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Associated Industries Insurance Co. v. Brad Williams LLC

United States District Court, S.D. Mississippi, Northern Division

May 21, 2018

ASSOCIATED INDUSTRIES INSURANCE COMPANY PLAINTIFF
v.
BRAD WILLIAMS, LLC, ET AL. DEFENDANTS

          ORDER

          DANIEL P. JORDAN III CHIEF UNITED STATES DISTRICT JUDGE.

         The parties in this insurance-coverage declaratory-judgment action have filed cross-motions for summary judgment, seeking a decision on the meaning of a policy's interrelated-wrongful-acts provision. For the reasons that follow, Plaintiff's Motion for Partial Summary Judgment [45] is granted, and Defendants' Motions for Summary Judgment [47, 49] are denied. The Court will, however, certify its Order for interlocutory appeal.

         I. Facts and Procedural History

         This Order decides which insurance policy covers a series of civil suits filed against Defendants Brad Williams, LLC, and RevClaims, LLC (collectively “RevClaims”). RevClaims “assisted hospitals and healthcare centers nationwide by asserting liens on potential third party recovery sources that could fully satisfy charges and costs incurred by patients.” Defs.' Mem. [48] at 2. Defendant Landmark American Insurance Company (“Landmark”) insured RevClaims through May 1, 2016, at which point RevClaims swiched its coverage to Plaintiff Associated Industries Insurance Company (“AIIC”). Significantly, both policies were claims-made policies, providing coverage for claims first made against RevClaims during the respective policy periods, no matter when the conduct giving rise to the claims occurred. But the AIIC policy also included an interrelated-wrongful-acts provision, under which related claims were considered made at the time of the first such claim. So the question is whether claims filed during the AIIC policy period are related to a claim filed during Landmark's policy period.

         The first of the four claims against RevClaims at issue was filed on February 27, 2016- during the Landmark policy period. In that case, Elizabeth Wiggins sued RevClaims in the Circuit Court of Mobile County, Alabama, related to medical treatment she received following a September 1, 2015 motorcycle accident. Wiggins says her medical providers wrongfully engaged RevClaims to file a lien against her instead of billing her health insurer, BlueCross BlueShield of Alabama, at its negotiated reimbursement rates. Landmark is providing RevClaims with a defense in the Wiggins case.

         The three subsequent suits were filed during the AIIC policy period. First, on July 7, 2016, Tammy Hargett filed a class-action lawsuit against RevClaims and other entities in the Circuit Court of Craighead County, Arkansas. Hargett, an Arkansas Medicaid recipient, received treatment for injuries sustained in a motor-vehicle accident in July 2015. Like Wiggins, Hargett says her medical provider hired RevClaims to file a lien against her for the full amount of its bill rather than submitting the bill to Medicaid at the reduced rate Medicaid had negotiated. Hargett seeks to pursue claims on behalf of

[a]ll persons who were Arkansas Medicaid-eligible beneficiaries and received Medicaid-covered services from [the d]efendants [in Hargett] for injuries sustained in an incident for which a third party was potentially liable whose subsequent claim against that third party was impaired by the filing of a lien for the full charge of the services.

Hargett Compl. [1-2] ¶ 47. On September 8, 2016, AIIC agreed to defend RevClaims with regard to the Hargett case under a full reservation of rights.

         RevClaims received a second class-action complaint on August 19, 2016. Sue Garrison, the named plaintiff, was involved in an August 2013 motor-vehicle accident. Although Garrison had health insurance through a qualified health plan offered under the Arkansas health-insurance exchange, she says one of her medical providers employed RevClaims to assert a lien against her in lieu of billing her health insurer. Garrison seeks to pursue claims on behalf of a class including

[a]ll persons who were insured under an Arkansas [qualified health plan] and received covered services from [the defendant] healthcare providers [in Garrison] for injuries sustained in an incident for which a third party was potentially liable whose subsequent claim against that third party was impaired by the filing of a lien by [RevClaims] for a charge for services in an amount in excess of the negotiated contract rate with the [qualified health plan] insurer.

Garrison Compl. [1-4] ¶ 76.[1] Garrison was represented by the same attorneys that represent Hargett, and AIIC agreed to defend RevClaims with respect to the Garrison case under a full reservation of rights.[2]

         Alicia Pledger filed the fourth and final lawsuit against RevClaims on September 14, 2016, in the Circuit Court of Mobile County, Alabama. Pledger, a Blue Cross and Blue Shield of Alabama insured, is represented by the same attorneys representing Wiggins in the first-filed action. Like the others, Pledger says her medical provider retained RevClaims to file a lien against her for the full amount of her medical bills rather than billing Blue Cross and Blue Shield of Alabama at its negotiated reimbursement rates. RevClaims tendered the Pledger case to Landmark, which agreed to defend RevClaims under a reservation of rights. By letter dated November 8, 2016, AIIC also agreed to defend RevClaims in the Pledger action under a full reservation of rights.

         After agreeing to defend the Pledger action, AIIC discovered the Wiggins case and that Landmark had agreed to defend RevClaims in Wiggins and Pledger. AIIC then concluded that all four claims involved interrelated wrongful acts and therefore were first made during the Landmark policy period. Accordingly, AIIC filed this lawsuit against RevClaims and Landmark on January 18, 2017. It seeks a “declaration that it has no obligation to . . . RevClaims . . . with regard to the” Wiggins, Hargett, Garrison, or Pledger cases. Compl. [1] ¶ 57. It also seeks contribution and equitable subrogation for amounts it has already incurred defending RevClaims in the Hargett and Garrison cases.

         Landmark and RevClaims both filed counterclaims against AIIC. Landmark seeks equitable subrogation “for all funds Landmark pays in connection with the defense of RevClaims . . . in the Pledger Action.” Landmark Countercl. [10] ¶ 19. RevClaims seeks an adjudication “that AIIC is obligated to pay indemnity and provide coverage and defense to the limits of the AIIC policy regarding the Hargett and Garrison cases.” RevClaims Countercl. [30] ¶ 20. Following the close of discovery, the parties filed their cross-motions for summary judgment, which have been fully briefed. The Court has personal and subject-matter jurisdiction.

         II. Standard

         Summary judgment is warranted under Federal Rule of Civil Procedure 56(a) when evidence reveals no genuine dispute regarding any material fact and that the moving party is entitled to judgment as a matter of law. The rule “mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial.” Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986).

         The party moving for summary judgment “bears the initial responsibility of informing the district court of the basis for its motion, and identifying those portions of [the record] which it believes demonstrate the absence of a genuine issue of material fact.” Id. at 323. The nonmoving party must then “go beyond the pleadings” and “designate ‘specific facts showing that there is a genuine issue for trial.'” Id. at 324 (citation omitted). In reviewing the evidence, factual controversies are to be resolved in favor of the nonmovant, “but only when . . . both parties have submitted evidence of contradictory facts.” Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994) (en banc). When such contradictory facts exist, the court may “not make credibility determinations or weigh the evidence.” Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 150 (2000). Conclusory allegations, speculation, unsubstantiated assertions, and legalistic arguments have never constituted an adequate substitute for specific facts showing a genuine issue for trial. TIG Ins. Co. v. Sedgwick James of Wash., 276 F.3d 754, 759 (5th Cir. 2002); Little, 37 F.3d at 1075; SEC v. Recile, 10 F.3d 1093, 1097 (5th Cir. 1993).

         III. Analysis

         A. ...


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