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Owatonna Clinic -- Mayo Health System v. the Medical Protective Company of Fort Wayne

May 11, 2011


Appeal from the United States District Court for the District of Minnesota.

The opinion of the court was delivered by: Arnold, Circuit Judge.

Submitted: December 14, 2010

Before LOKEN, ARNOLD, and BYE, Circuit Judges.

This is a contracts case. Owatonna Clinic -- Mayo Health System sued its insurer, Medical Protective Company, claiming that the company had breached its obligation to defend and indemnify the Clinic in a medical malpractice suit that had resulted in a judgment against it. Medical Protective denied that it had any such duty because the Clinic had failed to give proper notice of a potential claim against it. After cross-motions for summary judgment, the district court*fn1 held that the notice the Clinic provided was sufficient as a matter of law. The court also noted, though, that the policy required that, when giving notice, the Clinic "reasonably believe allegations of liability may result" from an incident, and the court decided that this requirement involved two questions: one was whether the Clinic's belief, if any, was objectively reasonable, the other was whether the Clinic actually believed that it was at risk. The court ultimately held that there was a triable issue on the latter question only, held a trial on that question, and put the matter specially to a jury. After the jury returned a verdict for the Clinic on the question, the district court entered judgment for it in the amount of the policy limits and awarded the Clinic pre-judgment interest on that amount.

On appeal, Medical Protective maintains that the district court erred in ruling as a matter of law that the Clinic's notice conformed to the policy requirements and that the Clinic's belief that it was at risk was objectively reasonable. It also asserts that the Clinic was not entitled to pre-judgment interest. We affirm.


There is a preliminary question to answer. The Clinic asserts that we do not have jurisdiction to decide the correctness of the district court's rulings on summary judgment because Medical Protective made no motion for judgment as a matter of law with respect to those rulings under Fed. R. Civ. P. 50. It argues that Medical Protective is appealing from an order denying its motion for summary judgment, and correctly points out that, absent exceptional circumstances not present here, we do not have jurisdiction over such an appeal because the order is only interlocutory, not final, see 28 U.S.C. § 1291. And the Clinic contends that, even if the denial of a summary judgment order was appealable, the time for appeal would have long past. See Fed. R. App. P. 4(a)(1)(A); see also 28 U.S.C. 2107(a); Ortiz, 131 S. Ct. at 891. But Medical Protective says that it is instead appealing from the final judgment against it and wishes to assign error in certain legal rulings that the district court made in the course of summary judgment proceedings. We have jurisdiction to decide legal issues raised in a trial unless they have been waived or are not properly preserved, and there is no suggestion of actual waiver here. So, strictly speaking, our question is not one of jurisdiction but one of preservation -- that is, whether Medical Protective had to make motions for judgment as a matter of law under Rule 50 before we can notice the legal errors that it wishes to raise.

As the parties point out, our cases related to this general question may not be in harmony. In Metropolitan Life Ins. Co. v. Golden Triangle, 121 F.3d 351, 353-56 (8th Cir. 1997), we rejected outright the proposition that a denial of a summary judgment motion was appealable after final judgment if the denial was based on a legal question rather than on the existence of material facts in issue. But just two years later, we adopted the principle that when " 'the denial of summary judgment is based on the interpretation of a purely legal question, such a decision is appealable after final judgment.' " White Consol. Indus., Inc. v. McGill Mfg. Co., 165 F.3d 1185, 1190 (8th Cir. 1999) (quoting Wolfgang v. Mid-America, 111 F.3d 1515, 1521 (10th Cir. 1997)). We later affirmed our allegiance to and applied this proposition in Estate of Blume v. Marian Health Ctr., 516 F.3d 705, 707-08 (8th Cir. 2008), and we adverted to it approvingly in Hertz v. Woodbury County, Iowa, 566 F.3d 775, 780 (8th Cir. 2009). This very issue was recently raised in Ortiz, 131 S. Ct. at 892-93, but the Court decided that it need not address it.

We think that it is unnecessary to resolve this apparent conflict in our cases, if that is possible, or decide which of them state the correct rule, because Medical Protective's real complaint is not that the district court erred in denying its motion for summary judgment. In this case, Medical Protective did not get a trial on the issues that it wishes to raise on appeal because the district court, though it did not say so directly in its order, effectively granted partial summary judgment to the Clinic on them: The court allowed a trial only on the issue of whether the Clinic actually believed that it was at risk of allegations of liability, and the jury rendered a special verdict on that matter alone. So the pertinent issue here is whether the district court erred in granting summary judgment, not denying it. A simple reference to Rule 50(a)(1) solves the question at hand. The rule provides that a motion for judgment as a matter of law should be granted "[i]f a party has been fully heard on an issue during a jury trial and the court finds that a reasonable jury would not have a sufficient evidentiary basis to find for the party on that issue." Rule 50 therefore has no application.

Medical Protective calls our attention to a recent case of ours, Studnicka v. Pinheiro, 618 F.3d 799 (8th Cir. 2010), but we don't think that case requires a contrary result. In fact, it fits comfortably with the conclusion we reach here. Studnicka was a suit against a doctor for a common-law assault and battery, and the defense was that the plaintiff had consented to the surgical procedure at issue. When the plaintiff moved for summary judgment on the ground that the law required written consent before the surgery could be performed, the district court denied the motion and proceeded to a trial in which the matter of consent was fully developed. Following a defendant's verdict, the plaintiff asserted on appeal that the absence of written consent required judgment for him as a matter of law. Id. at 800-01.

We quite rightly rejected the appeal because there had been a trial on the issue of consent and the plaintiff had failed to press his legal point by raising it in a Rule 50 motion. Id. at 801-02. In other words, the matter at issue, the consent of the plaintiff, had been subject to a full airing at trial, and if a writing were required for consent as a matter of law, there would, in the words of Rule 50, have been no "legally sufficient evidentiary basis to find" for the defendant because there was no such written consent in evidence. See id. at 801. In those circumstances, the need for a Rule 50 motion is thoroughly obvious. In our case, by contrast, the only issue on which there was a trial was the matter of the Clinic's subjective belief, as to which there was no doubt as to the sufficiency of the evidence, and as to which, more relevantly, there is no issue raised on appeal. Simply put, unlike Studnicka, the issues raised here were not "fully heard ... during a jury trial" and so a Rule 50 motion was not necessary to preserve them. Fed. R. Civ. P. 50(a)(1). This case is no different in relevant respects from ones in which a defendant's liability is established by summary judgment and a trial is held solely on the matter of damages.


We proceed therefore to the merits of Medical Protective's contentions. The policy involved in this case is a so-called "claims-made" policy, that is, it covered only claims submitted during the policy period. See In re Silicone Implant Ins. Coverage Lit., 667 N.W.2d 405, 409 (Minn. 2003). Under the policy, the Clinic was "deemed" to have filed a timely claim if, during the policy period, it gave Medical Protective "written notice of a medical incident from which the [Clinic] reasonably believes allegations of liability may result." The policy also requires that before it can "be deemed a claim, notice of a medical incident shall include all reasonably obtainable information with respect to the time, place and circumstances of the professional services from which liability may result and the nature and extent of the injury including the names and addresses of the injured and of available witnesses."

The writing on which the Clinic relies as providing appropriate notice was a letter that it sent to Medical Protective enclosing a Notice of Conference from the Minnesota Board of Medical Practice; the Notice informed Dr. Charles Chambers, a Clinic employee, that he was under investigation for his care of five patients. The Notice told Dr. Chambers that the Board wanted to discuss matters related to his "ability to practice medicine and surgery with reasonable skill and safety." As relevant here, the Notice asserted that a "patient #5" who was about to deliver a baby had undergone an ultrasound, that Dr. Chambers had missed a diaphragmatic lesion when reading it, and that the baby had been born with persistent respiratory distress and a ...

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