421 F.Supp.3d 331
S.D.W. Va2019Background
- Westfield sued for a declaratory judgment that its commercial liability Policy No. BOP 3157951 (effective Mar. 21, 2015–Mar. 21, 2016) does not cover defense or indemnity for claims by ten former female patients against Dr. Steven Matulis and his employer Charleston Gastroenterology.
- Underlying allegations: while anesthetized for colonoscopies and other procedures, claimants allege Dr. Matulis sexually assaulted them; related claims include battery, outrage/intentional infliction of emotional distress, invasion of privacy, false detention, medical negligence, and negligent supervision/retention by the employer.
- The Policy covers "bodily injury" and "personal and advertising injury" and imposes a duty to defend, but contains exclusions for (1) expected/intended injury (intentional acts), (2) professional services (medical services), and (3) personal/advertising injury caused knowingly by the insured.
- Westfield moved for summary judgment; Matulis and Charleston Gastroenterology defaulted; some claimants opposed and sought discovery or delay; the court refused leave to amend as futile.
- Applying West Virginia law, the court held the Policy excludes coverage for the alleged sexual assaults and related malpractice/supervision claims and therefore Westfield has no duty to defend or indemnify; summary judgment granted in Westfield’s favor.
Issues
| Issue | Westfield's Argument | Claimants' Argument | Held |
|---|---|---|---|
| Are the alleged sexual assaults "occurrences" (accidents) covered or excluded as intentional acts? | Assaults were intentional by Matulis and thus not "accidents"; excluded by the expected/intended-injury exclusion. | Coverage should be assessed from the employer-insured's standpoint (Charleston Gastroenterology) — it did not intend the assaults, so claims could be "occurrences." | Court applied West Virginia precedent treating intentional sexual misconduct as non-occurrence; exclusion applies and no coverage. |
| Do invasion-of-privacy / false-detention / emotional-distress claims (non-physical harms) fall within coverage or are excluded? | Where such claims are rooted in sexual misconduct or arise from medical treatment, exclusions apply (personal injury exclusion for knowing violation; professional-services exclusion). | Some claimants argued these are "personal injuries" independent of medical services and thus covered (citing Tackett). | Court found invasion/false-detention claims grounded in alleged sexual misconduct or in the medical setting are excluded (personal-injury exclusion and/or professional-services exclusion). |
| Are medical-malpractice/medical-negligence claims covered? | Such claims arise from medical services and are excluded by the Policy’s professional-services exclusion. | Claimants argued impaired or incompetent care may create coverage or that claims against employer predate treatment. | Court held medical negligence claims arise from professional services and are excluded; no coverage. |
| Are negligent-supervision/retention claims against Charleston Gastroenterology covered despite alleging negligence rather than intent? | These claims arise from or are tied to Matulis’s intentional acts and are excluded by either the expected/intended-injury exclusion or professional-services exclusion; alleging negligence does not override exclusions. | Claimants contended negligent supervision/administrative failures are independent and could be covered. | Court rejected that distinction under West Virginia law (Leeber, Clendenen, Stanley): negligent-retention/supervision claims tied to intentional acts are excluded. |
| Should decision be deferred pending discovery or resolution of state-court cases? | No; duty-to-defend can be decided from the pleadings and policy language; declaratory judgment proper now. | Claimants sought more discovery and argued indemnity issues should wait for state-court outcomes. | Court denied further discovery/delay and decided coverage now, finding the case fit for declaratory judgment. |
Key Cases Cited
- Smith v. Animal Urgent Care, 542 S.E.2d 827 (W. Va. 2000) (sexual harassment/misconduct does not qualify as an "occurrence" under liability policy and is excluded by intentional-acts language)
- Leeber v. Horace Mann Ins. Co., 376 S.E.2d 581 (W. Va. 1988) (intent to injure in sexual-misconduct cases is inferred as a matter of law; insurer need not defend)
- Columbia Cas. Co. v. Westfield Ins. Co., 617 S.E.2d 797 (W. Va. 2005) (determine "accident"/"occurrence" from the standpoint of the insured whose coverage is at issue)
- State Bancorp, Inc. v. U.S. Fid. & Guar. Ins. Co., 483 S.E.2d 228 (W. Va. 1997) (definition of "accident/occurrence" excludes deliberate acts)
- W. Va. Fire & Cas. Co. v. Stanley, 602 S.E.2d 483 (W. Va. 2004) (court may decide coverage without resolving underlying facts; negligent-acts pled as negligence may in substance be intentional and thus excluded)
- Tackett v. American Motorists Ins. Co., 584 S.E.2d 158 (W. Va. 2003) (distinguishing personal-injury claims not grounded in bodily injury and their potential coverage under CGL policies)
- Am. Nat'l Prop. & Cas. Co. v. Clendenen, 793 S.E.2d 899 (W. Va. 2016) (intentional/criminal-act exclusions apply to torts based on intentional acts even when couched as negligent supervision)
- Farmers & Mechs. Mut. Ins. Co. v. Cook, 557 S.E.2d 801 (W. Va. 2001) (insurer's duty to defend tested by whether underlying allegations are reasonably susceptible to a covered interpretation)