JOSEPH N. LAPLANTE, District Judge.
The possible contamination of surgical instruments after exposure to a communicable neurological disease—and whether those instruments constitute "premises" under the terms of an insurance policy—led to a coverage dispute that culminated in this litigation. Plaintiff Catholic Medical Center ("CMC") seeks a declaratory judgment that defendant Fireman's Fund Insurance Company ("Fireman's Fund") wrongfully denied coverage for certain losses after a CMC neurosurgical patient was diagnosed several months after surgery, necessitating the destruction of the potentially contaminated instruments and causing temporary suspension of CMC's neurosurgery program. The parties have filed cross-motions for summary judgment. Having reviewed the insurance policy at issue and the undisputed factual record, and having held oral argument, the court finds that CMC's claims are not covered. Fireman's Fund's motion is therefore granted; CMC's is denied.
Summary judgment is properly granted when the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.
On May 24, 2013, CMC personnel performed neurosurgery on a patient. Several months after the surgery, CMC learned that the patient was experiencing symptoms consistent with Cruetzfeldt-Jakob Disease ("CJD"), a communicable, incurable and fatal neurological disease. A lab test in mid-August 2013 established that the patient likely had CJD. The patient died soon after and post-mortem analysis confirmed the CJD diagnosis. CMC also determined that eight patients had undergone neurosurgery at CMC since May 24, 2013. CMC had two sets of neurosurgery instruments, so it was possible that some, none, or all of these eight patients underwent surgery with the same instruments used on the CJD patient, potentially exposing them to the disease.
CMC reported the incident to the New Hampshire Department of Health and Human Services ("New Hampshire HHS"), as required by law because CJD is a communicable disease. Representatives from New Hampshire HHS met daily with CMC personnel to formulate a response. Since it could not be determined which of the two surgical kits was used on the original patient, New Hampshire HHS advised CMC that both kits had to be decontaminated, a process that will result in the destruction of the instruments.
Aside from quarantining the affected instruments and issuing various notifications to the public and the eight post-incident surgical patients, CMC undertook no other action, such as additional decontamination, evacuation or operating room closure. CMC was, however, forced to suspend its neurosurgery program from August 16, 2013 until February 24, 2014, when it completed its purchase of new instruments.
CMC notified Fireman's Fund of a potential claim as soon as it became aware of the CJD incident, and later filed a formal claim for the loss of the surgical instruments and losses occasioned by the suspension of CMC's neurosurgery program. Fireman's Fund denied the claim as a non-covered loss, and also denied CMC's subsequent request to reconsider its position. CMC filed suit in New Hampshire Superior Court in March 2014. Fireman's Fund timely removed the case to this court.
During the relevant time period, Fireman's Fund insured CMC pursuant to a Commercial Property policy. As pertinent to this case, the policy includes two endorsements. The first is a Health Care Extension Endorsement, which, in turn, includes Communicable Disease Coverage, which provides, in relevant part:
(Emphasis in original).
The policy also contains a Crisis Management Coverage Extension Endorsement, which obligates Fireman's Fund to cover certain losses resulting from a "covered crisis event." The pertinent policy provision defines such an event as:
(Emphasis in original).
As is often the case in insurance policies, the emphasized terms have been assigned particular meanings. "Premises" is defined as "that part of the location you occupy." The Endorsement defines "communicable disease" as "any disease caused by a biological agent that may be transmitted directly or indirectly from one human or animal to another" and defines "communicable disease event" as an "event in which a
The parties agree that New Hampshire law controls this dispute. Therefore, the insurer, Fireman's Fund, bears the burden of proving that CMC's claim is not covered.
The interpretation of insurance policy language is a question of law for the court to determine.
Fireman's Fund makes several arguments in support of its position that the policy's Communicable Disease Coverage does not apply to CMC's claim. Fireman's Fund's overall point, however, is that the CJD incident did not constitute a "communicable disease event," as that term is defined in the policy. The court agrees.
As previously noted, the policy defines a "communicable disease event" as "an event in which a
CMC argues that no policy language would lead a reasonable insured to conclude that coverage to the instruments would only be triggered if the entire premises were disinfected, decontaminated or evacuated. To the contrary, the plain language leads precisely to that conclusion.
Restating the relevant provision, the policy defines "premises" as "that part of the location you occupy." Engrafting that definition onto that of a "communicable disease event" yields "an event in which a public health authority has ordered that
Given this policy language, the existence of a "communicable disease event" serves as an important gateway to coverage. But CMC essentially ignores this step and offers no reasonable explanation as to how surgical instruments can be considered "premises," a term which connotes a location. Instead, CMC relies on the policy's coverage for damage to insured property— such as surgical instruments—
Finally, CMC invites the court to find ambiguity by citing internal Fireman's Fund communications showing that there was, at some point in the claims handling process, disagreement among Fireman personnel as to the breadth of the definition of "premises," with two Fireman's Fund employees seemingly favoring CMC's position. The court declines the invitation as it is improper to resort to such extrinsic evidence where, as here, the policy provision is not facially ambiguous.
Against this backdrop, the court finds that the Fireman's Fund's Communicable Disease Coverage does not cover CMC's claim.
CMC argues that the Crisis Management Coverage Extension Endorsement covers the losses it sustained when it had to suspend its neurosurgery program in the absence of surgical instruments. Once again, though, the policy language does not support such a conclusion. While CMC is correct that the policy covers various losses caused by "suspension of operations," such suspension must be the result of a "covered crisis event," which requires "closure of the covered premises." CMC argues that coverage of "suspension" is internally inconsistent with the requirement of "closure," and that the provision is therefore ambiguous. Relatedly, it argues that Fireman's Fund's position ignores the "suspension" coverage. The court finds both arguments wanting. The policy is clear that only "a suspension . . . caused by or result[ing] from a `covered crisis event'" is covered. Here, again, CMC's argument ignores the threshold requirement of a "covered crisis event"—defined as requiring closure of the premises—and focuses solely on the resulting damage. Similarly, any inconsistency between coverage for "suspension of operations" and "closure of premises" is irrelevant because only the latter term in contained within the threshold definition of "covered crisis event." Thus, CMC's loss is not covered under the Crisis Management Coverage Extension Endorsement.
Eschewing, as it must, "linguistic gymnastics," the court finds that, as relevant to CMC's claims, the Fireman's Fund policy is not ambiguous and does not cover those claims. Accordingly, Fireman's Fund's motion for summary judgment