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Proassurance Indemnity Co. Inc. v. Wagoner

United States District Court, S.D. Indiana, Indianapolis Division

August 9, 2017

DONALD J. WAGONER, MARILYN L. WAGONER, WAGONER MEDICAL CENTER, LLC, WAGONER MEDICAL CENTER, P.C., D.J. & M.L. WAGONER, INC., ROBERT A. BREWER, GARY M. HARTMAN, THOMAS K. HEWITT, JOHN M. THOMAS, STEPHEN ROBERTSON as the Administrator of the Indiana Patient's Compensation Fund, LINDA S. RICHARDS LPN, Defendants. STEPHEN ROBERTSON as the Administrator of the Indiana Patient's Compensation Fund, Cross-Claimant,


          Hon. Jane Magnus-Stinson, Chief Judge

         In the matter before the Court, Plaintiff ProAssurance Indemnity Company, Inc. (“ProAssurance”) seeks to rescind and have the Court declare various professional medical liability insurance policies void ab initio under Indiana law. The policies span from 2001 to 2013, during which time ProAssurance alleges that several Defendants made material misrepresentations and omissions related to the illegal prescription of scheduled controlled substances. The Defendants consist of physicians, physician assistants, a registered nurse, various medical centers, and the Administrator of the Indiana Patient's Compensation Fund.

         ProAssurance filed a Motion for Summary Judgment on its rescission claim, seeking a declaration that the policies are void and that ProAssurance has no obligation to defend against pending and future claims or to pay judgments or damages that may be assessed against the named defendants. [Filing No. 174.]

         Two Cross-Motions for Summary Judgment were filed: the first by Defendants Donald Wagoner, Marilyn Wagoner, Wagoner Medical Center, LLC, Wagoner Medical Center, P.C., D.J. & M.L. Wagoner, Inc., and Linda Richards, (collectively, the “Wagoner Defendants”), [Filing No. 185]; and the second by Defendant John Thomas, [Filing No. 187].

         ProAssurance also filed a Motion to Strike certain portions of the Wagoner Defendants' and Mr. Thomas' reply briefing, [Filing No. 200], and a Motion for Leave to Supplement its Summary Judgment Exhibits, [Filing No. 204].

         Each of the Motions is ripe for the Court's review.


         Standard of Review

         A motion for summary judgment asks the Court to find that a trial is unnecessary because there is no genuine dispute as to any material fact and, instead, the movant is entitled to judgment as a matter of law. See Fed.R.Civ.P. 56(a). As the current version of Rule 56 makes clear, whether a party asserts that a fact is undisputed or genuinely disputed, the party must support the asserted fact by citing to particular parts of the record, including depositions, documents, or affidavits. Fed.R.Civ.P. 56(c)(1)(A). A party can also support a fact by showing that the materials cited do not establish the absence or presence of a genuine dispute or that the adverse party cannot produce admissible evidence to support the fact. Fed.R.Civ.P. 56(c)(1)(B). Affidavits or declarations must be made on personal knowledge, set out facts that would be admissible in evidence, and show that the affiant is competent to testify on matters stated. Fed.R.Civ.P. 56(c)(4). Failure to properly support a fact in opposition to a movant's factual assertion can result in the movant's fact being considered undisputed, and potentially in the grant of summary judgment. Fed.R.Civ.P. 56(e).

         In deciding a motion for summary judgment, the Court need only consider disputed facts that are material to the decision. A disputed fact is material if it might affect the outcome of the suit under the governing law. Hampton v. Ford Motor Co., 561 F.3d 709, 713 (7th Cir. 2009). In other words, while there may be facts that are in dispute, summary judgment is appropriate if those facts are not outcome determinative. Harper v. Vigilant Ins. Co., 433 F.3d 521, 525 (7th Cir. 2005). Fact disputes that are irrelevant to the legal question will not be considered. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).

         On summary judgment, a party must show the Court what evidence it has that would convince a trier of fact to accept its version of the events. Johnson v. Cambridge Indus., 325 F.3d 892, 901 (7th Cir. 2003). The moving party is entitled to summary judgment if no reasonable fact-finder could return a verdict for the non-moving party. Nelson v. Miller, 570 F.3d 868, 875 (7th Cir. 2009). The Court views the record in the light most favorable to the non-moving party and draws all reasonable inferences in that party's favor. Darst v. Interstate Brands Corp., 512 F.3d 903, 907 (7th Cir. 2008). It cannot weigh evidence or make credibility determinations on summary judgment because those tasks are left to the fact-finder. O'Leary v. Accretive Health, Inc., 657 F.3d 625, 630 (7th Cir. 2011). The Court need only consider the cited materials, Fed.R.Civ.P. 56(c)(3), and the Seventh Circuit Court of Appeals has “repeatedly assured the district courts that they are not required to scour every inch of the record for evidence that is potentially relevant to the summary judgment motion before them, ” Johnson, 325 F.3d at 898. Any doubt as to the existence of a genuine issue for trial is resolved against the moving party. Ponsetti v. GE Pension Plan, 614 F.3d 684, 691 (7th Cir. 2010).

         “The existence of cross-motions for summary judgment does not . . . imply that there are no genuine issues of material fact.” R.J. Corman Derailment Servs., LLC v. Int'l Union of Operating Eng'rs, 335 F.3d 643, 647 (7th Cir. 2003). Specifically, “[p]arties have different burdens of proof with respect to particular facts, different legal theories will have an effect on which facts are material; and the process of taking the facts in the light most favorable to the non-movant, first for one side and then for the other, may highlight the point that neither side has enough to prevail without a trial.” Id. at 648.



         The basic facts of this case are not in dispute and for the purposes of efficiency and clarity, the Court will only discuss facts relevant to its decision. [1]

         Between 2001 and 2013, ProAssurance issued numerous medical professional liability policies (the “Policies”) to various Defendants. [Filing No. 1-2; Filing No. 1-3; Filing No. 1-4; Filing No. 1-5.] Each of the Policies contained a provision providing the following statement, with minor modifications:

By acceptance of the policy, all insureds agree that the statements in the Coverage Summary and in their respective applications or renewal applications for insurance are the it agreements and representations, that the policy is issued in reliance upon the truth of Such. representations, and that the policy embodies all agreements existing between themselves and us of any of our agents relating to this insurance, in the event of any fraud, material misrepresentation or omission by any insured in his application or renewal application for insurance, the policy is void as to the party committing such fraud, material misrepresentation or omission, and no coverage is afforded to such party hereby.

         [Filing No. 1-2 at 8; Filing No. 1-2 at 24; Filing No. 1-2 at 43-44; Filing No. 1-3 at 9; Filing No. 1-3 at 33; Filing No. 1-3 at 63-64; Filing No. 1-3 at 90-91; Filing No. 1-4 at 13-14; Filing No. 1-4 at 41-42; Filing No. 1-4 at 67-68; Filing No. 1-4 at 105-106; Filing No. 1-5 at 13; Filing No. 1-5 at 60.]

         In addition, each of the Policies contained the following provision, with minor variations:

         Further, as a condition to renewal of the policy the policyholder and each Insured represent and warrant that, except a* otherwise disclosed to us in writing:

A. no Ensured has had arty state medical license, hospital privileges or license to prescribe or dispense medicine denied, suspended, restricted or revoked, nor has any such insured voluntarily surrendered any such license or privileges for any reason;
B. no insured has (1) undergone psychiatric treatment. (2) been treated for alcohol or narcotics addiction, (3) had any chronic iBnesa or physical defect, (4) been convicted of any misdemeanor or felony other than minor traffic violations, (S) appeared before any Professional Standards/Duality Assurance Review Committee or (6) appeared before any Board of Medical Examiners or Medteai Licensure Commission; and
C. no insured has changed the scope of his or her medical practice from (h?t previously disclosed to us in his or her applications for insurance.

         If, at any time white the policy is in effect, any of the events described in paragraph A, B, or C occur, the policyholder agrees to notify us within thirty (30) days of its occurrence, and to provide such additional information as we may require.

         The policyholder acknowledges that information concerning any of the events described above is material to our agreement to provide insurance under the policy on the ba3is, and for the premium, stated in the Coverage- Summary.

[Filing No. 1-2 at 13; Filing No. 1-2 at 30; Filing No. 1 -2 at 51; Filing No. 1-3 at 16; Filing No. 1-3 at 40; Filing No. 1-3 at 69; Filing No. 1-3 at 98; Filing No. 1-4 at 20; Filing No. 1-4 at 46; Filing No. 1 -4 at 73; Filing No. 1-4 at 114; Filing No. 1-5 at 22; Filing No. 1-5 at 71.]

         On May 28, 2014, Defendant Donald Wagoner pled guilty to a number of Class A Felonies and admitted to knowingly prescribing controlled substances outside the usual course of professional practice, resulting in opiate overdoses, respiratory depression, and poly-pharmacy overdoses. [Filing No. 1-9 at 2-6]. Mr. Wagoner admitted that he illegally prescribed controlled substances to various individuals on the following dates:

• January 10, 2010, [Filing No. 1-7 at 42];
• October 1, 2010, [Filing No. 1-7 at 43];
• February 2, 2010, [Filing No. 1-7 at 44];
• March 12, 2010, [Filing No. 1 -7 at 45];
• August 18, 2010, [Filing No. 1-7 ...

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