Interstate Fire and Casualty Company v. Washington Hospital Center Corporation , 853 F. Supp. 2d 49 ( 2012 )


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  •                             UNITED STATES DISTRICT COURT
    FOR THE DISTRICT OF COLUMBIA
    ____________________________________
    )
    INTERSTATE FIRE AND CASUALTY        )
    COMPANY,                            )
    )
    Plaintiff,        )
    )
    v.                            )                Civil Action No. 10-1193 (ABJ)
    )
    WASHINGTON HOSPITAL CENTER          )
    CORPORATION, d/b/a WASHINGTON )
    HOSPITAL CENTER, GREENSPRING )
    FINANCIAL INSURANCE LIMITED,        )
    and MEDSTAR HEALTH INC.,            )
    )
    Defendants.       )
    ____________________________________)
    MEMORANDUM OPINION
    Plaintiff Interstate Fire and Casualty Company (“Interstate”) brings this action against
    defendants Washington Hospital Center (“WHC”), Greenspring Financial Insurance Limited
    (“GFIL”), and MedStar Health Inc. (“MedStar”) seeking reallocation of a settlement paid by
    plaintiff for the alleged medical malpractice of Nurse Chichio Hand. Plaintiff argues it is entitled
    to reallocation of the settlement because (1) Nurse Hand is an employee of WHC within the
    meaning of WHC’s insurance policy with GFIL, and (2) the “other insurance” clauses in the
    GFIL and Interstate insurance policies provide that the GFIL supplies primary coverage to Nurse
    Hand and Interstate supplies excess coverage. The parties filed cross-motions for summary
    judgment regarding reallocation of the settlement. Defendants’ motion also requests that WHC
    and MedStar be found not liable because plaintiff’s arguments regarding liability do not apply to
    them. As to the liability of defendant GFIL, the Court will grant plaintiff’s motion for summary
    judgment [Dkt. # 32], and deny defendants’ cross-motion [Dkt. # 33] because it finds that Nurse
    Hand was an “employee” within the meaning of the GFIL insurance policy. However, the Court
    will grant defendants’ motion for summary judgment [Dkt. # 33] as it pertains to WHC and
    MedStar.
    BACKGROUND
    I.       The Underlying Litigation and Settlement 1
    The reallocation dispute in this case is the product of a settlement agreement that arose
    out of a medical malpractice suit brought by patient Radianne Banks against WHC and two
    WHC doctors (“the underlying litigation”). Compl. ¶ 10. In that suit, WHC filed a Third-Party
    Complaint against Progressive Nursing Staffers of Virginia, Inc. (“Progressive”) and Ms.
    Chichio Hand, the temporary nurse that was responsible for Ms. Banks’s post-op care. Id. ¶ 11.
    Nurse Hand was hired to work at WHC through Progressive. Id. The Third-Party Complaint
    alleged both contribution and indemnification. Id.
    The underlying litigation eventually settled and Ms. Banks received a total of $4,105,000.
    Pl.’s Statement of Material Facts (“Pl.’s SMF”) ¶ 56 [Dkt. # 32-23]. Consequently, Interstate –
    Progressive’s insurer – paid $3,055,000 on behalf of Nurse Hand. Compl. ¶ 15. Interstate also
    paid $148,062 in attorneys’ fees and “$5,186.75 in costs/expenses in defending the Underlying
    Action.” Pl.’s SMF ¶ 59.
    II.      Reallocation of the Settlement
    In the instant case, Interstate brings this suit against WHC, WHC’s parent company
    MedStar, and WHC’s insurer Greenspring Financial Insurance Limited (“GFIL”), alleging
    breach of contract, contribution, and subrogation. Compl. ¶¶ 31–40. Interstate also seeks a
    1      The following facts regarding the underlying litigation, taken from plaintiff’s complaint,
    are undisputed by defendants.
    2
    declaration that Nurse Hand is an insured of GFIL and that GFIL is required to reimburse
    Interstate for the $3,055,000 that Interstate paid on behalf of Nurse Hand in the underlying
    litigation. Id. ¶¶ 41–45. Defendants collectively deny Interstate’s allegations. Answer ¶¶ 31–
    45.
    Interstate subsequently filed a Motion for Partial Summary Judgment [Dkt. #32] and
    defendants filed a Cross-Motion for Summary Judgment [Dkt. #33].           The parties disagree on
    two issues. First, they disagree as to whether Nurse Hand was an employee within the meaning
    of WHC’s insurance policy with GFIL and, therefore, whether there is any theory by which
    GFIL is responsible for Nurse Hand’s portion of the settlement. And second, if Nurse Hand is an
    employee of WHC for purposes of GFIL’s insurance policy, the parties disagree as to whether
    the responsibility for covering Nurse Hand’s expenses related to the underlying litigation should
    be determined by the “other insurance” provisions in the GFIL and Interstate insurance policies
    (which would require GFIL to reimburse Interstate for all expenses paid on behalf of Nurse
    Hand), or whether the indemnification agreement in the Temporary Staffing Agreement could
    preclude a finding of GFIL’s liability.      The following undisputed facts are necessary for
    resolution of both issues.
    A. The Relationship between Progressive, WHC, and Nurse Hand
    In February 2002, Progressive and WHC entered into a Temporary Staffing Agreement
    (“Agreement”), which provided the terms by which Progressive would provide temporary nurses
    to WHC. Pl.’s SMF ¶¶ 3, 5; Defs.’ Statement of Undisputed Material Facts (“Defs.’ SMF”) ¶ 4
    [Dkt. # 33-2]. Under the Agreement, Progressive nurses could work on a per diem basis (“one
    shift up to potentially several weeks of work”) or as local travel staffing (“2 to 13 or more weeks
    in duration[] with a minimum assignment of 24 hours per week”). Defs.’ SMF ¶ 7; see also Pl.’s
    3
    SMF ¶ 6. At the time of Nurse Hand’s alleged malpractice, she was working at WHC on a per
    diem basis. Pl.’s SMF ¶¶ 6, 9; Defs.’ SMF ¶¶ 30–31.
    The Agreement also provided that Progressive nurses were to remain employees of
    Progressive; 2 that Progressive, not WHC, would pay the nurses their wages; 3 and that
    Progressive was to designate a Progressive “employee to act as a ‘Staffing Specialist’ who
    [would] remain available as a liaison to [the hospital] for coordinating and scheduling services to
    be provided.” Ex. 2 to Pl.’s Mot. for Partial Summ. J. (“Pl.’s MSJ”) [Dkt. # 32-2] at 2, 7–8;
    accord Defs.’ SMF ¶¶ 8–9, 13. At the same time, however, the Agreement provided that WHC
    controlled the day-to-day tasks of a Progressive nurse during that nurse’s shift. Ex. 2 to Pl.’s
    MSJ at 4–5 (“[WHC] will . . . maintain responsibility for clinical supervision and direction of
    [Progressive] Registered Nurses with regard to day-to-day staffing and nursing objectives. . . .
    [WHC] may immediately terminate the services of a Registered Nurse who fails to perform
    within the reasonable expectations of [WHC] or fails to follow [WHC] policies for patient
    care.”); see also Pl.’s SMF ¶¶ 11–13. WHC’s representative acknowledged that, despite the
    2        Plaintiff argues that the provision in the Agreement that states that Progressive nurses
    remain Progressive employees was included for the sole purpose of preventing WHC from
    soliciting nurses without fairly compensating Progressive. Pl.’s SMF ¶ 48. Defendants, on the
    other hand, argue that inclusion of that statement in the Agreement shows the intent of
    Progressive and WHC that Progressive nurses would not be employees of WHC. See Defs.’
    SMF ¶ 19. Whether the Agreement indicates intent on the part of Progressive and WHC that
    Progressive nurses remain Progressive employees, however, is irrelevant to the question before
    the Court for two reasons. First, the Court is tasked with interpreting the meaning of the word
    “employee” in an insurance contract between WHC and GFIL. As a result, the Agreement is
    parol evidence that the Court may not consider. Second, even if there was an intention that
    Progressive nurses remain employees of Progressive, there is nothing in D.C. law that would
    prohibit the finding that Nurse Hand was an employee of both Progressive and WHC at the time
    of her alleged negligence. Consequently, the Court need not address the issue.
    3      Progressive was also responsible for “withholding federal and state income taxes,
    payment of Federal Social Security and Medicare taxes, and payment of applicable
    unemployment insurance and maintenance of worker’s compensation insurance as required by
    law.” Ex. 2 to Pl.’s MSJ at 7; accord Defs.’ SMF ¶ 13.
    4
    presence of Progressive staff, WHC retained ultimate control over Progressive nurses’ day-to-
    day tasks as well as the ultimate authority to say that they would no longer allow a certain nurse
    to work at WHC. Eckert Dep., Ex. B to Defs.’ Mot. for Summ. J. (“Eckert Dep.”) 51:11–52:9
    [Dkt. # 33-4] (“The Hospital Center always retained the right in order to determine and ascertain
    what the assignment of the individual nurse would be . . . . [They also had the right to] say this
    particular nurse is not meeting our standard . . . . [and w]e will no longer choose to have them
    work at our hospital . . . .”). 4
    Finally, the Agreement included an indemnification clause, under which Progressive was
    required “to indemnify WHC for claims arising from the negligence of Progressive or its
    registered nurse employees who were provided to WHC.” Defs.’ SMF ¶ 15; accord Ex. 2 to
    Pl.’s MSJ at 8. The indemnification clause served as the basis for the Third-Party Complaint
    filed by WHC in the underlying litigation. See Pl.’s SMF ¶ 52; Defs.’ SMF ¶¶ 15, 47.
    B. Insurance Policies
    There are two insurance policies that are relevant in the instant case. The first is the
    policy in which GFIL agreed to “indemnify the Insured for all sums that the Insured shall
    become legally obligated to pay as Damages as a result of Injury to any person arising out of a
    covered Medical Incident occurring during the policy period,” Defs.’ SMF ¶ 39; accord Pl.’s
    SMF ¶ 62, including repayment for legal expenses incurred by the insured where insured is a
    defendant in a suit, Defs.’ SMF ¶ 40. Under the policy, an insured is “any employee other than a
    4       There is some dispute between the parties as to whether the Progressive staff member on
    site at WHC conducted clinical supervision of the Progressive nurses. See Pl.’s SMF ¶¶ 19–21;
    Defs.’ SMF ¶ 12. There is also dispute as to whether the Progressive staff member was present
    on the day of Nurse Hand’s alleged negligence. See Pl.’s SMF ¶ 20; Eckert Dep. 49:12–50:22.
    These factual disputes, however, do not affect the Court’s analysis for the reasons described
    below. Consequently, the Court does not find that they create a genuine issue of material fact
    that would preclude summary judgment.
    5
    Physician, Podiatrist, Dentist, medical or dental intern, or resident of [WHC] while acting within
    the scope of his or her duties as such for [WHC].” Defs.’ SMF ¶ 39; accord Pl.’s SMF ¶ 64.
    The policy defines employees as “all past, present, or future full-time or part-time Employees of
    [WHC].” Defs.’ SMF ¶ 39; accord Pl.’s SMF ¶ 67.
    In addition to the regular terms of coverage, the GFIL policy includes an “other
    insurance” provision. Defs.’ SMF ¶ 40. This provision provides in pertinent part that:
    The insurance afforded by this policy is primary insurance, except when stated to
    apply in excess of or contingent upon the absence of other insurance. When this
    insurance is primary and the Insured has other insurance that it stated to be
    applicable to the loss on an excess or contingent basis, the amount of the
    Company’s liability under this policy shall not be reduced by the existence of
    such other insurance. . . .
    However, with respect to coverage afforded by this policy as it may apply to
    Employees, this insurance is designated primary and the foregoing provisions
    contained in this section shall not apply.
    Id. (final emphasis added).
    The Interstate insurance policy is the second policy that is relevant to this case. Although
    the Interstate policy provides similar coverage to that of GFIL, see Pl.’s SMF ¶¶ 72–73; see also
    Defs.’ SMF ¶ 45, it differs from GFIL’s policy with respect to the “other insurance” provision.
    Whereas GFIL’s “other insurance” provision states that it remains a primary insurer for
    employees regardless of other applicable insurance, plaintiff’s “other insurance” provision
    provides in pertinent part:
    If there is other valid insurance (whether primary, excess, contingent or self-
    insurance) which may apply against a loss or claim covered by this policy, the
    insurance provided hereunder shall be deemed excess insurance over and above
    the applicable limit of all other insurance or self-insurance.
    When this insurance is excess, the Company shall have no duty under this policy
    to defend any Claim or Suit that any other insurer or self-insurer has a duty to
    defend.
    6
    Pl.’s SMF ¶ 74 (emphasis in original omitted); accord Defs.’ SMF ¶ 45. Consequently, plaintiff
    argues, and defendant does not dispute, that, should the Court find that Nurse Hand is covered by
    GFIL’s policy and that the “other insurance” provisions control the disposition of this case, GFIL
    would be liable to reimburse plaintiff for the money paid on behalf of Nurse Hand.
    C. Settlement Agreement
    In addition to settling Ms. Banks’s legal claims, the settlement agreement executed in the
    underlying litigation included an agreement by which WHC released Progressive “from any and
    all claims” that “WHC may now have or may hereafter have against . . . Progressive by reason of
    any matter, cause or thing arising out of, or in any manner connected with, the Litigation . . . .
    including but not limited to the Temporary Staffing Agreement.” Ex. 12 to Pl.’s MSJ at 3. At
    the same time, a specific provision was included, which expressly states that:             “Nothing
    contained in this Agreement [would] be construed as a waiver of [Interstate’s] rights under its
    policies to seek reallocation of the settlement. . . . [Interstate] does not waive and expressly
    reserves the right to rely on the ‘other insurance’ clauses incorporated into its policies to seek
    reallocation of the settlement. . . .” Id. at 4; accord Pl.’s SMF ¶ 58; Defs.’ SMF ¶ 51.
    Interstate has brought the instant case based on the express language in the settlement
    agreement, which it claims reserved Interstate’s right to seek reallocation of the settlement. The
    parties’ cross-motions for summary judgment are now pending before the Court.
    STANDARD OF REVIEW
    Summary judgment is appropriate “if the movant shows that there is no genuine dispute
    as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P.
    56(a). The party seeking summary judgment bears the “initial responsibility of informing the
    district court of the basis for its motion, and identifying those portions of the pleadings,
    7
    depositions, answers to interrogatories, and admissions on file, together with the affidavits, if
    any, which it believes demonstrate the absence of a genuine issue of material fact.” Celotex
    Corp. v. Catrett, 
    477 U.S. 317
    , 323 (1986) (internal quotation marks omitted). To defeat
    summary judgment, the non-moving party must “designate specific facts showing there is a
    genuine issue for trial.” 
    Id. at 324
     (internal quotation marks omitted). The existence of a factual
    dispute is insufficient to preclude summary judgment. Anderson v. Liberty Lobby, Inc., 
    477 U.S. 242
    , 248 (1986). A dispute is “genuine” only if a reasonable fact-finder could find for the non-
    moving party; a fact is only “material” if it is capable of affecting the outcome of the litigation.
    Id; see also Laningham v. U.S. Navy, 
    813 F.2d 1236
    , 1241 (D.C. Cir. 1987).
    “The rule governing cross-motions for summary judgment . . . is that neither party waives
    the right to a full trial on the merits by filing its own motion; each side concedes that no material
    facts are at issue only for the purposes of its own motion.” Sherwood v. Washington Post, 
    871 F.2d 1144
    , 1148 n.4 (D.C. Cir. 1989), quoting McKenzie v. Sawyer, 
    684 F.2d 62
    , 68 n.3 (D.C.
    Cir. 1982). In assessing each party’s motion, “[a]ll underlying facts and inferences are analyzed
    in the light most favorable to the non-moving party.” N.S. ex rel. Stein v. District of Columbia,
    
    709 F. Supp. 2d 57
    , 65 (D.D.C. 2010), citing Anderson, 
    477 U.S. at 247
    .
    ANALYSIS
    I.      GFIL Must Reimburse Plaintiff For The Expenses Incurred On Behalf Of Nurse
    Hand In The Underlying Litigation.
    When determining whether GFIL must reimburse Interstate for the amount Interstate paid
    on behalf of Nurse Hand as a result of the underlying litigation, the Court must address two
    issues. First, the Court must determine whether Nurse Hand is considered an “employee” of
    WHC such that she is covered by the GFIL insurance policy. If the answer is no, the Court’s
    inquiry ends and GFIL is not liable. If, however, the Court finds that Nurse Hand is an employee
    8
    of WHC, the Court must then determine whether the indemnification clause in the Temporary
    Staffing Agreement between WHC and Progressive would nonetheless preclude a finding of
    GFIL’s liability in this case.
    A. Under D.C. law, Nurse Hand is an employee of WHC for purposes of the GFIL
    insurance policy.
    It is well-settled in D.C. that, “[u]nless it is obvious that the terms used in an insurance
    contract are intended to be used in a technical connotation, [the court] must construe them
    consistently with the meaning which common speech imports.” Travelers Indem. Co. of Ill. v.
    United Food & Commercial Workers Int’l Union, 
    770 A.2d 978
    , 986 (D.C. 2001), quoting In re
    Estate of Corriea, 
    719 A.2d 1234
    , 1239 (D.C. 1998). It is also settled that “[i]t is the duty of the
    insurer to spell out in plainest terms any exclusionary or delimiting policy provision. Having
    failed to do so, the words employed must be given their common meaning and all ambiguities
    resolved against [the insurer].” Nationwide Mut. Ins. Co. v. Schilansky, 
    176 A.2d 786
    , 788 (D.C.
    1961), quoting Loffler v. Bos. Ins. Co., 
    120 A.2d 691
    , 693 (D.C. 1956).
    The operative word in GFIL’s insurance policy for purposes of this action is “employee.”
    The policy does not clearly define the term, nor does it specify whether temporary employees,
    such as Nurse Hand, are included. At first blush, it might seem that a temporary employee paid
    by a temp agency is not the “employee” of the business that retained the agency as that term is
    generally understood. But available precedent indicates that the concept of who controls the
    individual is also part of the analysis, and therefore, it is more complex. And to the extent the
    term is ambiguous, the lack of clarity operates to GFIL’s detriment.
    As a starting point, the common meaning can be gleaned from the dictionary. See
    American Heritage Dictionary 604 (3d ed. 1992) (defining employee as any “person who works
    for another in return for financial or other compensation”); Webster’s New World College
    9
    Dictionary (4th ed. 2002) (defining employee as “a person hired by another, or by a business
    firm, etc., to work for wages or salary”); Black’s Law Dictionary 525 (6th ed. 1990) (defining
    employee as “a person in the service of another under any contract of hire, express or implied,
    oral or written, where the employer has the power or right to control and direct the employee in
    the material details of how the work is to be performed”). Indeed, the case chiefly relied upon by
    defendants, Seattle Opera v. NLRB, 
    292 F.3d 757
     (D.C. Cir. 2002), reflects that the Supreme
    Court specifically consulted the American Heritage Dictionary and Black’s Law Dictionary
    when defining the term “employee” for purposes of the National Labor Relations Act (“NLRA”).
    
    Id. at 762
    , citing NLRB v. Town & Country Electric, Inc., 
    516 U.S. 85
    , 90 (1995). And in that
    case, when the D.C. Circuit was faced with the need to define the word “employee” as used in
    section 152(3) of the NLRA, it concluded:
    [I]t is clear that . . . the person asserting statutory employee status does have such
    status if (1) he works for a statutory employer in return for financial or other
    compensation . . . ; and (2) the statutory employer has the power or right to
    control and direct the person in the material details of how such work is to be
    performed.
    
    Id.
    The common meaning of the term can also be elucidated by reference to cases where it
    has been necessary to distinguish employees from non-employees in other contexts. Thus,
    plaintiff suggests that this Court should apply D.C.’s common law test for vicarious liability
    because differentiating between individuals who are employees and those who are independent
    contractors is essentially what is at issue here. See Pl.’s Mem. in Supp. of Mot. for Partial
    Summ. J. (“Pl.’s Mem.”) at 21–22. Plaintiff also argues that it is appropriate to apply the
    vicarious liability test because other jurisdictions, such as Vermont and Michigan, have invoked
    common law tests to determine whether an individual is an employee for insurance purposes.
    10
    See id. at 22, citing Progressive Mich. Ins. Co. v. Citizens Ins. Co of Am., No. 293167, 
    2010 WL 4483690
    , at *2 (Mich. Ct. App. 2010); Hathaway v. Turner, 
    2010 VT 114
    , 
    187 Vt. 126
    , 
    14 A.3d 968
     (Vt. 2010), RLI Ins. Co. v. Agency of Transp., 
    762 A.2d 475
     (Vt. 2000), and Crawford v.
    Lumbermen’s Mut. Cas. Co., 
    220 A.2d 480
     (Vt. 1966). Defendants counter that the common law
    test is an inappropriate means for determining the common meaning of an ambiguous term in a
    contract. Defs.’ Mem. in Supp. of Mot. for Summ. J. (“Defs.’ Mem.”) at 11 [Dkt. # 33-1]. They
    direct the Court’s attention to the Seattle Opera decision instead, and they assert that using its
    definition, Nurse Hand cannot be considered an employee because she did not receive
    compensation from WHC, and she did not have a contract with the hospital. 
    Id.
     at 17–18. But
    defendants mischaracterize Seattle Opera. The application of the test articulated in that case
    would lead this Court to the same result obtained by reference to the vicarious liability test.
    As the plaintiffs point out, the common law test is designed to get to the heart of the
    problem in this case – when an individual is an employee as opposed to an independent
    contractor. The test makes sense in the insurance coverage context because it is designed to
    determine when an employer may be found liable for the torts of its employee, and the insurance
    policy was designed to cover the employer for exactly that potential liability. And D.C.’s
    vicarious liability test takes into account many of the factors that can be drawn from consulting
    the dictionary definition.
    On the other hand, in the Seattle Opera case, which defendants prefer, the question
    before the court was whether certain chorus members should be considered employees as
    opposed to a mere volunteers. 
    292 F.3d at 762
    . As a result, the Circuit emphasized the existence
    of the economic relationship between the employer and the individuals seeking to exercise
    collective bargaining rights. 
    Id.
     at 762–64. That factor alone does not resolve the ambiguity
    11
    here; indeed, the point in Seattle Opera was that they were paid, not who paid them. Moreover,
    the existence of a contract was not itself determinative, and the court also looked quite closely at
    a factor defendants chose to ignore: the employer’s right to control and direct the performance of
    the individuals involved.     
    Id. at 765
    .    More important, the Court of Appeals specifically
    referenced common law agency principles in its opinion. See Seattle Opera, 
    292 F.3d at 765, n. 11
     (“The dissent itself acknowledges, however, that the Board can and should consider the
    common law definition of “employee’ when performing a section 152(3) analysis. . . . ‘[W]hen
    Congress has used the term ‘employee’ without [clearly] defining it, we have concluded that
    Congress intended to describe the conventional master-servant relationship as understood by
    common-law agency doctrine.’”) (internal citation omitted).
    For all of those reasons, then, in arriving at the common meaning of the term
    “employee,” the Court finds it helpful to consider the factors set out in the vicarious liability test.
    Under D.C. law, the following factors               are relevant in determining whether an
    employee/employer relationship exists: 1) the selection and engagement of the servant, 2) the
    payment of wages, 3) the power to discharge, 4) the power to control the servant’s conduct, and
    5) whether the work is part of the regular business of the employer. Schecter v. Merchs. Home
    Delivery, Inc., 
    892 A.2d 415
    , 423 (D.C. 2006), quoting Beegle v. Rest. Mgmt. Inc., 
    679 A.2d 480
    , 485 (D.C. 1996). Although “no single factor is controlling, ‘the decisive test . . . is whether
    the employer has the right to control and direct the servant in the performance of his work and
    the manner in which the work is to be done.” 
    Id.,
     quoting Beegle, 
    679 A.2d at 485
     (emphasis
    omitted).
    In this case, the third and fifth factors plainly support the conclusion that Nurse Hand was
    an employee of WHC on the day of her alleged negligence because, on that day, Nurse Hand
    12
    provided the “post-partum/post-operative care of Radianne Banks,” Defs.’ SMF ¶ 31 – work that
    is clearly part of the regular business of WHC – and WHC had the right to terminate Nurse
    Hand’s employment at WHC whenever it felt that she was no longer capable of performing the
    tasks assigned. Eckert Dep. 52:4–7 (explaining that all WHC had to do to stop a nurse from
    working at WHC was “say this particular nurse is not meeting our standard . . . [and w]e will no
    longer choose to have them work at our hospital”).
    Factors 1 and 2, on the other hand, point slightly against a conclusion that, as a matter of
    law, there was an employee/employer relationship in this case. As to factor 1, the parties dispute
    how much of a role WHC played in the initial selection of nurses to fill its open shifts. See Pl.’s
    SMF ¶¶ 22–29; Defs.’ SMF ¶¶ 24–27. If the Court were to find that factor 1 is material, this
    dispute could raise a question of fact, more appropriate for a jury to decide. Factor 2 also
    slightly weighs against an employee/employer relationship because WHC did not directly
    compensate the temporary nurses; instead, WHC paid Progressive who, in turn, paid the nurses.
    Ex. 2 to Pl.’s MSJ at 2, 7–8; accord Defs.’ SMF ¶¶ 8–9, 13.
    But any pull by factors 1 and 2 toward a finding that no employee/employer relationship
    exists become irrelevant in light of factor 4: the power to control the servant’s conduct. As
    previously noted, D.C. courts view factor 4 as the most important factor in determining whether
    an employee/employer relationship exists. Schecter, 
    892 A.2d at 432
    ; Beegle, 
    679 A.2d at 485
    ;
    Safeway Stores, Inc. v. Kelly, 
    448 A.2d 856
    , 860 (D.C. 1982); LeGrand v. Insur. Co. of N. Amer.,
    
    241 A.2d 734
    , 735 (D.C. 1968). Here, it is undisputed that WHC had the right to control Nurse
    Hand’s conduct while she was working at WHC. Eckert Dep. 51:11–19; see also Pl.’s SMF ¶¶
    11–13; Ex. 2 to Pl.’s Mem at 5. Specifically, WHC “always retained the right in order to
    determine and ascertain what the assignment of the individual nurse would be,” Eckert Dep. 51,
    13
    and dictated the day-to-day tasks of Progressive nurses at WHC by telling them what kind of
    medical care or attention to give a particular patient, id. at 56. Consequently, factor 4 weighs
    strongly toward finding that Nurse Hand was an employee because WHC certainly controlled her
    conduct. 5 This, along with the weight of factors 3 and 5, leads the Court to find that Nurse Hand
    and WHC had an employee/employer relationship. 6
    Consequently, applying the common meaning of the term employee as used in the
    particular context of a liability insurance policy, the Court concludes that Nurse Hand was an
    employee at the time of her alleged negligence and, therefore, was a covered “insured” under
    GFIL’s policy.
    B. The indemnification clause does not preclude a finding that GFIL is liable.
    Defendants’ alternative defense is that this Court should not find GFIL liable because to
    do so would lead to circular litigation that would ultimately result in plaintiff bearing the cost of
    5       Defendants’ argument that Progressive sent an in-house staff member to WHC to
    supervise Progressive nurses (a fact that plaintiff disputes) does not affect the Court’s conclusion
    regarding factor 4 nor does it create a genuine issue of material fact that would preclude a grant
    of summary judgment. As D.C. case law makes clear, the right to control in factor 4 means “the
    right to control an employee in the performance of a task and in its result, and not the actual
    exercise of control or supervision.” Schechter, 
    892 A.2d at 423
    . WHC does not dispute that
    they had the right to control Progressive’s nurses; instead, WHC acknowledges that, despite the
    alleged presence of a Progressive employee, WHC still maintained ultimate control over
    Progressive nurses’ (and Nurse Hand’s) day-to-day assignments and the medical plans they were
    to follow. Eckert Dep. 51:11–19, 56. Consequently, the presence of a Progressive employee at
    WHC is irrelevant in determining whether Nurse Hand was an employee of WHC.
    6       If the Court accepted defendants’ invitation to apply only the Seattle Opera test, it would
    again be required to focus on the element of control. See 
    292 F.3d at 762
    . The Seattle Opera
    test considers whether the “employer has the power or right to control and direct the person,” and
    it also asks whether the individual “works for [the] employer in return for financial or other
    compensation.” 
    Id.
     Clearly, Nurse Hand performed her work for the employer in return for
    financial compensation. And even if one concludes that what the Court of Appeals meant by “in
    return for” was whether the individual worked for the employer in return for financial
    compensation provided by the employer, that would leave the Court with one Seattle Opera
    factor favoring the plaintiff and one favoring the insurer, requiring the Court to resolve the tie
    against the insurer.
    14
    Nurse Hand’s defense and liability. Defs.’ Mem. at 13–16. This defense is premised on the
    indemnification clause included in the Temporary Staffing Agreement, which requires
    Progressive to indemnify WHC for any liability resulting from the actions of Progressive nurses.
    Id. at 13. In other words, Defendants’ argue that, should this Court find GFIL liable, GFIL,
    through subrogation, will file suit against Progressive for indemnification, and Progressive will
    then seek reimbursement from plaintiff Interstate, resulting in plaintiff being responsible for the
    money in the end. Id.
    Defendants’ argument, however, overlooks one important detail: the indemnification
    clause was waived by the broad language of the Settlement Agreement with Ms. Banks.
    Specifically, the Settlement Agreement provides that:
    WHC completely releases and forever discharges . . . Progressive and [Interstate] .
    . . from any and all claims . . ., which the WHC may now have or may hereafter
    have against . . . Progressive by reason of any matter, cause or thing arising out
    of, or in any manner connected with, the Litigation or the facts giving rise to the
    Litigation.
    This release shall extend to every type of claim, whether based on tort,
    contract or other theory of recovery, including but not limited to the Temporary
    Staffing Agreement . . . .
    Ex. 12 to Pl.’s Mem at 3 (emphasis added). Because the indemnification clause was in the
    Temporary Staffing Agreement and the provision quoted above waived any claim or “other
    theory of recovering including but not limited to the Temporary Staffing agreement,” WHC
    effectively waived its right to indemnification. Id. Consequently, a finding that GFIL is liable
    will not lead to circular litigation because GFIL will not be able to step into WHC’s shoes to sue
    for indemnification.
    Instead, the “other insurance” provisions found within both plaintiff’s and GFIL’s
    insurance policies control the allocation of liability for Nurse Hand’s settlement and defense.
    15
    See Jones v. Medox, Inc., 
    430 A.2d 488
    , 493–94 (D.C. 1981) (refusing to adopt the Lamb-
    Weston rule of dividing liability equally among insurers and instead allowing the language of the
    “other insurance” provisions to control where the provisions are reconcilable); see also Keene
    Corp. v. Ins. Co. of N. Am., 
    667 F.2d 1034
    , 1050 n.37 (D.C. Cir. 1981) (noting that insurers may
    be required to share defense costs based on how liability is distributed by their “other insurance”
    provisions).
    Here, defendants do not dispute that GFIL’s “other insurance” provision establishes that
    its policy provides primary insurance coverage to WHC employees. Defs.’ SMF ¶ 40. They also
    do not dispute that plaintiff’s “other insurance” provision transforms plaintiff’s policy into
    excess coverage when “there is other valid insurance (whether primary, excess, contingent or
    self-insurance) which may apply against a loss or claim covered” by that policy. Id. ¶ 45.
    Instead, defendants simply argue that Nurse Hand was not an employee of WHC, and therefore
    not covered by GFIL’s policy, and, alternatively, that the indemnification clause should prevent
    the Court from applying the “other insurance” provisions and thus finding GFIL liable. As the
    Court has already rejected both of defendants’ arguments, it follows that the Court, in applying
    the D.C. courts’ practice of looking at “other insurance” provisions to allocate liability, will grant
    plaintiff’s motion for partial summary judgment with regard to GFIL’s liability.
    II.      WHC and MedStar are not liable under any of plaintiff’s causes of action.
    In its complaint, plaintiff asserts the theories of subrogation, breach of contract, and
    contribution against all defendants, including WHC and MedStar.                 Compl. ¶¶ 31–40.
    Defendants, however, argue that WHC and MedStar are not liable under any of those theories. It
    is worth noting that plaintiff essentially concedes this issue, as it does not respond to defendants’
    arguments or object to defendants’ conclusions that plaintiff has no legal claim against WHC or
    16
    MedStar.    But, regardless of whether this issue is conceded, the Court finds defendants’
    arguments persuasive.
    First, pursuant to the Settlement Agreement, Nurse Hand and Progressive released WHC
    and MedStar from any liability connected with the underlying litigation. Ex. 12 to Pl.’s MSJ at
    3–4; see also Defs.’ Mem. at 6–7. Therefore, plaintiff may not use subrogation in order to
    recover against WHC and MedStar. Second, WHC and MedStar are also not liable under a
    theory of breach of contract. Neither company has entered into a contract with plaintiff, Defs.’
    Mem. 7, 9, and plaintiff’s breach of contract claim is based solely on the alleged insurance
    relationship between GFIL and Nurse Hand, Compl. ¶¶ 31–36. Finally, WHC and MedStar are
    not liable under a theory of contribution. Plaintiff’s sole theory of contribution, or reallocation
    of the settlement, is that the “other insurance” provisions in its own insurance policy and in
    GFIL’s insurance policy indicate that GFIL provided primary insurance for Nurse Hand, making
    its policy “excess insurance.” Pl.’s Mem. at 12–19, 31–38; Defs.’ Mem. 8–9. Neither WHC nor
    MedStar is an insurer and, therefore, they cannot be liable under the theory of contribution.
    Based on the above mentioned facts and plaintiff’s concession that WHC and MedStar
    are not liable under any of the above theories, this Court will grant defendants’ summary
    judgment motion in part, insofar as it relates to the liability of WHC and MedStar.
    17
    CONCLUSION
    Because the Court finds that Nurse Hand was an “employee” under the GFIL insurance
    policy and that the “other insurance” provisions of the GFIL and Interstate insurance policies
    control in this case, the Court will grant plaintiff’s partial motion for summary judgment [Dkt. #
    32] and deny defendants’ cross-motion [Dkt. # 33] as it pertains to defendant GFIL. But, based
    on its finding that defendants WHC and MedStar are not liable under any theory advanced by
    plaintiff, the Court will grant defendants’ cross-motion as it pertains to WHC and MedStar.
    AMY BERMAN JACKSON
    United States District Judge
    DATE: March 28, 2012
    18
    

Document Info

Docket Number: Civil Action No. 2010-1193

Citation Numbers: 853 F. Supp. 2d 49

Judges: Judge Amy Berman Jackson

Filed Date: 3/28/2012

Precedential Status: Precedential

Modified Date: 8/31/2023

Authorities (21)

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