United States Court of Appeals
FOR THE EIGHTH CIRCUIT
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No. 10-2076
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Owatonna Clinic – Mayo *
Health System, *
*
Appellee, *
*
v. * Appeal from the United
* States District Court for
The Medical Protective Company of * the District of Minnesota.
Fort Wayne, Indiana, *
*
Appellant. *
--------------------------------------------- *
American Medical Association; *
Minnesota Hospital Association; *
Minnesota Medical Association, *
*
Amici on Behalf of *
Appellee. *
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Submitted: December 14, 2010
Filed: May 11, 2011
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Before LOKEN, ARNOLD, and BYE, Circuit Judges.
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ARNOLD, Circuit Judge.
This is a contracts case. Owatonna Clinic – Mayo Health System sued its
insurer, Medical Protective Company, claiming that the company had breached its
obligation to defend and indemnify the Clinic in a medical malpractice suit that had
resulted in a judgment against it. Medical Protective denied that it had any such duty
because the Clinic had failed to give proper notice of a potential claim against it.
After cross-motions for summary judgment, the district court1 held that the notice the
Clinic provided was sufficient as a matter of law. The court also noted, though, that
the policy required that, when giving notice, the Clinic "reasonably believe allegations
of liability may result" from an incident, and the court decided that this requirement
involved two questions: one was whether the Clinic's belief, if any, was objectively
reasonable, the other was whether the Clinic actually believed that it was at risk. The
court ultimately held that there was a triable issue on the latter question only, held a
trial on that question, and put the matter specially to a jury. After the jury returned a
verdict for the Clinic on the question, the district court entered judgment for it in the
amount of the policy limits and awarded the Clinic pre-judgment interest on that
amount.
On appeal, Medical Protective maintains that the district court erred in ruling
as a matter of law that the Clinic's notice conformed to the policy requirements and
that the Clinic's belief that it was at risk was objectively reasonable. It also asserts that
the Clinic was not entitled to pre-judgment interest. We affirm.
I.
There is a preliminary question to answer. The Clinic asserts that we do not
have jurisdiction to decide the correctness of the district court's rulings on summary
judgment because Medical Protective made no motion for judgment as a matter of law
with respect to those rulings under Fed. R. Civ. P. 50. It argues that Medical
Protective is appealing from an order denying its motion for summary judgment, and
correctly points out that, absent exceptional circumstances not present here, we do not
1
The Honorable David S. Doty, United States District Judge for the District of
Minnesota.
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have jurisdiction over such an appeal because the order is only interlocutory, not final,
see 28 U.S.C. § 1291. And the Clinic contends that, even if the denial of a summary
judgment order was appealable, the time for appeal would have long past. See Fed.
R. App. P. 4(a)(1)(A); see also 28 U.S.C. 2107(a); Ortiz, 131 S. Ct. at 891. But
Medical Protective says that it is instead appealing from the final judgment against it
and wishes to assign error in certain legal rulings that the district court made in the
course of summary judgment proceedings. We have jurisdiction to decide legal issues
raised in a trial unless they have been waived or are not properly preserved, and there
is no suggestion of actual waiver here. So, strictly speaking, our question is not one
of jurisdiction but one of preservation – that is, whether Medical Protective had to
make motions for judgment as a matter of law under Rule 50 before we can notice the
legal errors that it wishes to raise.
As the parties point out, our cases related to this general question may not be
in harmony. In Metropolitan Life Ins. Co. v. Golden Triangle, 121 F.3d 351, 353-56
(8th Cir. 1997), we rejected outright the proposition that a denial of a summary
judgment motion was appealable after final judgment if the denial was based on a
legal question rather than on the existence of material facts in issue. But just two
years later, we adopted the principle that when " 'the denial of summary judgment is
based on the interpretation of a purely legal question, such a decision is appealable
after final judgment.' " White Consol. Indus., Inc. v. McGill Mfg. Co., 165 F.3d 1185,
1190 (8th Cir. 1999) (quoting Wolfgang v. Mid-America, 111 F.3d 1515, 1521
(10th Cir. 1997)). We later affirmed our allegiance to and applied this proposition in
Estate of Blume v. Marian Health Ctr., 516 F.3d 705, 707-08 (8th Cir. 2008), and we
adverted to it approvingly in Hertz v. Woodbury County, Iowa, 566 F.3d 775, 780 (8th
Cir. 2009). This very issue was recently raised in Ortiz, 131 S. Ct. at 892-93, but the
Court decided that it need not address it.
We think that it is unnecessary to resolve this apparent conflict in our cases, if
that is possible, or decide which of them state the correct rule, because Medical
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Protective's real complaint is not that the district court erred in denying its motion for
summary judgment. In this case, Medical Protective did not get a trial on the issues
that it wishes to raise on appeal because the district court, though it did not say so
directly in its order, effectively granted partial summary judgment to the Clinic on
them: The court allowed a trial only on the issue of whether the Clinic actually
believed that it was at risk of allegations of liability, and the jury rendered a special
verdict on that matter alone. So the pertinent issue here is whether the district court
erred in granting summary judgment, not denying it. A simple reference to
Rule 50(a)(1) solves the question at hand. The rule provides that a motion for
judgment as a matter of law should be granted "[i]f a party has been fully heard on an
issue during a jury trial and the court finds that a reasonable jury would not have a
sufficient evidentiary basis to find for the party on that issue." Rule 50 therefore has
no application.
Medical Protective calls our attention to a recent case of ours, Studnicka v.
Pinheiro, 618 F.3d 799 (8th Cir. 2010), but we don't think that case requires a contrary
result. In fact, it fits comfortably with the conclusion we reach here. Studnicka was
a suit against a doctor for a common-law assault and battery, and the defense was that
the plaintiff had consented to the surgical procedure at issue. When the plaintiff
moved for summary judgment on the ground that the law required written consent
before the surgery could be performed, the district court denied the motion and
proceeded to a trial in which the matter of consent was fully developed. Following
a defendant's verdict, the plaintiff asserted on appeal that the absence of written
consent required judgment for him as a matter of law. Id. at 800-01.
We quite rightly rejected the appeal because there had been a trial on the issue
of consent and the plaintiff had failed to press his legal point by raising it in a Rule 50
motion. Id. at 801-02. In other words, the matter at issue, the consent of the plaintiff,
had been subject to a full airing at trial, and if a writing were required for consent as
a matter of law, there would, in the words of Rule 50, have been no "legally sufficient
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evidentiary basis to find" for the defendant because there was no such written consent
in evidence. See id. at 801. In those circumstances, the need for a Rule 50 motion is
thoroughly obvious. In our case, by contrast, the only issue on which there was a trial
was the matter of the Clinic's subjective belief, as to which there was no doubt as to
the sufficiency of the evidence, and as to which, more relevantly, there is no issue
raised on appeal. Simply put, unlike Studnicka, the issues raised here were not "fully
heard ... during a jury trial" and so a Rule 50 motion was not necessary to preserve
them. Fed. R. Civ. P. 50(a)(1). This case is no different in relevant respects from
ones in which a defendant's liability is established by summary judgment and a trial
is held solely on the matter of damages.
II.
We proceed therefore to the merits of Medical Protective's contentions. The
policy involved in this case is a so-called "claims-made" policy, that is, it covered only
claims submitted during the policy period. See In re Silicone Implant Ins. Coverage
Lit., 667 N.W.2d 405, 409 (Minn. 2003). Under the policy, the Clinic was "deemed"
to have filed a timely claim if, during the policy period, it gave Medical Protective
"written notice of a medical incident from which the [Clinic] reasonably believes
allegations of liability may result." The policy also requires that before it can "be
deemed a claim, notice of a medical incident shall include all reasonably obtainable
information with respect to the time, place and circumstances of the professional
services from which liability may result and the nature and extent of the injury
including the names and addresses of the injured and of available witnesses."
The writing on which the Clinic relies as providing appropriate notice was a
letter that it sent to Medical Protective enclosing a Notice of Conference from the
Minnesota Board of Medical Practice; the Notice informed Dr. Charles Chambers, a
Clinic employee, that he was under investigation for his care of five patients. The
Notice told Dr. Chambers that the Board wanted to discuss matters related to his
"ability to practice medicine and surgery with reasonable skill and safety." As
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relevant here, the Notice asserted that a "patient #5" who was about to deliver a baby
had undergone an ultrasound, that Dr. Chambers had missed a diaphragmatic lesion
when reading it, and that the baby had been born with persistent respiratory distress
and a diaphragmatic hernia; it also stated that the Board's medical consultant believed
that Dr. Chambers's diagnosis and treatment had constituted a "deviation from
acceptable OB ultrasound standards of care."
The parties are on common ground that the Notice did not literally comply with
the policy requirements: Though Medical Protective received the Notice before the
policy expired, it did not include any names and addresses or detailed particulars of
the injuries. But because Medical Protective had insured Dr. Chambers against
medical malpractice, it provided counsel to defend him before the Board, and he and
the lawyers whom Medical Protective retained to defend him learned the name of the
patient and had reviewed her medical records months before the policy expired. The
Notice, moreover, identified the time, place, and circumstances of the services
Dr. Chambers rendered, along with an account of the injuries to the baby that were
evident at the time. Medical Protective thus had knowledge of all relevant particulars
or could gather them to hand without any difficulty from Dr. Chambers or from his
counsel.
Medical Protective insists that since this was a claims-made policy, notice must
be given in strict accordance with its provisions because only then could the company
accurately fix its potential liabilities and thus its premiums on a solid actuarial basis.
That, it rightly points out, is a chief purpose of a claims-made policy. Medical
Protective relies on cases like Esmailzadeh v. Johnson & Speakman, 869 F.2d 422,
424-25 (8th Cir. 1989), that hold that the temporal requirements of notice provisions
in claims-made policies must be punctiliously observed. But, as the district court
noted, this case involves a question of the content of the notice, not the timing; and
because this is a diversity case we must look to the decisions of the Minnesota courts
to decide the matter.
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Although the Supreme Court of Minnesota does not seem to have addressed the
precise issue, decisions of intermediate appellate courts are persuasive authority
"when they are the best evidence of what state law is," Minnesota Supply Co. v.
Raymond Corp., 472 F.3d 524, 534 (8th Cir. 2006). We believe that St. Paul Fire &
Marine Ins. Co. v. Metropolitan Urology, 537 N.W.2d 297, 298-300 (Minn. Ct. App.
1995), effectively forecloses Medical Protective's argument. There, in a case
involving a claims-made policy, id. at 298, the court specifically held that as long as
the "notice clearly gave an insurer sufficient information to conclude that the insured
had presented a claim for arguable coverage," the insurer had a duty to make a
reasonable investigation of the situation and provide coverage if the policy covered
the conduct discovered, id. at 300 (internal quotation marks and citation omitted).
Medical Protective argues that the Minnesota Court of Appeals erred in
Metropolitan Urology because it misinterpreted the two cases that it relied on to reach
its decision, and so the Minnesota Supreme Court would not follow it. But, contrary
to what Medical Protective says, one of those cases, St. Paul Fire & Marine v. Tinney,
920 F.2d 861, 861-62 (11th Cir. 1991), did indeed turn on the interpretation of a
claims-made policy. And, as for the other case, Federal Sav. & Loan Ins. Corp. v.
Burdette, 718 F. Supp. 649 (E.D. Tenn. 1989), the Minnesota Court of Appeals quite
accurately characterized it as holding that the notice given in that case under a claims-
made policy was adequate and that if an insurer considered the notice inadequate it
had certain duties of inquiry. See id. at 651-52, 653-54; Metropolitan Urology,
537 N.W. 2d at 300. Though Burdette might not have been precisely on point, it
certainly did not, as Medical Protective insists, conclude that the notice given the
insurer was defective. The court held that letters to the insurer provided adequate
notice of the events that the letters referred to; it denied coverage only as to events that
the letters did not mention. See Burdette, 718 F. Supp. at 654.
We thus discern no internal infirmity in the reasoning in Metropolitan Urology
and so see no impediment to the Supreme Court of Minnesota accepting it. It is
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certainly not contrary to any Minnesota precedent that we have discovered, and is in
keeping with general Minnesota jurisprudence that rejects technical and narrow
objections to the existence of coverage, especially when it comes to matters of notice.
See, e.g., Nathe Bros., Inc. v. American Nat'l Fire Ins. Co., 615 N.W.2d 341 (Minn.
2000); Reliance Ins. Co. v. St. Paul Ins. Cos., 307 Minn. 338, 341-43, 239 N.W.2d
922, 924 25 (1976).
As the district court observed, requiring strict compliance with provisions in
claims-made policies that set deadlines for making claims makes sense because
insurers can then make plans and fix premiums based on a sounder actuarial footing
than would be possible if there were unknown, percolating claims that might be
pressed after the policy period ran. Besides, specific time-limit provisions do not lend
themselves to the application of a relaxed interpretive standard because they set out
bright, discriminating lines. But we don't think that the same considerations are in
play when the substantive adequacy of the notice is in issue. In that kind of case, we
conclude that the law of Minnesota places a burden of inquiry on the insurer when it
has notice of facts that would raise a likelihood of a claim, and we are satisfied that
this case falls within the ambit of that principle.
Medical Protective also maintains that the Notice of Conference that the Clinic
sent it was not intended to call attention to a possible claim against the Clinic but was
intended simply to request Medical Protective to defend Dr. Chambers in the
proceeding before the Board of Medical Practice. But the purpose of the notice
provision in the policy is to provide an insurer with a description of an incident that
would alert it that its insured might well be liable for damages, whatever the insured's
purpose was in revealing the incident to the insurer. And here, as we have said, the
information that Medical Protective received would obviously alert a reasonable
insurer to the likelihood of possible allegations of liability on the Clinic's part.
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` III.
Medical protective also challenges the district court's holding that the Clinic's
belief, if any, that "allegations of liability may result" from the incident at issue was
objectively reasonable as a matter of law. This contention is meritless because the
quoted policy language sets an exceedingly low bar. Properly construed, it requires
only that a reasonable insured would believe that someone might allege that it was
liable, not that someone will in fact do so or that someone would have any appreciable
prospect of recovery.
The situation that the Clinic faced easily clears that hurdle. The State Board of
Medical Practice had informed Dr. Chambers, a Clinic employee, that he was under
investigation for care he had provided and that the Board wanted to discuss his
professional competence and fitness to practice. His skill was called into doubt as was
his ability to perform surgery safely and treat his patients properly. The Board's
notice maintained that Dr. Chambers's patient had suffered an injury and, most
damaging of all, revealed that the Board's own medical consultant had concluded that
Dr. Chambers's performance was below acceptable professional standards. These
allegations would set off alarms in the minds of any reasonable person charged with
risk management at the Clinic and would certainly alert a reasonable mind to the
possibility that someone might claim that the Clinic was liable for the patient's
injuries. This is all the policy requires.
IV.
Medical Protective maintains finally that the district court erred in awarding
prejudgment interest against it under Minn. Stat. § 60A.0811, subd. 2(a). That statute
provides, with exceptions not relevant here, that an insured who prevails against an
insurance carrier on "any claim" for an insurer's breach of a duty under an insurance
policy "is entitled to recover ten percent per annum on monetary amounts due under
the insurance policy." Id. Despite the plain language of the statute, Medical
Protective insists that it cannot be made to pay more than the policy limits. It directs
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our attention to Minn. Stat. § 72A.201, subd. 12, which specifically states that when
a judgment is entered against an insured, the insurer must pay "their insured's share
of" the prejudgment interest on that judgment even if the total judgment exceeds the
policy limits, and points to the omission of any similar statement in § 60A.0811. It
argues that the absence of specific language concerning the payment of prejudgment
interest in addition to the policy limits is fatal to the Clinic's claim here. But it is hard
to see how this omission could defeat the plain language of § 60A.0811: As the
district court pointed out, the phrase "any claim" by an insured against its insurer
necessarily includes a claim for the policy's limits and the word "on" rather obviously
supports a conclusion that interest is in addition to the amount due under the policy.
Here, that amount was the policy limit.
Since there is no Minnesota precedent directly on point, we must do our best
to predict how the Minnesota Supreme Court would resolve the issue. See Marvin
Lumber & Cedar Co. v. PPG Indus., Inc., 223 F.3d 873, 876 (8th Cir. 2000). But we
think that the statute is unambiguous and that the Minnesota Supreme Court would
think so, too; and it may well be that precedent is absent because the answer to the
question presented here is so manifest that it has generated no serious dispute. It is
true that in Lessard v. Milwaukee Ins. Co., 514 N.W.2d 556, 559 (Minn. 1994), the
Minnesota Supreme Court held that prejudgment interest was not available against an
insurer to the extent that, when added to the total damages award, it would exceed the
policy limit. But that case involved the application of Minn. Stat. § 549.09, which
contains strictures not present in § 60A.0811, subd. 2; the latter statute was enacted
only recently and after Lessard was decided. Minn. Sess. Laws 2009, ch. 148, § 1
(effective. Aug. 1, 2009).
In a further effort to avoid prejudgment interest, Medical Protective points out
that the policy provides that Medical Protective's indemnity obligation is "subject to
the limits of liability ... of this policy." But even if this provision, construed as
Medical Protective urges, could lawfully trump the statutory duty to pay prejudgment
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interest that § 60A.0811, subd. 2, creates, we reject the proposed interpretation; we
believe that the policy language refers to Medical Protective's principal indemnity
obligation and not to the duty to compensate for a failure to honor that obligation
before suit was filed. At best, the provision is ambiguous on the point and we must
therefore construe it against the insurer. See General Cas. Co. of Wisconsin v.
Wozniak Travel, Inc., 762 N.W.2d 572, 575 (Minn. 2009).
Affirmed.
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