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Aix Specialty Insurance Co. v. Shiwach

Court of Appeals of Texas, Fifth District, Dallas

December 18, 2019


          On Appeal from the 134th Judicial District Court Dallas County, Texas Trial Court Cause No. DC-18-04268

          Before Chief Justice Burns, Justice O'Neill [1] , and Justice Rosenberg [2]



         This appeal involves insurer AIX Specialty Insurance Company's ("AIX") duty to defend the insured Dr. Raj Shiwach, MD ("Shiwach"). AIX appeals the summary judgment in Shiwach's favor, contending in six issues the trial court erred by granting Shiwach's partial motion for summary judgment and denying its motion for summary judgment. We affirm.


         Shiwach purchased a professional liability policy from AIX. When Leslie Broderick, a patient under Shiwach's psychiatric care at Hickory Trail Hospital, LP ("HT"), sued Shiwach, he notified AIX of Broderick's lawsuit and demanded AIX defend and indemnify him. AIX refused, contending neither Broderick's Original Petition nor her later First Amended Petition (the "Broderick Petition") asserted any covered allegation because the policy's sexual, criminal, and willful acts exclusions applied. Shiwach paid for his own defense and prevailed in the district court and on appeal. Despite a renewed request by Shiwach to reimburse his defense costs, AIX again refused.

         Shiwach sued AIX, asserting claims for breach of contract, violations of chapters 541 and 542 of the Insurance Code, and recovery of his attorneys' fees. AIX's answer included a general denial, various affirmative defenses, but no counterclaims.

         Shiwach moved for partial summary judgment, omitting only his chapter 541 claims. Together with the Broderick Petition and the policy, Shiwach's evidence included the summary judgment order and the related appellate opinion from the Broderick lawsuit, in which both courts determined Broderick's claims against Shiwach were time-barred "healthcare liability claims." AIX objected to both exhibits as a violation of the eight-corners rule and filed a combined no-evidence and traditional motion for summary judgment addressing each of Shiwach's claims.

         After the summary judgment hearing but before the trial court ruled, Shiwach filed a notice of nonsuit as to his chapter 541 claims. The trial court granted Shiwach's nonsuit, overruled AIX's objections to Shiwach's evidence, granted Shiwach's motion for summary judgment, and denied all other relief. AIX appeals the order overruling its objections, the order granting Shiwach's nonsuit, the summary judgment in Shiwach's favor, and the denial of its motion for summary judgment.


         Standard of Review and Burden of Proof

         We review a trial court's grant of summary judgment de novo. Cmty. Health Sys. Prof'l Servs. Corp. v. Hansen, 525 S.W.3d 671, 680 (Tex. 2017). To prevail on a traditional motion for summary judgment, a movant must prove the absence of a genuine issue of material fact and its entitlement to judgment as a matter of law. Tex.R.Civ.P. 166a(c); Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546, 548 (Tex. 1985). To prevail on a no-evidence summary judgment, the non-movant must produce evidence that raises a genuine issue of material fact on each challenged element of its claim. Timpte Indus., Inc. v. Gish, 286 S.W.3d 306, 310 (Tex. 2009). In both instances, we credit evidence favorable to the nonmovant if reasonable jurors could, and disregard contrary evidence unless reasonable jurors could not. Id.; Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding, 289 S.W.3d 844, 848 (Tex. 2009).

         The insured has the initial burden to establish a claim potentially covered by the policy. Dallas Nat'l Ins. Co. v. Calitex Corp., 458 S.W.3d 210, 222 (Tex. App.-Dallas 2015, no pet.). If the insured does so, the burden shifts to the insurer, which can then defeat the duty to defend by demonstrating the application of any relevant exclusion. Tex. Ins. Code § 554.002; Calitex Corp., 458 S.W.3d at 222.

         Duty to Defend

         In its first issue, AIX contends the trial court erred in not granting its summary judgment motion because injuries that arose out of an alleged gang rape[3] were not "medical incidents" that triggered its duty to defend. To determine whether the Broderick Petition triggered AIX's defense obligation, we must first decide whether it alleged a covered "medical incident" as the cause of Broderick's injury.

         The eight-corners rule governs our analysis. Ewing Const. Co., Inc. v. Amerisure Ins. Co., 420 S.W.3d 30, 33 (Tex. 2014). Pursuant to the eight-corners rule, we look to the four corners of the petition for allegations potentially within the scope of coverage in the four corners of the insurance policy. Id. We consider the factual allegations in the petition without regard to their truth or falsity, and we resolve all doubts regarding the duty to defend in the insured's favor. Id. If the underlying petition contains even one covered claim, the insurer must defend the entire suit. Evanston Ins. Co. v. Legacy of Life, Inc., 370 S.W.3d 377, 380 (Tex. 2012).

         Here, the policy required AIX to defend and indemnify Shiwach against a claim for damages with respect to an injury only if "(1) the injury is caused by a 'medical incident'; . . . (3) the injury arises out of the individual insured's profession as a physician; and (4) [a] claim for damages, with respect to the injury, is first made against any insured." The policy defined a "medical incident" as "any act or omission arising out of the providing of or failure to provide professional medical services . . . by the insured or any person acting under the personal direction, control or supervision of the insured."

         Thus, we examine the allegations against Shiwach. We first note that the Broderick Petition's introductory paragraph listed all defendants: Shiwach, HT, Universal Health Services, Inc., UHS of Delaware, Inc., [4] a "manager of HT called John Doe," "Chica an employee of HT last name unknown," and a "European woman also employed by HT." The same paragraph defined each listed defendant collectively as "Defendants."

         The Broderick Petition also identified each defendant in separate numbered paragraphs and provided capacity information about each. Regarding Shiwach, the petition specified:

3. The Defendants are all sued in their capacity as employees and managers of Hickory Trail LP and or the Universal Health "UHS" Defendants. Dr. Shiwach is sued in his individual capacity as well as his capacity as a medical professional and employee and or manager of Hickory Trail LP "HT" and the UHS Defendants.
Under a heading for "Causes of Action," the petition alleged only facts:
11. Plaintiff was gang raped by the above individual Defendants while a patient at Defendant HT. The above named persons all participated in some manner in the rape which occurred in or about May 2014.
12. The Defendants HT and the UHS Defendants ratified the rape because managers of the Defendants were involved in the rape, and such rapes have been occurring at UHS facilities with regular frequency across the country since at least 2004. The Defendants HT and UHS have failed to take action to correct the problems with rape, suicide, and over drugging of patients at their facilities as well as keeping patients who should never have been admitted to their facilities. Serious regulatory violations were noted at least 13 of the 26 UHS facilities in Texas. The Defendants UHS were cited for serious problems in 8.4% of their cases while the national average is 3% per federal regulators.
13. The UHS Defendants own, control, and manage Defendant HT. The UHS Defendants and the Defendant HT were responsible for negligent hiring of the individual defendants, understaffing, failing to provide adequate security, failing to perform background checks and negligent retention of the individual defendants along with inadequate security measures and staffing.
14.Each and every one of these actions and or inactions were a proximate and or producing cause of the ...

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