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Hamilton v. Bayer Healthcare Pharmaceuticals, Inc.

United States District Court, W.D. Oklahoma

September 5, 2019

WALTER HAMILTON AND DIANNA HAMILTON, Individually and as Legal Guardians of the Person and Estate of KAITLIN HAMILTON, an Incapacitated Person, Plaintiffs,
v.
BAYER HEALTHCARE PHARMACEUTICALS INC., BAYER PHARMA AG, BAYER CORPORATION, BAYER HEALTHCARE LLC, BAYER HEALTHCARE AG AND BAYER AG Defendants, MUTUAL OF OMAHA INSURANCE COMPANY, Intervenor
v.
WALTER HAMILTON AND DIANNA HAMILTON, Individually and as Legal Guardians of the Person and Estate of KAITLIN HAMILTON, an Incapacitated Person,

          MEMORANDUM OPINION AND ORDER

          Robin J. Cauthron United States District Judge

         The present action is a dispute over insurance coverage. Plaintiffs are the parents and legal guardians of Kaitlin Hamilton. Kaitlin Hamilton was covered under a group catastrophic injury insurance coverage pursuant to her status as a student athlete at Oklahoma State University. Kaitlin suffered a left calf strain in December of 2009 while at an athletic meet in Kansas City. She received treatment for that injury off and on until January of 2010. In January she went to see an orthopedic surgeon who was concerned that she had developed a deep vein thrombosis (“DVT”). The orthopedic surgeon scheduled Kaitlin for an ultrasound and on the morning of her scheduled ultrasound Kaitlin was found unresponsive on her dorm room floor, having suffered a pulmonary embolism and subsequent brain injury.

         A claim was made on the insurance policy issued by Mutual and in July of 2010, Mutual determined that Kaitlin's claim was covered and began providing benefits. Prior to paying benefits, Mutual submitted medical records to an independent physician for review. That review noted that while Kaitlin's taking YAZ[1] birth control was the most likely genesis of the DVT, it was impossible to eliminate the calf injury as a possible cause. Indeed, notes from Mutual's claims file, authored by the decisionmaker on the claim, outlined the inability to distinguish causation from birth control versus the injury, and on that basis accepted the claim as a covered injury.

         In October of 2014, attorneys representing Plaintiffs in an action against the manufacturer of the birth control pill contacted Mutual to obtain copies of the claims file.

         In July of 2016, a medical record management company obtained copies of records from Mutual related to an ongoing lawsuit. In August of 2017, Mutual sent a letter to Plaintiffs indicating that it had terminated benefit payments under the policy based on new evidence that clarified Kaitlin's injuries did not directly result from an accident at a covered event. In this action Mutual argues that certain parts of this evidence were new information. However, documents from the claims file as well as deposition testimony in this case demonstrate that Mutual was aware that Plaintiffs were pursing an action against Bayer several years prior to the 2017 termination letter. After approximately 45 days, and following protest from lawyers representing the Hamiltons as well as other community leaders, Mutual reinstated benefits to Kaitlin. However, the parties are in dispute as to whether or not all outstanding claims under the policy have been paid.

         Mutual sought leave to intervene in the action between the Hamiltons and Bayer and once Mutual had done so, the Hamiltons filed a counterclaim against Mutual, asserting claims for breach of contract and bad faith. Mutual has filed a Motion for Summary Judgment seeking judgment on Plaintiffs' claim for breach of contract and subrogation, as well as the claim for bad faith.

         Plaintiffs seek partial summary judgment, arguing they are entitled to the value of the insurance policy, as the August 2017 termination by Mutual constituted a repudiation of the contract. Plaintiffs also request judgment on Mutual's request for subrogation, arguing that there is no right of subrogation or alternatively that the subrogation clause in the insurance policy does not cover any recovery that Kaitlin obtained from the litigation related to Bayer.[2]

         STANDARD OF REVIEW

         Summary judgment is appropriate if the pleadings and affidavits show there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c). [A] motion for summary judgment should be granted only when the moving party has established the absence of any genuine issue as to a material fact. Mustang Fuel Corp. v. Youngstown Sheet & Tube Co., 561 F.2d 202, 204 (10th Cir. 1977). The movant bears the initial burden of demonstrating the absence of material fact requiring judgment as a matter of law. Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986). A fact is material if it is essential to the proper disposition of the claim. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). If the movant carries this initial burden, the nonmovant must then set forth specific facts outside the pleadings and admissible into evidence which would convince a rational trier of fact to find for the nonmovant. Fed.R.Civ.P. 56(e). These specific facts may be shown by any of the kinds of evidentiary materials listed in Rule 56(c), except the mere pleadings themselves. Celotex, 477 U.S. at 324. Such evidentiary materials include affidavits, deposition transcripts, or specific exhibits. Thomas v. Wichita Coca-Cola Bottling Co., 968 F.2d 1022, 1024 (10th Cir. 1992). The burden is not an onerous one for the nonmoving party in each case, but does not at any point shift from the nonmovant to the district court. Adler v. Wal-Mart Stores, Inc., 144 F.3d 664, 672 (10th Cir. 1998). All facts and reasonable inferences therefrom are construed in the light most favorable to the nonmoving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986).

         ANALYSIS

         Beginning with Mutual's Motion, the Court will address each party's Motion for Summary Judgment in this Order.

         A. Breach of Contract

         Mutual argues that Plaintiffs cannot demonstrate a breach of contract claim because they cannot show that Kaitlin was entitled to benefits under the policy. In support of its first argument, Mutual directs the Court to the opinions of the medical providers in this action. According to Mutual, the medical experts for both parties indicate that YAZ was the most likely cause of the DVT and subsequent injury. Mutual directs the Court to the language of the insurance policy defining what is a covered accident. The policy states Covered Accident “means an accident that occurs while this Policy is in effect, between August 1, 2009, and August 1, 2013, which directly results in bodily injury or death (not excluded from coverage by the Policy Exclusions and Limitations) of an Insured Person . . . .” (Dkt. No. 254-2, p. 14.) As noted above, Mutual argues that Kaitlin's injury does not fall under the definition of a covered accident because it was not directly caused by the left calf strain. On this point Mutual's argument must fail. Even Mutual's medical experts state unequivocally that it is possible that the left calf strain was a cause of the DVT. Indeed, the medical reports are clear that it is impossible to distinguish whether the strain alone, YAZ alone, or a combination of YAZ and the muscle strain led to the DVT.

         Indiana recognizes that where a pre-existing medical condition sets in motion a chain of events which results in the ultimate injury, the original event is the direct cause of the ultimate injury. Am. States Ins. Co. v. Morrow, 409 N.E.2d 1140, 1141-42 (Ind.Ct.App. 1980).[3] Indeed, to the extent Mutual argues that other jurisdictions have a more restrictive definition of direct cause, the Indiana courts have expressly rejected that position. See Nationwide Mut. Ins. Co. v. Neville, 434 N.E.2d 585, 590 (Ind.Ct.App. 1982). Under Indiana law, “[i]t is the duty of courts to interpret a contract so as to ascertain the intent of the parties.” First Fed. Sav. Bank of Ind. v. Key Mkts., Inc., 559 N.E.2d 600, 603 (Ind. 1990). Consistent with that instruction, the Court has evaluated the language of the contract and applied the appropriate Indiana law to determine that the left calf strain falls within the scope of a direct cause, rendering it a Covered Accident under the terms of the policy. Thus, Kaitlin is entitled to benefits.

         Alternatively, Mutual argues that Kaitlin suffered no damage as a result of the termination of claim payments between August 17 and October 2, 2017. Mutual argues that because it subsequently paid any claims that were denied following the termination of benefits, Plaintiffs cannot demonstrate that Kaitlin has suffered any damage and, as a result, the breach of contract claim must fail. Mutual argues that because Plaintiffs are not parties to the contract, any damage or loss they suffered is not compensable damage for any alleged breach of the policy.

         Certainly, at the time Mutual suspended payments under the policy, Kaitlin suffered a loss; that is, there were medical providers that were not paid. Kaitlin would not have received some of the care that was necessary absent payments by third parties. Thus, she clearly suffered a loss due to Mutual's termination of benefits. Orto v. Jackson, 413 N.E.2d 273, 278 (Ind.Ct.App. 1980) (“A party injured by a breach of contract is entitled to receive damages that may reasonably be considered to have arisen naturally from the breach or as may reasonably have been in contemplation of the parties at the time they entered the contract as a probable result of its breach.”) That Mutual ultimately mitigated its damages by paying the claims does not absolve it of the breach. Rather, Mutual's actions only impact the amount of damages that may be recovered for the breach. “A fundamental rule of damages applicable to breach of contract cases is that the party injured by the breach is limited in recovery to the loss actually suffered; he is not entitled to be placed in a better ...


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