Free Motion for Summary Judgment - District Court of Arizona - Arizona

1 2 3 4 5 6 7 8

Stephen Paul Forrest (No. 006341) HOLLOWAY ODEGARD FORREST KELLY & KASPAREK, P.C. 3101 N. Central Avenue, Suite 1200 Phoenix, Arizona 85012 Phone: (602) 240-6670 Facsimile: (602) 240-6677 Attorneys for Defendant Correctional Medical Services, Inc., a Missouri Corporation, Lorraine Lopez-Moreno, Trina Carrasco, and Jacqueline Cornwell

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA

9 10 11

Northland Insurance Company, a Minnesota Corporation, Plaintiff,

No. CV 2004 0347 PHX FJM

12

vs.
13 14 15 16 17 18 19 20 21 22 23 24 25

Correctional Medical Services, Inc., a Missouri Corporation, Dr. Antonio DiMaano, Dr. Reynaldo Figueroa, Nurse Lorraine Lopez-Moreno, Nurse Trina Carrasco, Nurse Jacqueline Cornwell, and ABC Insurance Company, Defendants.

DEFENDANTS CMS, LOPEZ, CARRASCO, AND CORNWELLS'S STATEMENT OF FACTS IN SUPPORT OF MOTION FOR SUMMARY JUDGMENT RE: GUARANTY FUND LAWS (Oral Argument Requested)

Defendants Correctional Medical Services, Inc., Nurse Lorraine Lopez, Nurse Trina Carrasco, and Nurse Jacqueline Cornwell (collectively, "CMS") submit the following Statement of Facts in support of their Motion for Summary Judgment. The Facts referenced herein are admitted solely for purposes of the Motion for Summary Judgment. STATEMENT OF FACTS

1.
26

This is a subrogation case in which plaintiff seeks to recover amounts it

Case 2:04-cv-00347-FJM

Document 99

Filed 10/31/2005

Page 1 of 7

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26

paid to satisfy a judgment rendered against the State of Arizona in the state court action, Valdez v. Maricopa County CV2000-000205. See Plaintiff's complaint paragraphs 8 and 73. 2. Jose Valdez was an inmate in two State prisons, Alhambra and Florence

West, as well as incarcerated in the Maricopa County Jail. See Plaintiff's complaint, paragraphs 33 and 35. 3. The State of Arizona owned and operated Alhambra while Correctional

Services Corporation, under a contract with the State of Arizona, operated Florence West. See Plaintiff's complaint, paragraph 12. 4. CMS provided services only at Florence West, the CSC-operated prison,

pursuant to a contract between CSC and CMS. See Plaintiff's complaint, paragraph 17. 5. Jose Valdez filed a state court complaint in January 2000 against the

State, CSC and others claiming both ordinary and medical negligence. See Plaintiff's complaint, paragraphs 58 and 59. 6. Neither CMS nor the nurses named in this case were named as

defendants in the Valdez complaint. See Plaintiff's complaint, paragraph 58 and Exhibit "A". 7. CSC tendered its defense of the case to CMS, which in turn notified its

insurer PHICO of CSC's tender. See Plaintiff's complaint, paragraph 60 and 69 and Exhibit "B". 8. In the Valdez action, CSC and the State of Arizona named CMS as a

non-party at fault. Exhibit "C". 9. In December of 2000, the State and CSC filed third-party actions against

CMS (Ramsey) for indemnification. See Plaintiff's complaint, paragraph 65 and Exhibit "D". 10. The State also filed a cross-action for indemnification against CSC. See

Plaintiff's complaint, paragraph 64.
Case 2:04-cv-00347-FJM Document 99- 2 -Filed 10/31/2005 Page 2 of 7

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26

11.

Neither the State of Arizona nor CSC developed any defense to

plaintiff's claims with respect to the medical care provided to Valdez at the Florence West facility where CMS provided the nursing staff. Exhibit "E". 12. Exhibit "F". 13. The State of Arizona admitted fault, the state court case was then tried on Valdez, CSC and Northland entered into a "high/low agreement."

damages only against the State of Arizona. The jury awarded Valdez $6 million. Exhibit "G". 14. "F". 15. The State of Arizona appealed the verdict (at the direction of Northland), The high-low agreement limited Valdez' recovery to $5 million. Exhibit

but the verdict was upheld on appeal and Northland ultimately satisfied the judgment. See Plaintiff's complaint, paragraphs 75, 76 and 77. 16. paragraph 3. 17. PHICO, the insolvent insurer of CMS, was subject to the insurance CMS is domiciled in the State of Missouri. See Plaintiff's complaint,

guaranty laws of Missouri by virtue of CMS' domicile there? Exhibit "H". 18. Northland filed a claim with the Missouri Insurance Guaranty

Association ("MIGA") on behalf of its insured, CSC, for the attorneys' fees and costs expended in the Valdez case. (Id.). 19. MIGA denied Northland's claim on the basis that any claim by an insurer

is not a "covered claim." (Id.). 20. Prior to the April 1, 2003 filing deadline, Northland filed a proof of

claim with the Statutory Liquidator of PHICO in Mechanicsburg, Pennsylvania. Exhibit "I". 21. CSC and CMS entered into a Health Services Agreement on October 1,

1997, for the delivery of inmate health care services at CSC's Arizona State Prison-- Florence (the "Florence West Contract"). See Plaintiff's complaint, paragraph 17 and
Case 2:04-cv-00347-FJM Document 99- 3 -Filed 10/31/2005 Page 3 of 7

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21

Exhibit "J". 22. The Florence-West contract did not state that CMS is required to

indemnify CSC for any reason. Exhibit "J". 23. The Florence-West contract provided that CMS was required to maintain

its own professional liability insurance with limits of not less than $3 million combined single limit and name CSC as an additional insured under the policy or policies. See Plaintiff's complaint, paragraphs 23, 24 and 27. 24. CMS obtained the coverage required in the Florence-West contract with

PHICO Insurance Company. See Plaintiff's complaint, paragraphs 23 and 24. 25. CMS, Nurse Lorraine Lopez, Nurse Trina Carrasco and Nurse Jacqueline

Cornwell were insured under policies issued by PHICO. Exhibit "K" 26. PHICO policy, HCL 10335, provided coverage for medical incidents up

to $1 million per occurrence and had an effective date of October 1, 1997. (Id.). 27. PHICO policy, PUP 10335, provided excess coverage for medical

incidents up to $10 million and had an effective date of October 1, 1997. (Id.). 28. Under the PHICO policies, CMS was the "named insured," while the

nurses were "persons insured" as "professional employees" of the "named insured." (Id.). 29. A "professional employee" under the PHICO policies, was defined as

any employee, other than a physician, who was authorized to provide health care or professional medical services. (Id.). 30. (Id). The nurses were all professional employees of CMS at the relevant time.

22 23 24 25 26

31.

The PHICO policies provided coverage for both bodily injury or

property damages arising from a medical incident defined as "any act or omission in the furnishing of any professional health care service immediately incident to the care of patients including, but not limited to, the furnishing of food, beverages, medications or appliances in connection with such services and the post-mortem handling of human
Case 2:04-cv-00347-FJM Document 99- 4 -Filed 10/31/2005 Page 4 of 7

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26

bodies by the insured, any employee of the insured or any person acting under the personal direction, control or supervision of the insured." (Id.). 32. The PHICO policies contained an endorsement providing that the

coverage extended to any entity as an additional insured if CMS agreed under a written contract to provide that entity the insurance afforded for claims arising from the conduct of an insured for an event for which coverage is otherwise provided under the policies. (Id.). 33. PHICO policies were issued for an initial term of one year, from October

1, 1997 through October 1, 1998. However, the terms of both policies were extended so that the policies, including the additional insured endorsements, provided coverage for medical incidents occurring through October 1, 2000. (Id.). 34. The Valdez claim was filed on January 5, 2000. See Plaintiff's

complaint, paragraph 58. 35. CMS was not named as a defendant but on July 7, 2000, CSC named

CMS as a non-party at fault. See Exhibits "A" and "D". 36. On September 29, 2000, CSC filed a motion for summary judgment

requesting judgment in CSC's favor arguing that it was not vicariously liable for the conduct of CMS. Exhibit "L". 37. Valdez opposed CSC's motion and filed a cross-motion, arguing that the

duty to provide health care services was non-delegable by CSC and the State of Arizona. Exhibit "M". 38. On December 15, 2000, the court denied CSC's motion for summary

judgment and granted Valdez's cross-motion, finding the State and CSC vicariously liable for the alleged wrongful conduct of CMS. Exhibit "N". 39. On December 22, 2000, CSC filed its Third-Party Complaint against

CMS for indemnification. Exhibit "D". 40. On September 19, 2001, the first day of trial and pursuant to stipulation,

the court dismissed Valdez' claims against CSC with prejudice. Exhibit "O".
Case 2:04-cv-00347-FJM Document 99- 5 -Filed 10/31/2005 Page 5 of 7

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26

41.

On September 19, 2001, the State of Arizona, the only remaining

defendant, admitted fault and the case proceeded to trial to assess damages only. Exhibit (Id.). 42. On September 21, 2001, the jury returned a $6 million verdict in favor of

Valdez and against the State. Exhibit "G". 43. On October 4, 2001, pursuant to the "high-low agreement" between

Valdez and Northland, the court entered judgment against the State of Arizona for $5 million plus costs. See Plaintiff's complaint, paragraph 73. 44. The Commonwealth Court of Pennsylvania placed CMS' insurer,

PHICO, under an Order of Rehabilitation on or about August 16, 2001. See Plaintiff's complaint, paragraph 70. 45. PHICO was later placed under an Order of Liquidation by the same court

effective February 1, 2002. (Id.). DATED this 31st day of October, 2005. HOLLOWAY ODEGARD FORREST KELLY & KASPAREK, P.C.

By:___/S/_________________________ Stephen Paul Forrest 3101 N. Central Avenue, Suite 1200 Phoenix, Arizona 85012 Attorneys for Defendant Correctional Medical Services, Inc., Lorraine Lopez-Moreno, Trina Carrasco, and Jacqueline Cornwell ORIGINAL of the foregoing filed this 31st day of October, 2005, with: The Clerk of Court United States District Court 401 W. Washington Phoenix, AZ 85003

Case 2:04-cv-00347-FJM

Document 99- 6 -Filed 10/31/2005

Page 6 of 7

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

COPY st the foregoing hand-delivered of this 31 day of October, 2005, to: The Honorable Frederick J. Martone United States District Court Sandra Day O'Connor U.S. Courthouse 401 W. Washington Street Phoenix, Arizona 85003 COPY of the foregoing mailed This 31st day of October, 2005, to: Karl M. Tilleman, Esq. Janice K. Crawford, Esq. Steptoe & Johnson, L.L.P. Collier Center 201 East Washington Street, Ste. 1600 Phoenix, Arizona 85004-2382 Attorneys for Plaintiff Northland Keith R. Ricker, Esq. Ricker and Bustamente, LLP. 4530 East Shea Blvd., Suite 150 Phoenix, AZ 85028 Attorneys for Defendants Antonio DiMaano and Reynaldo Figueroa

By /S/
16 17 18 19 20 21 22 23 24 25 26

Case 2:04-cv-00347-FJM

Document 99- 7 -Filed 10/31/2005

Page 7 of 7