to the pleadings by some or all of the parties as a result of this and further discovery is anticipated.

The District raises the issue of ripeness, relying on cases holding that “where there remain unresolved relevant issues in the underlying case, inseparable from the issues presented in the declaratory judgment action, the duty to indemnify is not ripe for resolution.” American Reliable (D.Mont. 2018); Skinner (Mont. 2005). The concern is that ruling on the duty to indemnify before allowing the facts to be determined in an underlying action fails to be a final adjudication on the indemnification issue. Such
a ruling may be subject to amendment or nullification when the underlying case is finally resolved. Northfield v. MACo (Mont. 2000).

MACo responds that its summary judgment motion seeks a ruling that it is not obligated to defend or indemnify the District. It points out that there is a long line of Montana cases that have decided whether coverage exists by analyzing whether the allegations of the underlying complaint trigger the duty to defend. Further, since the duty to defend is broader than the duty to indemnify, if there is no duty to defend, the underlying claim
falls outside the scope of coverage. Twite (Mont. 2008). “Put another way, while an insurer’s duty to defend is triggered by allegations, an insurer’s duty to indemnify hinges not on the facts the claimant alleges and hopes to prove but instead on the facts, proven, stipulated or otherwise established that actually create the insured’s liability.” Freyer (2003). MACo further relies on Grindheim (D.Mont. 1995) (“An insurer’s duty to defend
its insured arises when the insurer, through reference to pleadings, discovery, or final issues declared ready for trial, has received notice of facts representing a risk covered by the terms of the policy.”). Thus, MACo argues, if a claim falls unequivocally outside the policy’s coverage, there is no basis for imposing a duty to defend. MACo contends that the District is attempting to eliminate the duty to defend analysis by merging it into the
narrower duty to indemnify analysis. It points to case law holding that an insurer “had no duty to defend [the insured] because the complaint cannot be construed to give rise to a claim under the terms of the policy.” Weitzel (Mont. 2016). It rejects the District’s argument that unresolved factual issues preclude a determination of coverage, since the Supreme Court has recognized that “factual disputes between the parties relevant to
coverage must be resolved in favor of coverage.” Id. It argues that Northfield and American Reliable are not on point because they addressed only the issue of indemnification and did not analyze the duty to defend.

The District counters that MACo misconstrues its ripeness argument. It relies on authority that where there are unresolved relevant issues in the underlying case that are inseparable from the issues in the declaratory action, the duty to indemnify is not ripe. It argues that there are unresolved issues here that are inseparable from MACo’s summary judgment motion seeking a ruling that it is not obligated to defend or indemnity the District for Knights’ claims. It takes issue with MACo’s effort to distinguish Northfield as only addressing indemnification since the opinion notes at the outset that MACo had already assumed the defense, so the duty to defend was not at issue. It reiterates
that it relies on Northfield for the holding denying Northfield’s request for a declaratory ruling on its potential indemnification obligations because there were unresolved factual issues in the underlying case. Northfield also relied on the DJA, which authorizes a court to refuse to enter a declaratory ruling if doing so “would not terminate the uncertainty or controversy giving rise to the proceeding.” §27-8-206. In Northfield, MACo successfully
defended against Northfield’s motion by contending that the plaintiffs in the underlying case could subsequently amend their complaint and therefore Northfield’s motion seeking declaratory relief on its indemnification obligation was premature. The District maintains that American Reliable ultimately determined that it could not rule on whether there was an occurrence under the policy because of ongoing factual issues in the underlying case. Given this decision, it determined that American Reliable’s duty to defend was ongoing.

There are not only unresolved factual issues in the underlying litigation here, but also claims that have not been filed. This case is not to the stage where there is sufficient finality of pleadings, discovery, or final issues declared ready for trial, such that the Court can determine MACo’s duty to indemnify or defend. If the Court ruled on the summary judgment motions at this juncture, such rulings may be subject to nullification or amendment after further amendment of the pleadings, further discovery, or further proceedings. The Court is cognizant of MACo’s desire to have a ruling based on the state of the pleadings at the time it filed its summary judgment motion. However, doing so “would not terminate the uncertainty or controversy giving rise to the proceeding.” There is sufficient basis to deny MACo’s motion in keeping with the DJA §27-8-206.

The parties are preparing amended pleadings, most significantly Knights’ assertion of a 3rd-party claim which, if filed, would be crucial to MACo’s assessment of its position and the Court’s determination of the matters presented by the summary judgment motions now before the Court. The District has just recently asserted a 3rd-party contribution & indemnification claim, bringing a new party into the underlying case. Discovery has already been extended into 5/19,  and the addition of a new party may give rise to further requests for amendment of the Scheduling Order. The procedural status
puts this case beyond the level of uncertainty and unresolved facts in Northfield or American Reliable.

MACo’s motion for summary judgment and the District’s cross-motion for summary judgment must be denied.

Bozeman Nurse Settles Wrongful Discharge Lawsuit – Shea Law Firm Bozeman, MT

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Chronicle Staff | Posted: Friday, February 10, 2012

A Bozeman nurse who claims she was fired after acting as a surrogate mother for a patient has settled her wrongful discharge lawsuit with Billings Clinic.

Anicee Acosta-Yearick contended that Billings Clinic wrongly fired her for ethics violations when she agreed to carry the patient’s baby in 2009, according to court documents.

Acosta-Yearick worked for Bozeman OB/GYN, owned by Billings Clinic, for 16 years before she was fired in January 2010. She was fired because “as a licensed professional nurse, she used her knowledge of private, protected health information to influence and solicit a Billings Clinic patient to enter into a surrogacy contract resulting in personal gain,” which violates the nursing and clinic codes of conduct, court documents state.
Billings Clinic filed an ethics violation complaint against Acosta-Yearick with the Montana Nursing Board, but the board decided the complaint did not justify legal or disciplinary action, according to court records.

Acosta-Yearick claimed she is friendly with the couple who asked for her help, court documents state, and she did not ask for money other than expenses.

Medical providers, who worked with Acosta-Yearick, supported her decision to be a surrogate mother for the patient. They submitted written statements that called into question the clinic’s motives for firing Acosta-Yearick.

The clinic filed to dismiss the case, saying state law protects employers from being sued for wrongful discharge when they have good cause. The clinic’s attorney claimed the accusations of insurance fraud, ethics violations and Acosta-Yearick’s decision to make money from the surrogacy were all valid reasons for firing her.

A Gallatin County judge’s order closing the wrongful discharge lawsuit didn’t include the settlement amount.

In a separate complaint, the insurance commissioner ordered health insurer New West Health Services to pay Acosta-Yearick’s medical bills for maternity care. New West had originally withdrawn its coverage after learning of the surrogate pregnancy.

A federal lawsuit against New West also has been settled and closed.

Insurer must pay bills for surrogate mother’s pregnancy – Nurse’s lawsuit against Billings Clinic Persists

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JODI HAUSEN, Chronicle Staff Writer, November 10, 2011

A health insurer that withdrew medical coverage for a Bozeman nurse’s pregnancy after learning it was a surrogacy was ordered by the state to pay her medical bills.

Jameson C. Walker, attorney for the Montana Commissioner of Securities and Insurance, notified New West Health Services that the insurer has to reimburse Anicee Acosta-Yearick for costs associated with her 2009 surrogate pregnancy.

“New West attempt to exclude coverage for surrogacy” but the exclusion outlined in the plan “only applies to costs associated with treatment of infertility – not an ensuing pregnancy by the insured surrogate,” Walker wrote in bold in the Nov. 1 letter.

“The policy also provides for coverage for all pregnancy and does not specifically exclude surrogacy pregnancy,” he continued.  “Even if the exclusion applied to the insured’s surrogacy pregnancy, this would be a violation” of Montana law that makes it unlawful to discriminate “solely on the basis of sex or marital status in the issuance or operation of any type of insurance policy.”

Citing a previous Montana Supreme Court case, Walker continued: “Since pregnancy was a condition unique to women, and the exclusion subjected women to fewer benefits than men, (the policy in question) unlawfully discriminated on the bases of gender.”
New West was given until Dec. 1 to provide the commissioner’s office with proof Acosta-Yearick’s covered pregnancy costs have been paid.

In a lawsuit filed against New West, Acosta-Yearick and her husband, Christopher Yearick, sued to recover more than $11,500 in medical claims.
Although it appears her medical bills will be paid, Acosta-Yearick is still awaiting resolution on a related wrongful discharge lawsuit she filed in Gallatin County District Court against Billings Clinic.

According to the lawsuit, Acosta-Yearick contends Billings Clinic wrongly fired her on grounds she violated the organization’s code of ethics when she agreed to carry an infertile patient’s baby.

Acosta-Yearick worked for Bozeman OB/GYN, owned by Billings Clinic, for 16 years before she was fired in January.  She was terminated because “as a licensed professional nurse, she used her knowledge of private, protected health information to influence and solicit a Billings Clinic patient to enter into a surrogacy contract resulting in personal gain,” which violates the clinic’s code of conduct and a nursing code of ethics, court documents state.

Billings Clinic filed an ethics violation complaint against Acosta-Yearick with the Montana Nursing Board, but the board determined the complaint did not justify legal or disciplinary action, court documents state.

Acosta-Yearick claims she is friendly with the couple who asked for her help.  She did not ask for financial compensation other than expenses.  She carried the woman’s baby as a gift.

Medical providers, who worked with Acosta-Yearick, supported her decision to be a surrogate mother for the patient.  They submitted written statement that called into question the clinic’s motives for firing her.

In her statement Dr. Stacey H. Shomento said that the complaint filed with the nursing board was “a personal vendetta” against Acosta-Yearick.  “I feel very strongly that Anicee has been wrongly accused,” she wrote.

Todd Shea, Acosta-Yearick’s attorney, also alleges in the suit that Billings Clinic violated the nurse’s privacy when they reviewed her medical records without her permission.
The clinic filed to dismiss the case, saying state law protects employers from being sued for wrongful discharge when they have good cause to do so.

The clinic’s attorney, Ed Butler, of Colorado Springs, Colo., calls the case “wholly frivolous” and claims the accusations of insurance fraud, nursing ethics violations and “specifically the propriety of Mrs. Yearick’s decision to become a surrogate mother for a patient…and her financial gain from that decision” are all valid reasons for having fired her.

Bozeman Nurse and Surrogate Mother Suing Billings Clinic, Health Insurer

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JODI HAUSEN, Chronicle Staff Writer I Posted: Tuesday, October 11,2011

A Bozeman nurse is suing Billings Clinic and its health insurer, claiming she was wrongfully fired and denied health insurance coverage because she was pregnant as a surrogate mother for her patient.  Anicee Acosta-Yearick filed one lawsuit each against the Billings Clinic and the insurer, New West Health Services.

According to the lawsuits:
Acosta-Yearick was fired on grounds she violated Billings Clinic’s code of conduct and a nursing code of ethics when she agreed to carry an infertile patient’s baby. She is also suing to recover more than $11,500 in medical claims for the pregnancy New West initially paid but later revoked.

In November 2009, Acosta-Yearick became pregnant for a patient at Bozeman OB/GYN where she worked. The baby was born at Bozeman Deaconess Hospital in July 2010. When she was fired in January, Billings Clinic “informed Mrs. Yearick that she was under investigation for insurance fraud” and “interrogated” her about her pregnancy. The clinic filed a complaint against her with the Montana Nursing Board for ethics violations. The clinic fired her because she “used her knowledge of private, protected health information to influence and solicit a Billings Clinic Bozeman OBGYN patient to enter into a surrogacy contract resulting in personal gain.”

But Acosta-Yearick claims she is friendly with the couple who asked for her help. She did not ask for financial compensation other than expenses. She carried the woman’s baby as a gift. “If anyone pushed anyone into signing a legal surrogacy contract, it was I,” the baby’s mother wrote in a statement in the lawsuit. “Yes, Anicee, as my close friend, offered to be my gestational surrogate, but it was I who made the first contact to Anicee.”

Acosta-Yearick claims medical providers at Bozeman OBGYN supported her decision and never questioned her motives when she received pregnancy care.
Dr. Tyler Bradford wrote, “I feel it is wrong for her to be reported to the board of nursing and it would be even more unjust if her license is suspended or revoked as doing so would punish an individual for exhibiting the characteristics that we should all strive for in medicine: selflessness.”

Todd Shea, Acosta-Yearick’s attorney, said another nurse at a Billings Clinic donated her kidney to a patient. He wrote in the brief that she “was praised for her selfless and courageous act.”

Acosta-Yearick claims her termination violated her health care privacy rights, defamed her through slanderous and libelous contentions, was intended to interfere with her economic interests and intentionally inflicted emotional distress.

The lawsuit against New West claims the insurer initially paid Acosta-Yearick’s medical bills but later reneged after a Billings Clinic employee asked the insurer about the legitimacy of the payments. The insurer had no exclusions for “surrogate services” and only added that amendment to the plan after Acosta-Yearick had asked about her benefits and became pregnant with the understanding her medical bills would be covered.

Montana’s state auditor reviewed Acosta-Yearick’s appeal to New West after her benefits were revoked and ruled in her favor, saying “the underlying condition that New West is denying coverage for is pregnancy and child birth. This is a condition exclusive to women.”