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Monday, June 21, 2010

Ind. Decisions - 7th Circuit issues one Indiana opinion today, involving a doctor much in the news in NW Indiana, and the relationship between the federal and state actions

In Medical Assurance Co v. Amy Hellman (ND Ind., Sharp), a 22-page opinion, Judge Wood writes:

Dr. Mark Weinberger maintained a prosperous ear, nose, and throat practice (commonly called “ENT” by people whose first loyalty is not to J.R.R. Tolkien) in Merrillville, Indiana. Unfortunately, that was not enough for him; he supplemented his income by using his practice to defraud numerous insurance companies of millions of dollars. In September 2004, while vacationing with his wife in Greece, Weinberger “went for a run” and did not come back. At the time, it seemed that Weinberger had no intention of returning to the United States, in all likelihood because he was facing $5.7 million in creditor claims and 22 criminal counts of billing fraud upon his return. The U.S. government took various steps, including having an international arrest warrant issued, to locate Weinberger. The parties have informed us that Weinberger was arrested in Italy in December 2009, he has been extradited to the United States, and he is now facing health care fraud charges in the Northern District of Indiana. These facts, however, are of only peripheral concern to us for the present case.

Criminal charges are not the only allegations pending against Weinberger. He is also facing more than 350 medical malpractice claims, most of which were filed after his disappearance. These claims have been proceeding through Indiana’s medical malpractice process. Weinberger’s medical malpractice insurance carrier, the Medical Assurance Company, Inc. (“Medical Assurance”), has been conducting his defense, but Weinberger’s disappearance prompted it to file this suit. The insurance contracts between Medical Assurance and Weinberger include a typical cooperation clause, which requires Weinberger to participate in his defense. Needless to say, Weinberger was not cooperating during his extensive European “vacation.” Frustrated, Medical Assurance brought a declaratory judgment action in federal court in Indiana asking the court to declare that Weinberger breached his responsibilities under the contract and therefore Medical Assurance no longer has a duty to defend or indemnify him.

The district court was concerned that such a declaration would intrude too severely on the state medical malpractice actions. It thought that Medical Assurance could not show that Weinberger’s lack of cooperation was prejudicing the company without improperly interfering with the state cases. It therefore decided to refrain from going forward pending the resolution of the state court proceedings, and it issued a stay of the federal proceedings. In this appeal, Medical Assurance argues that the court erred in doing so and that it should have proceeded to resolve the merits of the declaratory judgment action. We conclude that Medical Assurance is correct. Although district courts enjoy some discretion over requests for declaratory judgments, that discretion is not unlimited. We therefore remand this case to the district court with instructions to lift the stay and to proceed to the merits. In so doing, the court will be able to take into account Weinberger’s return to Indiana and any other pertinent developments. defend or indemnify him.

Posted by Marcia Oddi on June 21, 2010 02:28 PM
Posted to Ind. (7th Cir.) Decisions