Allegations Of Personal Harm Resulting From Nursing Home's Lack Of Adequate Care Do Not Trigger "Bodily Injury" Insurance Coverage For A False Claims Act Complaint
HEALTH CARE INDUSTRY LIABILITY INSURANCE PROGRAM v. MOMENCE MEADOWS NURSING CENTER, INC. (May 20, 2009)
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The Health Care Industry Liability Insurance Program (the "Insurer") issued a commercial general liability policy to Momence Meadows Nursing Center, Inc. (“Momence”). The policy included commercial general liability coverage and professional liability coverage. After the policy was issued, two former employees brought an action against Momence for violations of the False Claims Act and the Illinois Whistleblower Reward and Protection Act ("IWRPA"). The suit alleged that Momence submitted false claims to the United States and the State of Illinois and that the employees were retaliated against for bringing the charges. The basis for the false claims charge was that Momence improperly certified that it was meeting the Medicare and Medicaid standards of care. The complaint alleged numerous instances of improper care, inadequate nutrition, and injuries to patients. The insurer brought this action for a declaration that it had no duty to defend or indemnify Momence. The court granted summary judgment to the insurer on the duty to defend and held that the issue of indemnification was not ripe. Momence appeals.
In their opinion, Judges Manion, Rovner and Sykes affirmed. The Court first addressed Momence's argument that the district court’s rulings on the issues of duty to defend and indemnification were inconsistent. The Court actually agreed with Momence but disagreed on the outcome. In Illinois, the duty to defend its broader duty to indemnify. Therefore, a finding of no duty to defend precludes a finding of a duty to indemnify. Instead of allowing the lower court’s decision on indemnity to reopen its decision on a duty to defend, the Court simply concluded that there was no duty indemnify if the district court properly held there was no duty to defend. The Illinois rule on duty to defend is that if any portion of a complaint is potentially within the scope of coverage, an obligation exists. The Court rejected Momence's argument that the allegations of physical injury underlying the false claims and IWRPA counts fell within the "bodily injury" coverage of the policies. The Court concluded that the damages sought by those counts of the complaint resulted from the allegations of false filings, not from allegations of bodily injury. The Court could find no theory of recovery in the complaint that required proof of bodily injuries. The Court also summarily rejected Momence's arguments that the retaliation counts were somehow included within the policies’ coverage.
