Case Information
*2 Before JOLLY, WIENER, and CLEMENT, Circuit Judges.
E. GRADY JOLLY, Circuit Judge:
This insurance dispute requires us to decide whether Lexington Insurance Company must defend and indemnify LCS Corrections Services, Inc., against a claim that LCS’s alleged failure to provide medications to an inmate housed at one of its facilities caused the inmate’s death. Two insurance contracts are at issue in this appeal: a Commercial General Liability (“CGL”) policy and a Commercial Umbrella Liability (“CUL”) policy. The district court, in separate rulings, held that, under the CGL policy, Lexington had a duty to defend LCS, but without reaching the indemnification issue under that policy; and that, under the CUL policy, Lexington had no duty to defend or indemnify LCS. For the reasons that will follow, we vacate the district court’s judgment in part and hold that Lexington is not required to defend or indemnify LCS under the CGL policy, and affirm the district court’s judgment in part and hold that Lexington is not required to defend or indemnify LCS under the CUL policy. Thus, we AFFIRM in part, VACATE in part, and REMAND the case for entry of judgment in favor of Lexington.
I.
This dispute over the insurance policies stems from a tort action by the heirs (the “Plaintiffs”) of Mario Garcia (“Garcia”). Garcia was confined at the Brooks County Detention Center (the “Detention Center”) in Falfurrias, Texas, after pleading guilty to a federal offense. LCS, a Louisiana corporation, owns a number of private prison facilities, and operates the Detention Center. At the time Garcia was incarcerated, he was taking high doses of benzodiazepine, as prescribed by his personal physician. The Plaintiffs claim that Garcia died because officials at the Detention Center refused to provide him with additional doses of benzodiazepine.
After Garcia’s death, the Plaintiffs filed suit against LCS, alleging claims of medical malpractice under state law and constitutional violations under 42 U.S.C. § 1983. Initially, in the previous tort litigation that underlies this appeal, the district court allowed only the medical malpractice claims to go to trial. In that trial, a jury returned a $2.25 million verdict in favor of the Plaintiffs. [2] Following that trial, the district court agreed to reinstate the Plaintiffs’ § 1983 claim. In response to the district court’s ruling, the Plaintiffs filed their Fifth Amended Complaint (the “Complaint”), which alleges that LCS’s policy of refusing to administer certain medications to inmates constituted deliberate indifference to Garcia’s serious medical needs.
LCS then filed this separate action in another district court, seeking a declaration that Lexington is required to defend and indemnify LCS in the underlying § 1983 action. Thus, this declaratory judgment appeal involves only the question of insurance coverage and only for the § 1983 claim. This appeal, however, implicates two insurance policies.
By way of background, Lexington issued three policies to LCS—the CUL and CGL policies that are at issue in this suit, along with a Healthcare Professional Liability (“HPL”) policy, which is not a subject of this appeal. [3] Both the CUL and CGL policies insure LCS against “bodily injury” or “property damage” caused by an “occurrence,” defined as “an accident, including continuous or repeated exposure to substantially the same general harmful conditions.” Additionally, the CGL policy, but not the CUL policy, includes a civil rights endorsement, which extends the insurance agreement to cover certain civil rights claims.
More particularly, this appeal primarily involves two exclusions, one from each policy: a “medical services” exclusion to the CGL policy, and a “professional liability” exclusion to the CUL policy. Common to each policy, LCS and the Plaintiffs contend that the Complaint alleges that the injury Garcia suffered resulted from covered administrative or non-professional services; whereas Lexington counters that the alleged injury occurred because LCS denied Garcia his medication, constituting a failure of LCS to render a medical or professional service, which is excluded from coverage in the respective policies. Both LCS and Lexington moved for summary judgment. The district court ruled for the Plaintiffs and LCS on the CGL policy, and ruled for Lexington on the CUL policy.
II.
So, we turn to the merits of this declaratory judgment appeal, seeking an answer only to insurance coverage for the underlying § 1983 claim: whether Lexington owes a duty to defend and/or indemnify LCS, under either the CGL or the CUL policies. Under both Texas and Louisiana law, the duty to defend under the HPL policy, but the limits of that policy may be exhausted if the § 1983 litigation is ultimately successful. LCS and the Plaintiffs suggest that some of the issues in this appeal are not ripe for
review. Specifically, they argue that the duty to indemnify is unripe as to both the CGL and
CUL policies, relying on Texas state law precedent that the duty to indemnify is generally
determined only after the underlying litigation that gives rise to the potential duty to
indemnify draws to a close.
See Farmers Tex. Cty. Mut. Ins. Co. v. Griffin
,
cite authority from both Texas and Louisiana in support of their respective positions. But, like the district court, we do not decide the choice of law issue because the parties have not briefed or presented argument on this issue, and we discern no substantive differences in the relevant insurance laws of the two states.
no duty to defend and the same reasons that negate the duty to defend likewise
negate any possibility the insurer will ever have a duty to indemnify.”
Farmers
Tex. Cty. Mut. Ins. Co. v. Griffin
,
As we have earlier indicated, we focus on exclusions in each of the
policies—first on the medical services exclusion in the CGL policy and, second,
on the professional liability exclusion in the CUL policy. We recognize that
insurance terms, particularly exclusions, are strictly construed against the
insurer, and, as appropriate, in favor of the insured.
Nat’l Union Fire Ins. Co.
of Pittsburgh, Pa. v. Hudson Energy Co.
, 811 S.W.2d 552, 555 (Tex. 1991);
Garcia v. St. Bernard Parish Sch. Bd.
,
III.
A. We will first discuss the CGL policy, under which the district court held that Lexington had a duty to defend Garcia’s claims against LCS. In this respect, we will initially consider whether Lexington must provide a defense to LCS. We will later turn our attention to the duty to indemnify.
1.
a. At the outset, LCS and the Plaintiffs contend that we need not even consider the medical services exclusion because the civil rights endorsement in the CGL policy overrides the medical services exclusion, which is to say, that the civil rights endorsement stands on its own and is not subject to the medical services exclusion of the primary policy. The civil rights endorsement provides as follows:
This insurance applies to claims or “suits” arising out of “bodily injury” and “property damage” caused by alleged civil rights violations, so long as such violations and any resulting injury(ies) are not expected or intended from the standpoint of the insured or any person or organization either representing or acting on behalf of the insured.[]
All other terms and conditions of the policy remain the same.
(Emphasis added.)
We cannot agree that the civil rights endorsement overrides the medical
services exclusion. The civil rights endorsement, by its terms, is only a
modifier of the insurance agreement itself. Consequently, the endorsement is
subject to, and governed by, all other relevant terms of the primary insurance
agreement, to which it is attached, unless otherwise stated. This means that
it is subject to the exclusions in the policy, including the medical services
exclusion.
See Michelet v. Scheuring Sec. Servs. Inc.
, 95-2196, p. 12–13 (La.
App. 4 Cir. 9/4/96);
In sum, our review of the policy leads to the conclusion that the medical services exclusion applies to the Plaintiffs’ claim if the allegations in the Complaint fall within the medical services exclusion, which we now turn to address.
b.
The medical services exclusion provides as follows: In consideration of the premium charged, it is agreed that this policy shall not apply to any liability of the Insured arising out of the rendering or failure to render “Medical Services” by any employee of the Insured or any independent contractor who has entered into a contractual agreement with the Insured.
For the purposes of this endorsement, “Medical Services” shall mean:
a) medical, surgical, dental or nursing treatment to such person or the person inflicting the injury including the furnishing of food or beverages in connection therewith;
b) furnishing or dispensing of drugs or medical, dental or surgical supplies or appliances if the injury occurs after the Named Insured has relinquished possession thereof to others;
c) handling of or performing post-mortem examination on human bodies; or
d) service by any person as a member of a formal accreditation or similar professional board or committee of the Named Insured, or as a person charged with the duty of executing directives of any such board or committee.
The parties dispute whether this case is controlled by subpart (a) or subpart (b) of the medical services exclusion. According to LCS and the Plaintiffs, only subpart (b) is relevant; only it addresses the dispensation of medication. They further argue that because all parties agree that subpart (b) does not , itself, exclude coverage in this case, a fortiori , coverage of the § 1983 claim exists under the CGL policy. But Lexington says, not so fast; there is more to the definition of “medical services” than subpart (b); subpart (a) broadly excludes “medical, surgical, dental or nursing treatment.” As applied to the facts in this case, subpart (a) excludes coverage of the denial of medication to Garcia.
We believe that Lexington is correct: because the exclusions are listed in the disjunctive, we must consider subpart (a) of the medical services exclusion as distinct from subpart (b). The inclusion of “or” after subpart (c) demonstrates that the exclusion is written in the disjunctive, and each subpart must be considered separately. See, e.g., PPG Indus., Inc. v. Shell Oil Co. , 727 F. Supp. 285, 287 (E.D. La. 1989) (“[U]nder the law of Texas, contract language should be given its ‘plain grammatical meaning.’ Simply stated, ‘or’ is disjunctive, or alternative in its effect.” (quoting Lyons v. Montgomery , 701 S.W.2d 641, 643 (Tex. 1985))). Consequently, a reviewing court must review each of the four definitions separately in order to determine whether the allegations in a particular suit fall within any of the four exceptions. For example, subpart (b) applies to preclude coverage in a situation where the insured has given drugs or other medical equipment to a third party, such as a contractor (or even potentially an inmate). By contrast, subpart (a) applies when LCS directly provides or fails to provide medical care. Because subparts (a) and (b) address different situations and do not conflict, the provisions should be read in harmony to give effect to each. See Weeks Marine, Inc. , 737 F.3d at 369 (“Texas courts examine the entire contract in an effort to harmonize and give effect to all provisions so that none is rendered meaningless.”). Thus, we conclude that Lexington is not required to defend LCS if the allegations in the Plaintiffs’ Complaint fall within the meaning of subpart (a) of the medical services exclusion.
c.
So now we move on to consider whether the Plaintiffs’ allegations fall within subpart (a) of the exclusion. Relevant here, the medical services exclusion denies coverage of “ any liability of the Insured arising out of the . . . failure to render ‘Medical Services.’” (Emphasis added.) Thus, we ask whether the Plaintiffs’ alleged injury relates to the failure to render “Medical Services,” which services are defined as “medical, surgical, dental or nursing treatment.”
In essence, the Plaintiffs allege that Garcia died when the staff at the
Detention Center failed to provide him with his prescribed benzodiazepines.
When speaking generally, administering medication to an individual or to a
group of people is certainly a form of “medical treatment.”
See Duncanville
Diagnostic Ctr., Inc. v. Atl. Lloyd’s Ins. Co. of Tex.
,
Although the Plaintiffs and LCS argue that Garcia died as a result of
LCS’s adhering to its administrative policy, and not from a failure to render
medical services, this distinction proves unavailing here. In a closely similar
comparison, as discussed in more detail
infra
, we have “distinguished between
‘professional’ tasks and ‘administrative’ tasks.”
Nat’l Cas. Co.
,
2.
Having decided that Lexington owes no duty to defend, we must also
briefly consider whether Lexington owes a duty to indemnify LCS under the
CGL policy for any liability on the Plaintiffs’ § 1983 claim. Although a court
must generally decide whether an insurer has a duty to indemnify at the
conclusion of litigation, it may decide the issue earlier when it is clear that the
court’s ruling on the duty to defend must also control the duty to indemnify.
Griffin
,
B.
As we said at the outset of this opinion, there are two policies involved. Having concluded that Lexington owes no duty to defend or indemnify under the CGL policy, we must next decide whether Lexington owes a duty to defend or indemnify LCS under the CUL policy.
Thus, in considering the CUL policy, we focus on the professional liability exclusion, which provides as follows:
It is agreed that this policy shall not apply to liability arising out of the rendering of or failure to render professional services, or any error or omission, malpractice or mistake of a professional nature committed by or on behalf of the “Insured” in the conduct of any of the “Insured’s” business activities.
Because the term “professional service” is not defined by the contract, we look to the general definition of such services:
[T]he task must arise out of acts particular to the individual’s specialized vocation, [and] . . . it must be necessary for the professional to use his specialized knowledge or training.
Admiral Ins. Co. v. Ford
,
1.
As with the medical services exclusion above, the application of the professional liability exclusion in the CUL policy turns on whether the Plaintiffs have adequately alleged that a separate administrative policy—not the denial of “professional services”—caused Garcia’s death. In the context of a professional services exclusion, we have recognized that “[o]ur precedent has distinguished between ‘professional’ tasks and ‘administrative’ tasks.” Nat’l Cas. Co. , 669 F.3d at 615. According to the Plaintiffs and LCS, Garcia died because LCS had followed and applied a company policy “administered by non- medical and non-professional management personnel . . . , not to give inmates scheduled medications such as those prescribed to Garcia.”
The dispositive inquiry here is whether providing medications to inmates
in a prison is a professional medical service.
Duncanville Diagnostic Ctr., Inc.
,
LCS and the Plaintiffs have sliced this issue too thin, however, by
arguing that a separate administrative policy actually
caused
the injury, i.e.,
the liability, in this case. Admittedly, our cases have held that an
administrative action is not excluded from coverage by a professional services
exclusion when the administrative action itself causes an injury separate from
any injury caused by the professional service.
See, e.g.
,
Willbros RPI, Inc. v.
Cont’l Cas. Co.
,
The provisions of the professional liability exclusion further support our interpretation of this provision. The exclusion applies to: (1) liability arising out of the rendering of professional services; (2) liability arising out of the failure to render professional services; and (3) liability arising out of omissions, malpractice, and mistakes “of a professional nature.” The first provision applies when LCS, the insured, incurs liability from professional services inadequately rendered; that is, because of some professional or non- professional decision, inmates receive medical services that are inadequate. Similarly, the third provision excludes from coverage injuries that occur when a professional commits malpractice on an inmate. The second provision, which is applicable here, applies more broadly to a situation in which LCS, the insured, fails to provide a professional service to inmates at all . Here, the Plaintiffs have alleged that LCS, the insured, prohibited its medical personnel from distributing certain medications to inmates. Under the terms of the professional liability exclusion, the liability in this case arises out of LCS’s failure to render professional services to Garcia. Thus, Lexington owes no duty to defend LCS under the CUL policy, and accordingly, we AFFIRM the judgment of the district court in this respect.
2.
Finally, we conclude that there is no duty to indemnify LCS with respect to the CUL policy. As we explained with regard to the CGL policy, a reviewing court may determine the duty to indemnify before the conclusion of the underlying litigation “when the insurer has no duty to defend and the same reasons that negate the duty to defend likewise negate any possibility the insurer will ever have a duty to indemnify.” Griffin , 955 S.W.2d at 84 (emphasis omitted). The district court concluded that “no facts can be developed in the Garcia Lawsuit that can transform the failure to administer medication into an administrative policy unrelated to the failure to render professional medical services.” Based on our review of the record, we agree. As we have said, any administrative policy plainly amounted to a refusal to render a professional service to Garcia.
Thus, we AFFIRM the district court’s rulings addressing the CUL policy.
IV.
In sum, our review of the CGL and CUL policies leads us to conclude that the § 1983 claim is excluded from coverage by both policies. Accordingly, we hold that Lexington owes no duty to defend or indemnify LCS under the CGL policy; and we also hold that Lexington owes no duty to defend or indemnify LCS under the CUL policy. We further hold that the district court did not err in granting summary judgment for Lexington under the CUL policy, and thus AFFIRM the judgment in this respect. Finally, we hold that the district court erred in its judgment with respect to the CGL policy, and we REMAND the case for entry of judgment in favor of Lexington.
AFFIRMED in part, VACATED in part, and REMANDED, for entry of judgment consistent with this opinion.
Notes
[1] The underlying tort claims are pending before another federal district court.
[2] Specifically, the jury found that “LCS Corrections Services, Inc. employees” were responsible for Garcia’s death. The jury also concluded that two named healthcare professionals, Dr. Michael Pendleton and Kelli Savage (a nurse), were not legally responsible for Garcia’s death.
[3] Lexington defended LCS in the initial trial on the medical malpractice allegations under the HPL policy. Indeed, Lexington continues to defend LCS in the ongoing litigation
[6] Lexington also argues that the facts in the underlying Garcia litigation do not satisfy the “occurrence” requirement in the insurance agreements in the CGL and CUL policies. Because we hold that the exclusions in this case exclude coverage, we need not decide whether the Plaintiffs’ Complaint alleged facts that would give rise to an “occurrence” under the insurance agreements.
[7] We also reject the argument that applying the medical services exclusion to civil rights claims renders the civil rights endorsement meaningless. There is no doubt that the medical services exclusion potentially excludes some civil rights claims. But there are also many civil rights violations to which the medical services exclusion would have no relevance.
[8] The parties also point to various allegations of negligence in the Complaint, and LCS
points to a negligent act endorsement in the CGL policy, which applies to negligent acts,
including “errors or omissions arising out of the insured’s rendering or failure to render
professional services.” The parties have already tried the negligence issues before a jury,
though, and neither LCS nor the Plaintiffs seek a review of Lexington’s duties relating to
that
litigation. Instead, we construe this action to relate only to the § 1983 claim, which
cannot be based upon mere negligence.
See, e.g.
,
Stewart v. Murphy
,