Court: Missouri Court of Appeals; March 12, 2012; Missouri; State Appellate Court
Penny L. Boyce appeals the trial court's summary judgment favoring Intermed Insurance Co. in a case determining coverage under a professional liability insurance policy related to the negligent supervision of a physician’s assistant (PA) who sexually assaulted her. Boyce argues that the court erred in concluding that the clinic's failure to supervise the PA was not a separate, concurrent proximate cause of her injuries. The appellate court agrees, reversing the summary judgment and remanding for further proceedings.
The Hartville Medical Management Company, which owned the Hartville Medical Center (Clinic), had two liability insurance policies: one from Cincinnati Insurance Company for general liability and another from Intermed for professional liability, covering negligence in professional services. Intermed's policy excluded coverage for liabilities arising from sexual conduct.
In 2003, complaints emerged about the PA's conduct, including inappropriate examinations and instructions against having chaperones present. Despite these complaints, no investigation was initiated, and the situation remained unchanged. In December 2004, Boyce visited the Clinic for medical issues, during which the PA engaged in sexually inappropriate conduct. The PA was later charged with sexual assault and pleaded guilty to several counts related to Boyce and others.
Boyce filed a tort suit against the PA, Dr. Hill, Clinic, and Management Company for sexual assault and negligent supervision, seeking punitive damages. Dr. Hill, Clinic, and Management Company requested a defense from Intermed, which was offered only under a reservation of rights, leading them to secure their own legal representation. Cincinnati Insurance Company agreed to defend the Clinic under its general liability policy.
Dr. Hill, Clinic, Management Company, and Cincinnati Insurance Company entered into a section 537.065 settlement agreement with Appellant, where Cincinnati agreed to pay Appellant $242,500 plus court costs in exchange for her dismissal of complaints against all defendants except Clinic. Clinic stipulated to certain facts in Appellant’s lawsuit and agreed not to oppose her trial evidence. In return, Appellant limited her recovery to $1,242,500 from Clinic and agreed to enforce any judgment against Intermed only. Dr. Hill, Clinic, and Management Company assigned their rights under the Intermed policy to Appellant.
During the trial on May 27, 2008, Appellant proceeded solely against Clinic, which resulted in a judgment of $1,242,500, plus court costs, with the trial court providing detailed factual findings. The court found that Clinic had a duty to control a physician's assistant (PA) to prevent intentional harm and inappropriate conduct towards patients.
Subsequently, Intermed filed a petition for declaratory judgment, arguing that the damages from PA’s sexual assault of Appellant were not covered by its policy with Clinic due to exclusions related to intentional acts, sexual conduct, criminal acts, and improper supervision. Appellant countered with claims for breach of contract and bad faith. Following cross-motions for summary judgment, the trial court ruled in favor of Intermed, concluding that while Clinic's supervision of PA fell under the policy, PA’s sexual assault was excluded from coverage due to specific policy exclusions, and Clinic’s negligent supervision did not constitute a separate cause of Appellant’s damages.
Review of the trial court's grant of summary judgment is conducted de novo, meaning the appellate court independently assesses the trial court’s conclusions without deference. Summary judgment is considered a severe measure that should be applied cautiously. Disputes regarding insurance contract interpretations are legal matters for the court when no facts are disputed. Insurance contracts are interpreted to provide coverage rather than limit it, with exclusion clauses constructed strictly against the insurer.
The appellant contends that the trial court erred in three areas: 1) ruling that her claim fell under an exclusion for liability from sexual acts; 2) determining that Intermed had no duty to defend her, noting that the duty to defend is broader than the duty to indemnify; and 3) asserting that there was no coverage under the Intermed policy because the Clinic’s negligent supervision of the PA was a separate, concurrent proximate cause of her injuries. The court finds the third point decisive, agreeing with the appellant that the Clinic’s negligence was a distinct cause of her injuries, separate from the sexual assault. Missouri law allows for liability coverage when both an insured risk and an excluded risk are concurrent proximate causes, as long as one cause is covered by the policy. The policy must provide coverage if the negligence claims can be articulated independently of the excluded claim. The appellant's claims include a tort against the PA for sexual assault and separate negligence against the Clinic for negligent hiring and supervision.
Missouri follows the Restatement (Second) of Torts, § 317 (1965) regarding negligent supervision, establishing that a master must exercise reasonable care to control a servant acting outside their employment scope to prevent harm to others. This obligation arises when (a) the servant is on the master's premises or using the master's property, and (b) the master knows they can control the servant and is aware of the necessity to do so. Distinctly, proving negligent supervision does not require evidence of offensive touching.
In the case of Centermark, a third party took a vehicle from the insured's premises, resulting in an accident that injured a police officer. The officer sued for negligent supervision of the security officer. The insurance company sought to deny coverage based on a policy exclusion for vehicle-related injuries. However, the court found coverage due to allegations of negligence independent of vehicle use, specifically failing to follow procedures for handling criminal activity and inadequate hiring and training of security personnel.
In a related matter, while part of the Appellant’s harm was caused by an excluded intentional sexual assault, she also demonstrated that her injuries were proximately caused by the Clinic’s failure to act on knowledge of the perpetrator's inappropriate conduct, creating an unreasonable risk of harm. Intermed contends that the Appellant's injuries solely resulted from the sexual assault, referencing Gateway, where a hotel was not liable for injuries sustained during a boxing match due to an exclusion in its insurance policy for athletic activities, which is argued to differ significantly from the current case’s facts.
The hotel contended on appeal that its liability coverage should apply because the failure to provide adequate medical care at the boxing match was a concurrent proximate cause of the boxer's injuries. However, the Eastern District rejected this argument, highlighting a jury's finding that boxing is an inherently dangerous activity. The court determined that without the boxing activity, the hotel could not be held liable, as it could only be found negligent under the inherently dangerous activity doctrine for not providing medical assistance.
In contrast, the underlying case involved the negligent supervision of a physician's assistant (PA), which was deemed an independent proximate cause of the injuries sustained by the patients. The trial court had found that the Clinic had a duty to supervise the PA to prevent creating an unreasonable risk of harm, but this duty was not inherently linked to preventing sexual assault. Consequently, the trial court erred in granting summary judgment in favor of Intermed, leading to a reversal of the judgment and remand for further proceedings.
Additionally, while the Appellant's brief argued adequately against the summary judgment for Intermed, it failed to justify why the facts entitled her to a summary judgment on her counterclaims. Generally, the denial of a summary judgment is not appealable, but exceptions exist when intertwined with an opposing party's judgment. The court refrained from directing a summary judgment for the Appellant on her counterclaims, leaving open the possibility for future consideration if properly presented.
Intermed did not dispute whether the PA’s actions were covered under its policy based on inadequate supervision. The principles of vicarious liability apply when a servant acts within the scope of employment, as defined by agency law.
