IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 11-31032

CAMBRIDGE INTEGRATED SERVICES GROUP, INCORPORATED,

Plaintiff-Appellant

v.

CONCENTRA INTEGRATED SERVICES, INCORPORATED,

Defendant-Appellee

______________________

Appeal from the United States District Court

 for the Western District of Louisiana

Before WIENER, ELROD, and SOUTHWICK, Circuit Judges.

WIENER, Circuit Judge:

Plaintiff-Appellant Cambridge Integrated Services Group, Inc.

(“Cambridge”) appeals the district court’s grant of Defendant-Appellee Concentra

Integrated Services, Inc.’s (“Concentra”) motion for summary judgment. 

Cambridge and Concentra owed each other contractual duties of defense and

indemnification. Cambridge and a subsidiary of Concentra were later named as

defendants in a state court lawsuit. Concentra settled and obtained a release

that benefitted Cambridge to the extent of Concentra’s indemnification

obligation; however, Concentra rejected Cambridge’s tender of defense. 

Cambridge filed suit in federal court seeking a declaratory judgment that

United States Court of Appeals

Fifth Circuit

F I L E D

September 26, 2012

Lyle W. Cayce

Clerk

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Concentra owed it contractual defense and indemnification for the costs that

Cambridge incurred in settling the state-court litigation. The district court

granted summary judgment in favor of Concentra, holding that the settlement

satisfied its duty to defend and indemnify Cambridge. We affirm in part and

reverse in part, and we remand for further proceedings.

I. Facts & Proceedings

A. The Services Agreement

Cambridge is a third-party administrator of workers compensation claims. 

Concentra provides services to administrators like Cambridge. Concentra and

Cambridge entered into a Services Agreement in which Concentra agreed to 

review medical bills, recommend payments, and provide access to preferred

provider organization (“PPO”) discounts to Cambridge’s clients. Concentra also

agreed“to indemnify, defend and hold [Cambridge] harmless from and against

any and all claims ... including, reasonable attorneys’ fees and litigation expense

arising or resulting from any alleged act, error or omission, including any

intentional tort, willful misconduct, negligence or gross negligence by”

Concentra. Reciprocally, Cambridge agreed to defend and indemnify Concentra 1

for claims based on Cambridge’s alleged acts, errors, and omissions. In essence,

each party owed the other defense and indemnification only for claims based on

its own acts.

Paragraph 9.3(c) of the Services Agreement extended Concentra’s defense

and indemnification obligations to unclear allegations of wrongdoing:

If the alleged wrongful conduct cannot be determined from the

allegations as pleaded, CONCENTRA agrees to defend and

indemnify pursuant to the language in paragraph (a) above, of this

A separate provision reiterated that Concentra owed defense and indemnity for claims 1

against Cambridge “involv[ing] any alleged act, error or omission, including any intentional

tort, willful misconduct, negligence or gross negligence by” Concentra. 

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Agreement, until the conduct complained of is clarified during the

course of the litigation, at which time the defense and indemnity

obligation shall promptly be determined under paragraphs (a) and

(b) above; provided, however, in the event it is determined that

[Cambridge] is obligated to indemnify CONCENTRA, [Cambridge]

shall promptly reimburse CONCENTRA for fees and expenses

incurred by CONCENTRA up to the time of such determination.

B. The Gunderson Case and the Focus Settlement

In 2004, Cambridge and FOCUS Healthcare Management Inc. (“Focus”),

a subsidiary of Concentra, were among a number of parties named as defendants

in Clark A. Gunderson, M.D., et al. v. F.A. Richard & Associates, Inc., et al., a

suit filed in the state district court of Calcasieu Parish, Louisiana (“Gunderson”). 

The Gunderson plaintiffs, a proposed class of medical providers, alleged that the

defendants imposedPPOreductions on workers compensation payments without

complying with the notice requirements of Louisiana’s Any Willing Providers

Act. Cambridge was also a named defendant in related proceedings filed in 2

Louisiana’s Office of Workers’ Compensation (“OWC”) by members of the

Gunderson class.3

In January 2007, Focus and Concentra settled with the Gunderson

plaintiffs for $12 million (“the Focus Settlement”). Although Cambridge was not

a party to the Focus Settlement and did not participate in negotiating it, the

Gunderson plaintiffs also released their claims for “Liability” against Cambridge. 

The Focus Settlement defined the liability released by the plaintiffs as follows:

 La. Rev. Stat. § 40:2203.1. 

2

The Gunderson plaintiffs also asserted claims arising from workers compensation

3

payments made by Cambridge but reviewed by contractors other than Concentra or its

subsidiary.

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With respect to the Related Parties, the term “Liability” shall mean 4

and refer to all claims and liabilities of the Related Parties arising

out of the Episode, regardless of whether the claims, liabilities,

and/or resulting damages are not yet known or manifested or

whether such claims, liabilities, and/or resulting damages are

known or unknown, asserted or unasserted, but only to the extent

that Focus, Concentra, and/or Broadspire is liable to the Related

Parties for contribution, indemnity, or by contract as a result of the

Episode and specifically does not include the Independent Liability

of the Related Parties under La. R.S. 40:2201, et seq. and La. R.S.

23:1021, et seq.

(emphasis in original). 

5

The Gunderson plaintiffs did not, however, release their claims against

Cambridge for any “Independent Liability,” defined as follows:

The term “Independent Liability” shall mean and refer to any and

all liability of a Related Party, other than that for which Focus,

Concentra, and/or Broadspire is liable through indemnification,

contribution, or contract.

Finally, Paragraph 8.6 of the Focus Settlement prohibited the Gunderson

plaintiffs from settling with Cambridge without obtaining a release of

Cambridge’s claims against Concentra:

 The parties to this appeal agree that Cambridge is a Related Party. 4

The “Episode” is defined to “mean and refer to and include each and every event,

5

circumstance, and/or situation upon which allegations have been made or could have been

made for underpayment, penalties, recovery of damages, or other relief or remedy, arising out

of the alleged violations of one or more of the requirements of La. R.S. 40:203.1 and/or the

Louisiana Workers’ Compensation Law, La. R.S. 23:1021, et seq., during the period from

January 1, 2000 through the Effective Date as a result of the use of a PPO owned, operated,

or contracted with Focus or Concentra.”

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The Class, each Class Member, and the PSC agree not to

compromise, settle, release, waive, forfeit, surrender, acquit,

dismiss, or discharge any claim against a Related Party, without

first obtaining an express, written agreement by which such Related

Party compromises, settles, releases, waives, forfeits, surrenders,

acquits, dismisses, and forever discharges any and all claims for

contribution, indemnity, subrogation, breach of contract, statutory

violation, and/or tort related to the Episode that it may have against

Focus, Concentra, and/or Broadspire.

The state court granted preliminary approval of the Focus Settlement in

January 2007.

The Focus Settlement did not result in Cambridge’s dismissal from

Gunderson or from any OWC proceedings. Cambridge took the position that (1)

it had contractually delegated the state-law notice duty to Concentra, (2) it

could seek indemnification from Concentra for any claims against it, and (3) the

Gunderson plaintiffs’ post-settlement claims had therefore been released. 

Accordingly, Cambridge wrote to Concentra in January 2008, requesting

“written confirmation thatFocus’s indemnity obligations specifically apply to the

Louisiana class action and OWC proceedings so that Cambridge can seek

appropriate orders dismissing it from these Louisiana litigations.” Concentra

declined to provide that confirmation. Early in February 2008, Cambridge

formally demanded defense and indemnification from Concentra with respect to

Gunderson and the OWC proceedings. Concentra refused to provide a defense

or indemnification.

The following month, Cambridge filed the instant declaratory judgment

action in the district court, seeking a holding that Concentra owed it defense and

indemnification for any future liability in Gunderson and in the OWC

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proceedings. Concentra sought and obtained a stay of this action, and

Gunderson proceeded against Cambridge.

C. The Cambridge Settlement

Cambridge did not assert the Focus Settlement release as a defense in

Gunderson. Instead, in November 2009, Cambridge settled with the Gunderson

plaintiffs (“the Cambridge Settlement”). The Cambridge Settlement 6

incorporated Paragraph 8.6 of the Focus Settlement, but it also included

language appearing to reserve some claims against Concentra:

The Cambridge Interests agree to release [Concentra ] to the extent,

and only to the extent, that such release is required by Paragraph

8.6 of the Focus Settlement Agreement with Plaintiffs. The

Cambridge Interests retain all rights to assert claims outside of

Paragraph 8.6, including claims arising from [Concentra's] breach

of their contractual, tort, or indemnity obligations with respect to

the defense of the Gunderson matter, the OWC proceedings, or any

applicable arbitration proceedings.

In May 2010, Cambridge sought and obtained a lift of the stay in the

instant district court declaratory action and amended its complaint to pursue

damages for the amounts it spent defending and settling Gunderson. Concentra

responded by filing a motion for summary judgment, contending that the Focus

Settlement satisfied its defense and indemnification obligations to Cambridge

by releasing Cambridge from any possible liability for which indemnification

might be owed. Concentra asserted in the alternative that Cambridge had

released all claims for defense and indemnification in the subsequent Cambridge

Settlement. 

Cambridge paid a total of $10,000,000 to settle Gunderson. Because Gunderson also

6

involved claims arising out of workers compensation payments which Concentra did not

review, Cambridge seeks only $5,000,000 of the total settlement amount from Concentra.

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The district court granted Concentra’s motion for summary judgment,

holding that Concentra had satisfied its defense and indemnification duties

under the Services Agreement by negotiating the Focus Settlement and

obtaining, for the benefit of Cambridge, a release of all Liability for which

Cambridge could have received indemnification. Cambridge timely appealed.

II. Analysis

A. Standard of Review

We review a district court’s grant of summary judgment de novo, applying

the same legal standards as the district court. Summary judgment is 7

appropriate when “there is no genuine dispute as to any material fact and the

movant is entitled to judgment as a matter of law.” When reviewing a summary 8

judgment, we construe all the evidence and reasonable inferences in the light

most favorable to the nonmoving party. We are “not limited to the district 9

court’s reasons for its grant of summary judgment” and “may affirm the district

court’s summary judgment on any ground raised below and supported by the

record.” 

10

Concentra urges that because “state law governs issues in dispute, some

deference is due to the district court’s interpretation of the law of the state in

which it sits.” The Supreme Court’s opinion in Salve Regina College v. Russell 11

rejected that proposition. Thus, our more recent cases “afford no deference to 12

United States v. Caremark, Inc., 634 F.3d 808, 814 (5th Cir. 2011).

7

 Fed. R. Civ. P. 56(a). 8

Amazing Spaces, Inc. v. Metro Mini Storage, 608 F.3d 225, 234 (5th Cir. 2010).

9

Aryain v. Wal-Mart Stores Tex. LP, 534 F.3d 473, 478 (5th Cir. 2008).

10

Villanueva v. CNA Ins. Cos., 868 F.2d 684, 685 (5th Cir. 1989).

11

499 U.S. 225, 234, 240 (1991) (holding that “appellate deference to the district court’s 12

determination of state law is inconsistent with the principles underlying this Court's decision

in Erie” and that a court of appeals “err[s] in deferring to the local expertise of the district

7

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the district court’s determinations of issues of law of the state in which that

court’s chambers are located.”13

B. Duty to Indemnify

“Under Louisiana law, indemnity provisions are construed in accordance

with general rules governing contract interpretation. When the terms of a

contract are unambiguous and lead to no absurd consequences, we interpret

them as a matter of law.” The district court held as a matter of law that the 14

terms of the Focus Settlement satisfied Concentra’s contractual duty to defend

and to indemnify Cambridge. We agree with respect to the duty to indemnify,

but we disagree with respect to the duty to defend.

Through the Focus Settlement, Concentra obtained a release of the

Gunderson plaintiffs’ claims against Cambridge for “Liability,” but not for

“Independent Liability.” We repeat for emphasis that, in the Focus Settlement,

Liability is defined as all claims for which Concentra owed Cambridge

indemnification; Independent Liability is defined as everything else. Thus, the

scope of the release was defined by and coextensive with Concentra’s duty to

indemnify Cambridge under the Services Agreement. Any claim against

Cambridge for which it could have sought indemnification ceased to exist by

operation of the release and under res judicata, thus relieving Cambridge of any

liability for Concentra’s conduct. We agree with the district court that

court”).

Bayou Steel Corp. v. Nat’l Union Fire Ins. Co. of Pittsburgh, Pa., 642 F.3d 506, 509 13

(5th Cir. 2011).

Liberty Mut. Ins. Co. v. Pine Bluff Sand & Gravel Co., 89 F.3d 243, 246 (5th Cir. 14

1996).

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Concentra preemptively satisfied its duty to indemnify Cambridge by securing

the release from the Gunderson plaintiffs on Cambridge’s behalf.15

C. Duty to Defend

The district court did not distinguish between Concentra’s duty to

indemnify and its duty to defend. But “[t]he duty to indemnify and the duty to

defend clearly are separate and distinct duties.” We conclude that summary 16

judgment was inappropriate with respect to the issue of Concentra’s duty to

defend Cambridge.

Concentra owed a duty to defend Cambridge against “any and all claims

... arising or resulting from” Concentra’s conduct. And, if the conduct alleged to

give rise to a claim could not be determined from the pleadings, Concentra’s duty

to defend continues “until the conduct complained of is clarified during the

course of the litigation.” By definition, all claims for Liability that were 17

released arose from Concentra’s conduct. Therefore, if any claims that had been

released were subsequently asserted against Cambridge, or if it was unclear

from the allegations whether the subsequently asserted claims had been

released, Concentra remained contractually obligated to provide Cambridge a

defense.

After the Focus Settlement, the Gunderson plaintiffs pursued claims that

they contended were for unreleased Independent Liability arising solely from

Cambridge’s own conduct. And, the Gunderson plaintiffs presumably would not

See La. Civ. Code art. 1854 (“Performance by the obligor extinguishes the 15

obligation.”).

Fed. Ins. Co. v. St. Paul Fire & Marine Ins. Co., 638 So. 2d 1132, 1137 (La. Ct. App.

16

1994).

Concentra argues that paragraph 9.3(c) of the Services Agreement was an “automatic 17

self-termination provision.” Concentra cites no authority for that proposition and does not

explain how the duty to defend could be extinguished before “the conduct complained of is

clarified during the course of the litigation.”

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knowingly pursue claims that had been released. But Cambridge was not a

party to the Focus Settlement and thus was not bound to agree with the

Gunderson plaintiffs that it had any unreleased Independent Liability

whatsoever. Rather, just as the Gunderson plaintiffs were entitled to attempt

to prove any Independent Liability that they could based on Cambridge’s own

conduct, Cambridge was entitled to prove that the claims arose solely from

Concentra’s conduct and thus had been totally released. 

When, on this record, we draw every reasonable inference in favor of

Cambridge, we cannot say as a matter of law that all of the claims asserted by

the Gunderson plaintiffs following execution of the Focus Settlement arose

exclusively from Cambridge’s conduct. In other words, the nature of those 18

plaintiffs’ post-settlement allegations was unclear: The release might have

served as a defense to some of those claims. As the matter thus remained to 19

be clarified through litigation, Concentra’s duty to defend was triggered. By

rejecting Cambridge’s tender, Concentra breached its duty to defend until the

conduct underlying those claims was “clarified during the course of the

litigation.” Accordingly, the district court erred as a matter of law when it

granted summary judgment to Concentra with respect to its duty to defend

Cambridge. 

D. The Cambridge Settlement Release

Although the district court granted summary judgment on an incorrect

basis, we may affirm such a judgment “on any grounds supported by the

At a state court hearing, for example, counsel for the Gunderson plaintiffs indicated 18

that the post-settlement claims needed to be clarified during the course of the litigation: “Now,

until you go case by case with each doctor and the bills and what happened and what didn’t

happen, we won’t know what else they may have done wrong, and they would be responsible

for under independent liability.”

The release would not have been a complete defense to all of the Gunderson plaintiffs’

19

claims because, as explained above, some of the class members received payments which had

not involved Concentra or its subsidiary.

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record.” The district court did not reach Concentra’s alternative argument that 20

Cambridge released its claims for indemnification or breach of the Services

Agreement through the Cambridge Settlement. A release in a written

settlement agreement is subject to the general rules of Louisiana contract

interpretation. “Interpretation of a contract is the determination of the 21

common intent of the parties.” As Louisiana law construes releases narrowly, 22

Concentra has the burden of proof “to establish the requisites for a valid

compromise, including the parties’ intent to settle the differences being asserted

in the action” to which the release is asserted as a defense.23

Paragraph 8.6 of the Focus Settlement contractually prohibited the

Gunderson plaintiffs from settling with Cambridge without also securing a

release of Cambridge’s claims against Concentra. Paragraph 7(D) of the

Cambridge Settlement incorporates this requirement and releases Cambridge’s

claims against Concentra “to the extent, and only to the extent, that such release

is required by Paragraph 8.6 of the Focus Settlement Agreement.” But

Paragraph 7(D) also states that Cambridge “retain[s] all rights to assert claims

outside of Paragraph 8.6, including claims arising from Focus, Concentra, or

Broadsphire’s [sic] breach of their contractual, tort, or indemnity obligations

with respect to the defense of the Gunderson matter, the OWC proceedings, or

any applicable arbitration proceedings.”

Paragraph 7(D) is in tension with itself. The first sentence expresses

Cambridge’s intent to release all claims against Concentra; the second sentence,

however, expresses an intent to retain an indemnification claim against

Lifecare Hosps., Inc. v. Health Plus of La., Inc., 418 F.3d 436, 439 (5th Cir. 2005).

20

Young v. Equifax Credit Info. Servs., Inc., 294 F.3d 631, 637 (5th Cir. 2002).

21

 La. Civ. Code art. 2045. 22

See Young, 294 F.3d at 637.

23

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Concentra. Construing Paragraph 7(D) narrowly, as is required by Louisiana

law, we find it internally inconsistent and ambiguous as to which claims

Cambridge intended to release. Accordingly, we cannot say that Concentra has

borne its burden to show that Cambridge’s present claims come within the ambit

of the release. The summary judgment cannot be affirmed on that basis. 

As a drafter of the Cambridge Settlement, Cambridge is at least partially

responsible for the ambiguity in Paragraph 7(D). Perhaps it is problematic to

allow Cambridge to benefit from that ambiguity, but on these facts, the only

reason a release exists at all is because the original Focus Settlement

preemptively required the Gunderson plaintiffs to secure one. Cambridge was

not a party to the Focus Settlement and was under no independent contractual

obligation to release Concentra. If the release does not achieve all the results

that Concentra wanted, its remedy should lie against the Gunderson plaintiffs.

E. Remand

Because we must remand on the issue of the duty to defend, Cambridge

is entitled to prove the quantum of damages caused by that breach, including

fees and costs of defense in Gunderson. It is impossible for us to tell from the

present record what those defense costs or other damages might have been. This

is particularly true because Concentra’s duty to defend would have lasted only

“until the conduct complained of is clarified during the course of the litigation.” 

The district court is in the better position to address these fact-intensive issues

on remand.

Concentra raises other arguments in favor of affirming the summary

judgment, none of which avoid the need for a remand. First, Concentra claims

that the PPO discounts it recommended to Cambridge pursuant to the Services

Agreement, which were the subject of at least part of the claims in Gunderson,

were permissible under Louisiana law. But Cambridge’s suit is premised on

breach of the duty to defend under the Services Agreement. Whether

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Concentra’s conduct complied with Louisiana law may have been a defense to

the state-law claims in Gunderson, but that does not defeat Concentra’s duty to

assert that defense on Cambridge’s behalf.

Second, Concentra claims that Cambridge failed to mitigate its damages

when it did not assert the Focus Settlement release as a defense in Gunderson. 

According to Concentra, if the Gunderson plaintiffs were indeed pursuing claims

for released Liability, then Cambridge had a complete defense and could have

mitigated all of its damages instead of settling the claims. But even if 24

Cambridge had successfully asserted the release as a defense, it still would have

incurred defense fees and costs that Concentra was contractually obligated to

provide, for the reasons explained above. Cambridge’s strategic decision to settle

instead of asserting the release might be relevant to a determination whether

Concentra is liable for any portion of the amounts that Cambridge paid to settle

the case, or whether Cambridge’s defense fees and costs could have been reduced

by promptly asserting the release as a defense. It does not, however,

categorically defeat the claim for the damages Cambridge actually incurred in

litigating Gunderson after Concentra breached the Services Agreement by

rejecting the tender of defense. We leave the question of damages for the district

court to consider in the first instance on remand.

III. Conclusion

For the foregoing reasons, we affirm the summary judgment of the district

court dismissing Cambridge’s claims against Concentra for indemnification, but

we reverse the summary judgment with respect to Concentra’s duty to defend.

AFFIRMED IN PART, REVERSED IN PART AND REMANDED.

Conversely, if the release did not defeat any of the Gunderson plaintiffs’ claims 24

because those claims were for unreleased Independent Liability, then those claims fell outside

Concentra’s duty to defend and indemnify.

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