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Date: 05-26-2023

Case Style:

Brittany Blake, D.C., et al. v. NCMIC Insurance Company

Case Number: 3:17-CV-193

Judge: Joshua M. Kindred

Court: United States District Court for the District of Alaska (Anchorage Borough)

Plaintiff's Attorney:




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Defendant's Attorney:

Description: Anchorage, Alaska insurance Law lawyer represented Plaintiffs who sued Defendant on a bad faith breach contract theory.

Plaintiffs are seven women who formerly were patients of Dr. Myron Schweigert, a chiropractor practicing at Chugach Chiropractic Clinic, LLC (the “Clinic”) in Eagle River, Alaska.[5]On December 31, 2015, Plaintiffs filed suit against Dr Schweigert and the Clinic in Alaska Superior Court (the “Underlying Action”), bringing claims for (1) professional malpractice relating to Dr. Schweigert's treatment of each of the Plaintiffs and (2) breach of the covenant of good faith and fair dealing, sexual harassment, and wrongful discharge relating to Dr. Brittany Blake's employment.[6]The Complaint in the Underlying Action contains allegations that Dr. Schweigert touched Plaintiffs' breasts, nipples, genital area, and buttocks during chiropractic treatments.[7] The Complaint also alleges that certain Plaintiffs experienced pain or bruising following Dr. Schweigert's administration of Electrotherapeutic Point Stimulation Therapy (“ETPS”)[8]and that Dr. Schweigert administered cortisone injections into the shoulder of one Plaintiff on two occasions.[9] For each professional malpractice claim, the Complaint states that Dr. Schweigert “either lacked the degree of knowledge or skill or failed to exercise the degree of care ordinarily exercised by chiropractors trained in the field of chiropractic care and was negligent and/or reckless in his chiropractic care.”[10]The Complaint alleges each of the seven Plaintiffs suffered “severe humiliation, mental anguish, and emotional and physical distress” as a result of Dr. Schweigert's “negligent and/or reckless conduct.”[11]The Complaint seeks “compensatory damages, in excess of $100,000, the exact amount to be proven at trial,” plus “costs, attorney's fees and pre-judgment interest,” and “such other and further relief as the Court deems just and proper.”[12]

At all times relevant to this action, Dr. Schweigert and the Clinic were insured under Professional Liability Insurance Policy No. MP00034696 (the “Policy”), which was issued by NCMIC for the policy period of January 1, 2014, to January 1, 2015.[13]After being served with the Complaint in the Underlying Action, Dr. Schweigert and the Clinic tendered defense to NCMIC.[14] On March 22, 2016, counsel for NCMIC sent a letter to Dr. Schweigert, stating that “NCMIC will provide a defense in the Blake Lawsuit, pursuant to the Policy's Supplemental Legal Defense Endorsement and subject to a full reservation of rights.”[15]NCMIC explained that the Supplemental Legal Defense Endorsement (“SLD Endorsement”) provides a “maximum $25,000 limit of liability for defense costs incurred in any covered proceeding,”[16]which includes a civil action “where the insured is alleged to have committed sexual misconduct in the course of providing
professional services to a patient.”[17]NCMIC also advised that “coverage is otherwise unavailable for this matter, which arises out of sexual impropriety specifically excluded from coverage under the Policy.”[18]NCMIC stated that the allegations in the Complaint were outside the scope of coverage because (1) allegations of sexual impropriety are not “professional services” as defined by the Policy; (2) the alleged injuries were not “caused by an accident arising from an incident” under the Policy because they were the result of intentional sexual conduct; and (3) Plaintiffs' allegations of emotional distress, humiliation, and anguish do not constitute an “injury” under the Policy.[19]NCMIC also stated that “[t]he allegations asserted in the Blake Lawsuit are clearly within the purview of [Exclusion F], as each cause of action rests upon allegations that Dr. Schweigert engaged in sexual impropriety.”[20]NCMIC informed Dr. Schweigert that, under the limited defense provided by the SLD Endorsement, NCMIC will appoint counsel to represent him, however, pursuant to Alaska Stat. § 21.96.100, he may select independent counsel to represent him and have all reasonable expenses incurred by such counsel paid by NCMIC up to the applicable $25,000 limit.[21]

Dr. Schweigert and the Clinic responded through counsel in a letter dated March 25, 2016.[22]The letter indicated that Dr. Schweigert disputed NCMIC's denial of coverage, stating that the causes of action in the Underlying Action arose from “certain recognized chiropractic treatments” and Plaintiffs do not claim that Dr. Schweigert committed intentional sexual misconduct.[23]The letter explained that “[a]n insurance company is required to defend the whole case even if some of the allegations are not within the policy coverage.”[24]Dr. Schweigert's counsel attached medical literature explaining the chiropractic procedures described in the Complaint and urged NCMIC to reconsider its coverage denial.[25]Dr. Schweigert also invoked his right to independent counsel and retained Laura Farley to represent him in the Underlying Lawsuit.[26]On April 5, 2016, Dr. Schweigert's counsel supplemented the March 25, 2016, letter with an Alaska Supreme Court case discussing the standard for an insurer's duty to defend.[27]Dr. Schweigert's counsel indicated that “there are allegations of negligence contained in the Complaint . . . that are in no way sexual in nature,” such as the allegations that Ms. Taranto, Ms. Williams and Ms. Asman experienced pain or bruising after the administration of ETPS.[28]Dr. Schweigert's counsel claimed that these allegations triggered NCMIC's duty to defend the entire action regardless of whether there were other allegations in the Complaint that fell within a policy exception.[29]

On June 20, 2016, NCMIC responded to Dr. Schweigert's letters, reaffirming its prior denial of coverage.[30] NCMIC explained that it reviewed the materials submitted by Dr. Schweigert and determined, as it had before, that coverage for the Underlying Action was limited to defense costs up to $25,000 pursuant to the SLD Endorsement.[31]NCMIC asserted that coverage is governed by Plaintiffs' factual allegations, not the causes of action asserted in the Complaint, and Plaintiffs “plainly alleged touching and other acts of a sexual nature.”[32]NCMIC also asserted that, even if some allegations in the Complaint were not sexual in nature, under the Policy's definitions, a “‘claim' would encompass a written demand for money or services ‘arising out of' any bodily injuries allegedly sustained by one patient during the entire course of the patient's chiropractic treatment.”[33]NCMIC concluded that “it is immaterial whether some of the claims asserted in the Blake lawsuit also include allegations of conduct that is not sexual in nature, as all clearly arise out of sexually inappropriate conduct,” and therefore “Exclusion F precludes coverage beyond the $25,000 available for defense costs under the Policy's SLD Endorsement.”[34]

Dr. Schweigert's counsel wrote to NCMIC on June 30, 2016, proposing that the parties mediate their dispute.[35]Dr. Schweigert's attorneys wrote to NCMIC again on August 1, 2016, explaining that Dr. Schweigert and Plaintiffs had agreed to a mediator and that Dr. Schweigert's counsel “told plaintiffs' attorney that NCMIC has denied coverage and therefore they will have a difficult time collecting any judgment.”[36]NCMIC declined to participate in mediation with the parties in the Underlying Action, and Dr. Schweigert's counsel advised NCMIC that the parties may proceed to mediation without its participation.[37]

In May 2017, the parties in the Underlying Action entered into a settlement agreement (the “Settlement”) without the involvement of NCMIC.[38]Under the terms of the Settlement, Dr. Schweigert consented to entry of judgment to the medical malpractice claims in the Underlying Action for $250,000 in compensatory damages and $19,500 in attorney's fees for each Plaintiff.[39]The Settlement also contained an Assignment of Claims and a Covenant Not to Execute, which together provided that all claims Dr. Schweigert may possess against NCMIC were assigned to Plaintiffs, and Plaintiffs agreed not to “execute on any assets of Dr. Myron Schweigert other than the proceeds of the assigned claims against” NCMIC.[40]The Settlement also required Plaintiffs to dismiss all claims against the Clinic as well as Dr. Blake's employment-related claims.[41]Dr. Schweigert's counsel informed NCMIC of the Settlement on June 20, 2017.[42]Consistent with the terms of the Settlement, the Alaska Superior Court entered a Final Judgment in the Underlying Action on July 3, 2017.[43]NCMIC paid all defense costs incurred on behalf of Dr. Schweigert and the Clinic, which never exceed the $25,000 limit under the SLD Endorsement.[44]On August 3, 2017, Plaintiffs, as assignees under the Policy, filed the
present action in Alaska Superior Court (the “Coverage Action”).[45]The Coverage Action was removed to this Court on September 6, 2017.[46]...

Outcome: Summary judgment is GRANTED IN PART AND DENIED IN PART consistent with this Order. The remaining issues for a jury are: (1) whether the ETPS Allegations are covered by the Policy, and, if the jury answers in the affirmative; (2) was the Settlement reasonable.

Within twenty-one (21) days of this Order the parties are directed to file a Joint Status Report indicating whether they request a judicial settlement conference in advance of setting a trial date. If the parties indicate that they do not wish to pursue a judicial settlement conference, the Court will issue its Trial Readiness Certification Order.

IT IS SO ORDERED.

Blake v. NCMIC Ins. Co. (D. Alaska 2023)

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