‐1‐ 

IN THE UNITED STATES DISTRICT COURT 

FOR THE NORTHERN DISTRICT OF INDIANA 

SOUTH BEND DIVISION 

WESTFIELD INSURANCE COMPANY, 

 Plaintiff, 

 vs. 

ORTHOPEDIC AND SPORTS 

MEDICINE CENTER OF NORTHERN 

INDIANA, INC., et al., 

 Defendants. 

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NO. 3:14–CV-1548 

OPINION AND ORDER

 This matter is before the Court on the Motion for Summary 

Judgment filed by Plaintiff Westfield Insurance Company 

(“Westfield”), on March 31, 2016 (DE #64). For the reasons set 

forth below, Westfield’s Motion for Summary Judgment (DE #64) is 

GRANTED. The Clerk of the Court is DIRECTED to enter a DECLARATORY 

JUDGMENT in favor of Westfield and against all defendants declaring 

that no coverage exists under Commercial Package Policy No. TRA 

3413228 based on the personal and advertising injury, umbrella 

personal and advertising injury, bodily injury and property 

damage, and umbrella bodily injury and property damage coverage 

provisions, and thus, Westfield has no duty to defend or indemnify 

defendants Orthopedic and Sports Medicine Center of Northern 

Indiana, Inc. (“OSMC”), ASC Surgical Ventures, LLC (“ASC”), or 

their physicians (“OSMC Physicians”) with respect to the claims 
‐2‐ 

asserted by the other individual defendants in the lawsuits filed 

in Elkhart Superior Court and the proposed medical malpractice 

complaints filed with the Indiana Department of Insurance. 

BACKGROUND 

NECC was a compounding pharmacy that made preservative-free 

methylprednisolone acetate (“MPA”). MPA is an epidural steroid 

medication that is administered by injection for pain management. 

Defendants OSMC and its affiliate ASC purchased preservative-free 

MPA from NECC to treat patients with back pain. In September 2012, 

a multistate outbreak of fungal meningitis, lumbar fungal 

infections and related injuries arose as a result of patients 

receiving injections of contaminated preservative-free MPA that 

had been compounded by NECC. Patients injected with the 

contaminated MPA suffered bodily injury or death. 

Over 150 patients, spouses of patients, parents of patients, 

personal representatives of deceased patients, and powers of 

attorneys who are residents of Indiana or Michigan (together, 

“Individual Defendants”) filed lawsuits against OSMC, ASC, and 

OSMC Physicians (together, “OSMC Defendants”) in Elkhart Superior 

Court (“Lawsuits”). The Lawsuits allege the bodily injury or death 

of patients as a result of being injected with contaminated 

preservative-free MPA that had been compounded by NECC and ordered 

and administered by the OSMC Defendants. Most of the Individual 
‐3‐ 

Defendants also filed proposed complaints with the Indiana 

Department of Insurance alleging similar claims (“Medical 

Malpractice Complaints” or “Malpractice Complaints”). 

The OSMC Defendants requested that Westfield defend and 

indemnify them against the Lawsuits and Medical Malpractice 

Complaints pursuant to several insurance policies. Westfield 

refused to defend the OSMC Defendants, and filed the instant 

declaratory judgment action. Westfield now moves for summary 

judgment, asking the Court to find that the insurance policies do 

not provide coverage for the claims in the Lawsuits and Medical 

Malpractice Complaints, and that Westfield has no duty to defend 

or indemnify the OSMC Defendants in those actions. 

The OSMC Defendants do not oppose Westfield’s motion for 

summary judgment. The Individual Defendants oppose this motion in 

part. (DE #70.) Intervenor Stephen W. Robertson, Commissioner, 

Indiana Department of Insurance, as Administrator of the Indiana 

Patients’ Compensation Fund (“PCF”), filed a response to 

Westfield’s motion for summary judgement. (DE #79.) Westfield 

filed reply briefs to the Individual Defendants’ opposition and 

PCF’s response brief. (DE #73, DE #80.) 

On November 7, 2016, Westfield filed a notice of additional 

authority in support of its summary judgment motion, and attached 

Robertson v. Anonymous Clinic, 63 N.E.3d 349, 361 (Ind. Ct. App. 

2016). (DE #81.) The Individual Defendants objected to the 
‐4‐ 

Court’s consideration of Robertson because the appellant PCF had 

filed a petition to transfer to the Indiana Supreme Court. (DE 

#82.) The petition to transfer was denied on February 16, 2017, 

and the Court of Appeals certified Robertson on February 22, 2017. 

(See DE #83.) Therefore, the Individual Defendants’ objection is 

moot. 

SUMMARY JUDGMENT STANDARD 

 Summary judgment must be granted when “there is no genuine 

dispute as to any material fact and the movant is entitled to 

judgment as a matter of law.” Fed. R. Civ. P. 56(a). A genuine 

issue of material fact exists when “the evidence is such that a 

reasonable jury could return a verdict for the nonmoving party.” 

Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S. Ct. 

2505, 91 L. Ed. 2d 202 (1986). Not every dispute between the 

parties makes summary judgment inappropriate; “[o]nly disputes 

over facts that might affect the outcome of the suit under the 

governing law will properly preclude the entry of summary 

judgment.” Id. To determine whether a genuine dispute of material 

fact exists, the Court must construe all facts in the light most 

favorable to the non-moving party and draw all reasonable 

inferences in that party’s favor. See Ogden v. Atterholt, 606 

F.3d 355, 358 (7th Cir. 2010). A party opposing a properly 

supported summary judgment motion may not rely on allegations in 

her own pleading, but rather must “marshal and present the court 
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with the evidence she contends will prove her case.” Goodman v. 

Nat'l Sec. Agency, Inc., 621 F.3d 651, 654 (7th Cir. 2010). 

“[I]nferences relying on mere speculation or conjecture will not 

suffice.” Stephens v. Erickson, 569 F.3d 779, 786 (7th Cir. 2009) 

(citation omitted). The party with the burden of proof on an issue 

can obtain a summary judgment “only where the evidence is so onesided that it points inescapably” in the movant’s favor, and “every 

reasonable jury” would decide that the movant has met its burden 

of proof. Thorne v. Member Select Ins. Co., 899 F. Supp. 2d 820, 

824 (N.D. Ind. 2012) (citations omitted). If the non-moving party 

fails to establish the existence of an essential element on which 

he bears the burden of proof at trial, summary judgment is proper. 

Massey v. Johnson, 457 F.3d 711, 716 (7th Cir. 2006). 

“Interpretation of a written contract, including a contract 

of insurance, typically presents a question of law suitable for 

resolution on motions for summary judgment.” Royer v. USAA Cas. 

Ins. Co., 781 F. Supp. 2d 767, 770 (N.D. Ind. 2011) (citation 

omitted). “When the question presented is whether an insurance 

policy provides liability coverage for a particular claim or 

lawsuit, the central material facts are ordinarily the terms of 

the written contract and the contents of the plaintiff's 

allegations in the underlying litigation.” Id. (citation 

omitted). 
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FACTS 

The Court finds the following undisputed facts to be supported 

by admissible evidence in the record:1

OSMC operates a medical clinic in Elkhart County, Indiana. 

ASC is the operating entity for the clinic where OSMC’s physicians 

perform orthopedic surgeries and pain management procedures, 

including epidural steroid injections. ASC ordered the epidural 

steroid medication that OSMC’s physicians administered to 

patients, including MPA. 

In 2005, OSMC’s physicians had been administering 

preservative-based MPA to patients. OSMC’s physicians became 

concerned about reports in medical literature that injections of 

preservative-based MPA could cause arachnoiditis and injury to the 

spinal cord. Based on these concerns, the physicians recommended 

to ASC’s board of directors that they switch to using preservativefree MPA. ASC’s board of directors was comprised of ASC’s Chief 

                                                            

1 The Court notes that neither the Individual Defendants nor PCF 

filed a “Statement of Genuine Disputes” in their response briefs 

or appendices as required by the Local Rules. See N.D. Ind. L.R. 

56-1(b). While their response briefs include statements of fact, 

neither brief identifies material facts that they contend are 

genuinely disputed in connection with Westfield’s Motion for 

Summary Judgment. This approach does not comply with Local Rule 

56–1(b). The Court is “not obliged . . . to scour the record 

looking for factual disputes.” Waldridge v. Am. Hoechst Corp., 24 

F.3d 918, 922 (7th Cir. 1994). Nevertheless, the Court has 

attempted to sift through the parties’ versions of events, 

determine which, if any, facts the parties dispute, and construe 

disputed facts in the nonmovants’ favor if they provide citations 

to evidence in the record. 
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Executive Officer (“CEO”) and eleven physicians who are OSMC staff 

members. ASC’s board of directors approved the switch to 

preservative-free MPA. 

Dr. Gene W. Grove Sr., an OSMC physician and the medical 

director for ASC, testified that ASC’s decision to use 

preservative-free MPA compounded by NECC was a “medical decision” 

and a “medical judgment” made by himself and “other physicians on 

the ASC board [of directors].” (DE #67-3 at 30-31.) ASC had been 

using NECC, a compounding pharmacy located in Massachusetts, as a 

supplier of other medications, and had vetted NECC through its 

pharmacist consultant, Elkhart General Hospital and Elkhart 

General Hospital’s Pharmacy and Therapeutics Committee. ASC’s 

board of directors made the decision to use NECC as a supplier.2 

OSMC, through ASC, began ordering preservative-free MPA from NECC 

in approximately 2006. ASC’s board of directors conducted annual 

                                                            

2

 The Individual Defendants’ statement of facts (entitled, “Factual 

Background”) does not address the OSMC Defendants’ decision to use 

NECC as a supplier. PCF cites the testimony of Mary KauffmannKennel, the OSMC employee who ordered medications from NECC, 

regarding this decision. Ms. Kauffmann-Kennel testified that she 

“[did]n’t remember exactly that process [of who made the decision 

to use NECC as the supplier of preservative-free MPA]. My memory 

is because we were using them for a supplier of a couple of other 

things, other medications that we continued to use them for this.” 

(DE #67-4 at 12.) Westfield cites the deposition testimony of Dr. 

Grove, who testified that ASC’s board of directors made the 

decision to use NECC as a supplier, and that ASC had been using 

NECC as a supplier for other medications prior to supplying 

preservative-free MPA. (DE #67-3 at 22-23, 40-42.) The Court 

does not find the testimony of Ms. Kauffman-Kennel and Dr. Grove 

to be inconsistent. 
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reviews of medications used in OSMC’s medical center, and approved 

the continued use of preservative-free MPA. 

Preservative-free MPA was ordered from NECC using a 

prescription order form that listed each patient for each 

individual prescription of MPA that was ordered. This form was to 

be signed by a physician. Patients were injected with 

preservative-free MPA after they signed a consent form to receive 

the medical procedure. 

On September 26, 2012, NECC voluntarily recalled three lots 

of preservative-free MPA due to fungal contamination. 

Contaminated MPA had been distributed to OSMC’s medical center, 

and allegedly injected into the bodies of some OSMC patients. The 

Center for Disease Control and Prevention later confirmed more 

than 750 cases of fungal infection linked to injections of 

contaminated NECC-compounded MPA in 2012 and 2013, including over 

350 cases within the states of Indiana and Michigan. 

Lawsuits and Medical Malpractice Complaints 

Beginning in April 2014, the Individual Defendants filed 26 

Lawsuits against the OSMC Defendants in Elkhart Superior Court. 

The complaints filed in the Lawsuits (“Lawsuits’ complaints”) 

allege theories of negligence, gross negligence, negligent 

misrepresentation and omission, negligence per se for violation of 

Indiana Code § 16-42-19-16, failure to warn, punitive damages, 

medical malpractice, violation of the Indiana Deceptive Consumer 
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Sales Act, Ind. Code §§ 24-5-0.5-1 et seq., and battery. In 

opposing the instant motion for summary judgment, the Individual 

Defendants rely solely on the Lawsuits’ allegations that the OSMC 

Defendants were negligent in selecting NECC as a supplier of 

preservative-free MPA, and in managing and overseeing that 

supplier relationship. (DE #70 at 7, 11, 12, 22, 23 n.5.) They 

summarize the Lawsuits’ negligence allegations as follows: 

1. OSMC was negligent in selecting and continuing to deal 

with NECC as the latter was operating illegally under 

its Massachusetts state license; 

2. OSMC was negligent in that it should have known that 

NECC was operating as a bulk, mass manufacturer and 

as such, it could only lawfully operate pursuant to 

FDA authorization and regulation; 

3. Apart from not being properly licensed or authorized 

by either the State of Massachusetts or the FDA, NECC 

was also not accredited by any compounding 

accreditation board or other similar organization[;] 

4. OSMC also failed to perform reasonable, recommended 

and widely utilized due diligence in selecting NECC 

as a supplier of preservative-free MPA and failed to 

perform reasonable, recommended and widely utilized 

due diligence in the ongoing supplier relationship 

with NECC. 

(DE #70 at 7 (citing DE #29-5 (Amended Complaint filed in Alcozar 

v. Orthopedic and Sports Medicine Center of N. Ind., No. 20DO1-

1404-CT-72 (Elkhart Sup. Ct.)).3

                                                            

3 The Individual Defendants cite the Alcozar Amended Complaint 

throughout their response brief as representative of the Lawsuits’ 

complaints. (See DE #70 at 2 n.1, 2-7, 19 (citing DE #29-5).) 

The Court will do so as well. 
‐10‐ 

The majority of the Individual Defendants also filed proposed 

complaints of medical malpractice against the OSMC Defendants with 

the Indiana Department of Insurance, i.e., the Malpractice 

Complaints. The Malpractice Complaints allege similar claims of 

negligence, gross negligence, negligence per se, and medical 

malpractice. 

Westfield’s Insurance Policies 

Westfield issued Commercial Package Policy No. TRA 3413228 to 

OSMC and ASC in September 30, 2011 (“Policy”), and renewed it 

annually twice thereafter, for coverage through September 30, 2014 

(together, “Policies”). The Policies include commercial general 

liability (“CGL”) bodily injury and property damage coverage 

(“BI/PD”). The BI/PD provision states in part: 

We will pay those sums that the insured becomes 

legally obligated to pay as damages because of 

"bodily injury" or "property damage" to which this 

insurance applies. We will have the right and duty 

to defend the insured against any "suit" seeking 

those damages. However, we will have no duty to 

defend the insured against any "suit" seeking 

damages for "bodily injury" or "property damage" to 

which this insurance does not apply. . . . 

(DE #29-1 at 154; DE #29-2 at 142; DE #29-3 at 136.) The Policies’ 

commercial liability umbrella (“Umbrella”) BI/PD states in 

relevant part: 

We will pay on behalf of the insured the "ultimate 

net loss" in excess of the "retained limit" because 

of "bodily injury" or "property damage" to which 

this insurance applies. We will have the right and 

duty to defend the insured against any "suit" 
‐11‐ 

seeking damages for such "bodily injury" or 

"property damage" when the "underlying insurance" 

does not provide coverage or the limits of 

"underlying insurance" have been exhausted. . . . 

[W]e will have no duty to defend the insured against 

any "suit" seeking damages for "bodily injury" or 

"property damage" to which this insurance does not 

apply. . . . 

(DE #29-1 at 293; DE #29-2 at 282; DE #29-3 at 281.) The BI/PD 

and Umbrella BI/PD apply only if “[t]he ‘bodily injury’ or 

‘property damage’ is caused by an ‘occurrence’. . . .” (DE #29-1 

at 154, 293; DE #29-2 at 142, 282; DE #29-3 at 136, 281.) The 

Policies define “occurrence” as “an accident, including continuous 

or repeated exposure to substantially the same general harmful 

conditions.” (DE #29-1 at 168, 308; DE #29-2 at 156, 297; DE #29-

3 at 150, 297.) The term “suit” is defined as “a civil proceeding 

in which damages because of ‘bodily injury,’ ‘property damage’ or 

‘personal and advertising injury’ to which this insurance applies 

are alleged.” (DE #29-1 at 169, 309; DE #29-2 at 157, 298; DE 

#29-3 at 151, 298.) The term “bodily injury” is defined to include 

bodily injury, sickness or disease sustained by a person, including 

death resulting from any of these at any time. 

The Policies also include personal and advertising injury 

coverage (“PAI”), which states in part: “[w]e will pay those sums 

that the insured becomes legally obligated to pay as damages 

because of ‘personal and advertising injury’ to which this 

insurance applies. . . .” (DE #29-1 at 159; DE #29-2 at 147; DE 
‐12‐ 

#29-3 at 141.) The Umbrella PAI provision states in part, “[w]e 

will pay on behalf of the insured the ‘ultimate net loss’ in excess 

of the ‘retained limit’ because of ‘personal and advertising 

injury’ to which this insurance applies. . . .” (DE #29-1 at 298; 

DE #29-2 at 287; DE #29-3 at 286.) 

The Policies set forth several exclusions at issue in this 

matter. The BI/PD and Umbrella BI/PD include an “Expected Or 

Intended Injury” exclusion, which states that this insurance does 

not apply to “‘[b]odily injury’ or ‘property damage’ expected or 

intended from the standpoint of the insured.” (DE #29-1 at 155, 

294; DE #29-2 at 143, 283; DE #29-3 at 137, 282.) By endorsement, 

the BI/PD includes an exclusion for “Services Furnished By Health 

Care Providers” (“Health Care Services Exclusion”). The Health 

Care Services Exclusion states in relevant part: 

With respect to any operation shown in the Schedule 

[which identifies “Medical & Orthopedics”], this 

insurance does not apply to "bodily injury", "property 

damage", or "personal and advertising injury" arising 

out of: 

1. The rendering or failure to render: 

a. Medical, surgical, dental, x-ray or nursing 

service, treatment, advice or instruction . . 

. 

b. Any health or therapeutic service, 

treatment, advice or instruction; or . . . 

2. The furnishing or dispensing of drugs. . . . 

(DE #29-1 at 140; DE #29-2 at 128.) 
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The Umbrella BI/PD includes a “Professional Services” 

exclusion which states in relevant part that the insurance does 

not apply to: 

"Bodily injury" or "property damage" due to rendering or 

failure to render any professional service. This 

includes but is not limited to: 

. . . 

(5) Medical, surgical, dental, x-ray or nursing 

services treatment, advice or instruction; 

(6) Any health or therapeutic service treatment, 

advice or instruction; 

. . . 

(11) Services in the practice of pharmacy. . . . 

(DE #29-1 at 297; DE #29-2 at 286; DE #92-3 at 285-86.) 

The OSMC Defendants requested that Westfield defend and 

indemnify them under the Policies against the Lawsuits and the 

Malpractice Complaints. Westfield denied coverage under the 

Policies, declined to defend the OSMC Defendants in the Lawsuits 

and Malpractice Complaints, and commenced this declaratory action. 

 State Court Declaratory Judgment Action 

 In October 2014, nearly all of the Individual Defendants filed 

a complaint for declaratory judgment in Alcozar v. Orthopedic and 

Sports Medicine Center of Northern Indiana, No. 20D01-1410-CT-216, 

in Elkhart Superior Court (“State DJ Action”). The complaint 

sought a declaration that the claims in the Lawsuits and 

Malpractice Complaints are subject to the Indiana Medical 

Malpractice Act (“MMA”) and are covered by certain medical 

malpractice insurance policies. PCF intervened in the State DJ 
‐14‐ 

Action, and the parties filed cross motions for summary judgment. 

PCF argued that the negligence claims were not subject to the MMA. 

The Elkhart Superior Court granted OSMC’s and the plaintiffs’ 

motions for summary judgment, and denied PCF’s motion for summary 

judgment, holding that the claims fall within the scope of the 

MMA. (DE #67-40 at 14, ¶34.) The court also held that OSMC’s 

medical malpractice insurer has a duty to defend and indemnify 

OSMC, except to the extent that the medical malpractice policies 

limit the insurer’s liability. (Id. at 15, ¶¶39-40.) PCF filed 

an interlocutory appeal of the ruling, which the Indiana Court of 

Appeals recently affirmed in Robertson v. Anonymous Clinic, 63 

N.E.3d 349 (Ind. Ct. App. 2016), trans. denied.4

DISCUSSION 

The parties do not dispute that Indiana law governs the 

coverage obligations and duties to defend arising from the 

Policies. In Indiana, “[t]he interpretation of an insurance policy 

is primarily a question of law for the court, and it is therefore 

                                                            

4 In Robertson, PCF brought a consolidated interlocutory appeal of 

the ruling in the State DJ Action, as well as a similar ruling in 

an action brought in St. Joseph Superior Court in which other 

injured patients (or those suing on their behalf) sued a medical 

clinic in St. Joseph County that had injected patients with 

contaminated MPA compounded by NECC. See 63 N.E.3d at 354 (noting 

that six actions in St. Joseph Superior Court had been consolidated 

under In re Steroid Litigation). Like the Elkhart Superior Court, 

the St. Joseph Superior Court had ruled that the negligence claims 

against the clinic were governed by the MMA. Id. The Court of 

Appeals affirmed this ruling. Id. at 364.
‐15‐ 

a question which is particularly suited for summary judgment.” 

Wagner v. Yates, 912 N.E.2d 805, 808 (Ind. 2009) (citation 

omitted). In an insurance policy dispute under Indiana law, “the 

insured has the burden of proving that the coverage applies, and 

the insurer, if relying on an exclusion to deny coverage, has the 

burden of demonstrating that the exclusion is applicable.” Bowman, 

Heintz, Boscia & Vician, P.C. v. Valiant Ins. Co., 35 F. Supp. 3d 

1015, 1023 (N.D. Ind. 2014) (citation omitted). “Generally 

speaking, contracts for insurance are subject to the same rules of 

construction as other contracts.” Id. “[C]lear and unambiguous 

language in an insurance policy should be given its plain and 

ordinary meaning, even if those terms limit an insurer’s 

liability.” Everett Cash Mut. Ins. Co. v. Taylor, 926 N.E.2d 1008, 

1012 (Ind. 2010) (internal citation omitted). “If the terms of a 

written contract are ambiguous, it is the responsibility of the 

trier-of-fact to ascertain the facts necessary to construe the 

contract.” Newnam Mfg., Inc. v. Transcon. Ins. Co., 871 N.E.2d 

396, 401 (Ind. Ct. App. 2007). Where policy language is ambiguous, 

Indiana courts generally construe it strictly against the insurer 

and in favor of the insured. Taylor, 926 N.E.2d at 1012 (citation 

omitted). However, where “a case involves a dispute between a 

third party and an insurer, the court does not construe [the 

policy] strictly against the insurer, but determines the general 

intent of the contract from a neutral stance.” Empire Fire v. 
‐16‐ 

Frierson, 49 N.E.3d 1075, 1079 (Ind. Ct. App. 2016) (citations 

omitted). “In addition, an ambiguity does not exist simply because 

an insured and an insurer disagree about the meaning of a 

provision, but only if reasonable people could disagree about the 

meaning of the contract’s terms.” Id. (citations omitted). 

Ultimately, “[t]he meaning of an insurance contract can only be 

gleaned from a consideration of all its provisions, not from an 

analysis of individual words or phrases. [The Court] must accept 

an interpretation of the contract language that harmonizes the 

provisions rather than the one which supports a conflicting version 

of the provisions.” Adkins v. Vigilant Ins. Co., 927 N.E.2d 385, 

389 (Ind. Ct. App. 2010) (citations omitted). The power to 

interpret insurance policies does not extend to changing their 

terms; the Court will not give policies an unreasonable 

construction in order to provide additional coverage. Id. 

Westfield argues that it has no duty under the Policies to 

defend or indemnify the OSMC Defendants for claims made in the 

Lawsuits and the Malpractice Complaints. An insurer’s duty to 

defend is broader than its duty to indemnify. Newnam Mfg., Inc.,

871 N.E.2d at 401; see Ind. Farmers Mut. Ins. Co. v. N. Vernon 

Drop Forge, Inc., 917 N.E.2d 1258, 1267 (Ind. Ct. App. 2010) (“If 

the policy is otherwise applicable, the insurance company is 

required to defend even though it may not be responsible for all 

of the damages assessed.”). Indiana courts have determined that 
‐17‐ 

an insurer’s duty to defend is based on the allegations in the 

complaint and “those facts known or ascertainable by the insurer 

after reasonable investigation.” Newnam, 871 N.E.2d at 401

(citation omitted). If the pleadings demonstrate that “a claim is 

clearly excluded under the policy, then no defense is required.” 

Id.

Issues Not In Dispute 

 Westfield’s motion for summary judgment raises several issues 

that have been conceded by the Individual Defendants.5 Westfield 

argues that no coverage exists for the Individual Defendants’ 

claims under the PAI or Umbrella PAI coverage of the Policies. In 

response, the Individual Defendants concede that the PAI and 

Umbrella PAI are not applicable or relevant to their claims, and 

thus, do not provide coverage for their claims. 

In addition, Westfield contends that the Policies do not 

provide coverage for the Individual Defendants’ punitive damages 

claims, in part because courts have held that such coverage is 

void as against public policy. See Exec. Builders, Inc. v. 

Motorists Ins. Cos., No. IP 00–0018–C–T/G, 2001 WL 548391, at *5 

                                                            

5 The OSMC Defendants did not respond to Westfield’s motion for 

summary judgment. See N.D. Ind. L.R. 56-1(b) (“A party opposing 

the motion must . . . file and serve (A) a response brief”). Their 

failure to respond results in a waiver of any arguments in 

opposition to the motion. Nichols v. Michigan City Plant Planning 

Dep't, 755 F.3d 594, 600 (7th Cir. 2014) (“The non-moving party 

waives any arguments that were not raised in its response to the 

moving party’s motion for summary judgment.”). 
‐18‐ 

(S.D. Ind. Mar. 30, 2001) (noting “it is contrary to Indiana public 

policy to allow an insured to avoid liability for a punitive damage 

award by means of insurance where the insured is held directly 

liable for the acts giving rise to the punitive damage award”). 

Westfield also asserts that the Individual Defendants’ fraud and 

misrepresentation claims are subject to the Policies’ Expected Or 

Intended Injury Exclusion. See United Servs. Auto. Ass’n v. 

Caplin, 656 N.E.2d 1159, 1162 (Ind. Ct. App. 1995) (where the 

complaint sounded exclusively in intentional fraud, insurer was 

not required to defend the insureds under policies that “excluded 

coverage for expected or intended losses”). In response, the 

Individual Defendants concede that the Policies do not provide 

coverage for punitive damages or intentional acts, including fraud 

claims. 

The Individual Defendants acknowledge that “Westfield’s 

motion should be granted as to any claims asserting coverage under 

the Westfield PAI policy and as to any claims for punitive damages 

or for fraud or intentional tort.” (DE #70 at 25.) Because 

Westfield and the Individual Defendants are in agreement, and the 

OSMC Defendants raise no objection, the Court holds that no 

coverage exists, and no duty to defend or indemnify arises, under 

the PAI and Umbrella PAI with respect to the Lawsuits and 

Malpractice Complaints. In addition, the Court holds that no 

coverage exists, and no duty to defend or to indemnify arises, 
‐19‐ 

under the Policies with respect to any fraud and intentional tort 

claims, and any claims for punitive damages asserted in the 

Lawsuits and Malpractice Complaints. 

The Medical Malpractice Complaints 

Westfield maintains that it has no duty to defend the OSMC 

Defendants against the Malpractice Complaints because the BI/PD 

and Umbrella BI/PD limit the duty to defend to any “suit” seeking 

damages. (DE #29-1 at 154, 293; DE #29-2 at 142, 282; DE #29-3 at 

136, 281.) The Individual Defendants filed the proposed 

Malpractice Complaints with the Indiana Department of Insurance 

pursuant to the MMA, Ind. Code § 34-18-1-1, et seq.6 Under the 

MMA, the Malpractice Complaints will be addressed by a medical 

review panel (“panel”). See Ind. Code § 34-18-8-4 (“[A]n action 

against a health care provider may not be commenced in a court in 

Indiana before: (1) the claimant’s proposed complaint has been 

presented to a medical review panel established under IC 34-18-10 

. . . and . . . an opinion is given by the panel.”). “The panel 

has the sole duty to express the panel’s expert opinion as to 

whether or not the evidence supports the conclusion that the 

                                                            

6 PCF, the Individual Defendants and Westfield maintain that the 

Court should decide the instant motion based on the language of 

Westfield’s insurance policies, without interpreting the MMA. 

That being said, they do not raise concerns with the Court’s 

consideration of MMA provisions relevant to determining whether 

the Malpractice Complaints are “suits” seeking damages under the 

Policies. The Court will consider the cited MMA provisions for 

this limited purpose. 
‐20‐ 

defendant or defendants acted or failed to act within the 

appropriate standards of care as charged in the complaint.” Ind. 

Code § 34-18-10-22(a). The panel does not have jurisdiction to 

award damages against the OSMC Defendants. (See DE #79, at 13-14 

(PCF acknowledging that “the Medical Review Panel cannot award 

damages against the OSMC defendants”).) 

The Individual Defendants do not argue that the Malpractice 

Complaints are suits seeking damages. Rather, they respond that 

they filed negligence claims in Elkhart Superior Court, and that 

those Lawsuits qualify as suits seeking damages under the BI/PD 

and Umbrella BI/PD. Westfield acknowledges that if the panel 

determines that the OSMC Defendants failed to act within the 

appropriate standard of care, the Individual Defendants may bring 

a civil suit seeking damages against the OSMC Defendants. Because 

the panel cannot award damages to the Individual Defendants, the 

Malpractice Complaints do not qualify as suits seeking damages 

under the BI/PD or Umbrella BI/PD. Thus, the Court holds that no 

coverage exists, and no duty to defend or to indemnify arises, 

under the BI/PD and Umbrella BI/PD with respect to the Malpractice 

Complaints. 

The Lawsuits 

The Individual Defendants maintain that the BI/PD and 

Umbrella BI/PD provide coverage for the Lawsuits’ claims of 

negligence by the OSMC Defendants. Westfield argues that these 
‐21‐ 

claims are not covered by the BI/PD or Umbrella BI/PB because: (1) 

they do not allege an “accident” or “occurrence”; (2) they are 

excluded from coverage under the BI/PD’s Health Care Services 

Exclusion; and (3) they are excluded from coverage under the 

Umbrella BI/PD’s Professional Services Exclusion.7

“Occurrence” 

Westfield asserts that the Lawsuits’ claims do not allege an 

“occurrence” as required by the BI/PD and the Umbrella BI/PD, but 

rather, allege professional errors or omissions. The BI/PD and 

Umbrella BI/PD provide coverage for damages for bodily injury 

caused by an “occurrence.” The Policies define “occurrence” as 

“an accident, including continuous or repeated exposure to 

substantially the same general harmful conditions.” (DE #29-1 at 

168, 308; DE #29-2 at 156, 297; DE #29-3 at 150, 297.) Indiana 

courts define “accident” as “an unexpected happening without an 

intention or design.” Tri-Etch, Inc. v. Cincinnati Ins. Co., 909 

N.E.2d 997, 1002 (Ind. 2009). 

Westfield contends that Indiana courts recognize a difference 

between an accident/occurrence and a professional error or 

omission. An accident/occurrence is covered by CGL insurance, 

                                                            

7 In their answer to Westfield’s first amended complaint, the OSMC 

Defendants admit that the Lawsuits’ complaints: (1) do not allege 

an “accident” or “occurrence” for purposes of the BI/PD and 

Umbrella BI/PD (DE #40 at 86, ¶4.19); (2) are subject to the Health 

Care Services Exclusion (id. at 84, ¶4.16); and (3) are subject to 

the Professional Services Exclusion (id. at 88, ¶4.27). 
‐22‐ 

while a professional error or omission is covered by errors and 

omissions (“E&O”) insurance. See, e.g., Tri-Etch, 909 N.E.2d at 

1002 (noting “the distinction between an ‘occurrence’ as the term 

is used in CGL policies, and claims based on ‘commercial or 

professional conduct.’ Claims based on negligent performance of 

commercial or professional services are ordinarily insured under 

‘errors and omissions’ or malpractice policies.”) (internal 

citation omitted); Terre Haute First Nat. Bank v. Pacific Employers 

Ins. Co., 634 N.E.2d 1336, 1338 (Ind. Ct. App. 1993) (holding 

bank’s negligent administration of a guardianship was 

“professional relationship,” not an “accident”); Allstate Ins. Co. 

v. Preferred Fin. Sols., Inc., 8 F. Supp. 3d 1039, 1051 (S.D. Ind. 

2014) (holding failures to deliver debt-reduction services in the 

manner required by Georgia law were business errors or omissions, 

not an “accidental event” covered by CGL policies); U.S. Liab. 

Ins. Co. v. Parchman, No. 1:11–cv–01244, 2013 WL 2600406, at *5 

(S.D. Ind. Jun. 11, 2013) (holding party’s failure to hire adequate 

security, maintain proper permits, or maintain the premises in a 

reasonably safe condition, was not an “accident” under a CGL 

policy). 

In Tri-Etch, Inc. v. Cincinnati Insurance Company, a robber 

had abducted a liquor store employee before the store closed at 

midnight, tied him to a tree, and severely beat him. 909 N.E.2d 

at 999. The store’s security service, which was to call the store 
‐23‐ 

manager within thirty minutes if the alarm was not set at closing, 

did not call the manager until after 3:00 a.m. Id. The employee 

was found alive at 6:00 a.m., but later died from his injuries. 

Id. The employee’s estate brought a wrongful death action alleging 

that the security service was negligent for failing to call the 

manager within thirty minutes, and that if the service had acted 

promptly, the employee would have been found earlier and survived. 

Id. One of the security service’s insurers disputed its duty to 

defend and indemnify the security service against the wrongful 

death claim under CGL and umbrella policies. Id. at 999-1000. 

The policies defined “occurrence” as “an accident, including 

continuous or repeated exposure to substantially the same general 

harmful conditions.” Id. at 1001. The Indiana Supreme Court held 

that the security service’s failure was not an “occurrence” covered 

by the policies, but rather, was a professional error analogous to 

lawyer malpractice: 

Lack of intentional wrongdoing does not convert every 

business error into an “accident.” This failure is the 

same sort of claim as lawyer malpractice, or an insurance 

agent’s failure to secure coverage as the client 

directed. 1 Couch on Insurance § 1:35 (3d ed. 2005) 

(“Within professional liability insurance, several 

different coverages are available . . . [including] 

errors and omissions (E & O) coverage protecting against 

liability based on the failure of the insured, in his or 

her professional status, to comply with what can be 

considered in simplistic terms to be the standard of 

care for that profession. . . .”). Tri–Etch’s failure 

was just such an “error or omission,” not an “accident,” 

and for that reason it is not an “occurrence” covered by 

[the insurer’s] CGL and umbrella policies. The CGL 
‐24‐ 

policy does not guarantee the quality of work or products 

of its insureds. 

909 N.E.2d at 1001. To the extent the security service had a duty 

to the store employee, it arose from its contract with the store, 

which “may give rise to tort liability. But it does not convert 

a failure to meet a standard of care under a contractually assumed 

duty into an ‘accident.’” Id. (internal citation omitted). 

The Individual Defendants do not address Westfield’s 

assertion that the Lawsuits’ negligence claims involve a 

professional error or omission. Relying upon Sheehan Construction 

Company v. Continental Casualty Company, 935 N.E.2d 160 (Ind. 

2010), they maintain that the Lawsuits allege negligence and injury 

falling within the terms “accident” or “occurrence” under the 

Policies. In Sheehan, homeowners sued a general contractor for 

negligent construction of their homes. The contractor had hired 

subcontractors who performed the allegedly negligent work. The 

CGL policies at issue insured Sheehan against liability for 

“property damage” caused by an “occurrence,” which was defined as 

“an accident, including continuous exposure to substantially the 

same general harmful conditions.” Id. at 170. Sheehan’s insurer 

filed an action seeking a declaration that it had no duty to 

indemnify Sheehan. Id. at 164. The trial court ruled in favor of 

the insurer in part because it found no “occurrence” under the 

policies. Id. The Indiana Supreme Court disagreed, explaining: 
‐25‐ 

The question presented is whether faulty workmanship is 

an accident within the meaning of a standard CGL policy. 

In our view the answer depends on the facts of the case. 

For example, faulty workmanship that is intentional from 

the viewpoint of the insured cannot be an “accident” or 

an “occurrence.” On the other hand if the faulty 

workmanship is “unexpected” and “without intention or 

design” and thus not foreseeable from the viewpoint of 

the insured, then it is an accident within the meaning 

of a CGL policy. 

935 N.E.2d at 170. Sheehan does not address the distinction 

between an accident and a professional error or omission, but cites 

Tri-Etch with approval, indicating that the Indiana Supreme Court 

did not intend to call its decision in Tri-Etch into question. 

See id. 

The Individual Defendants maintain that, like the contractor 

in Sheehan who hired subcontractors to do the allegedly negligent 

construction work, “OSMC in effect hired NECC to compound 

preservative-free MPA, which OSMC then purchased from NECC.” (DE 

#70 at 21.) They contend that the alleged injuries constitute an 

“accident” under the Policies because they were “unexpected” and 

“without intention or design” by the OSMC Defendants. (Id.) 

However, “[l]ack of intentional wrongdoing does not convert every 

business error into an ‘accident.’” Tri-Etch, 909 N.E.2d at 1001. 

The Court finds the Lawsuits’ claims are more akin to those 

in Tri-Etch than those in Sheehan. The Lawsuits allege a 

professional relationship between the OSMC Defendants, who “are 

engaged in the business of providing health care,” and the patients 
‐26‐ 

to whom they administered the epidural MPA injections. (DE #70 at 

2.) They allege that the OSMC Defendants were negligent in 

selecting NECC to supply preservative-free MPA and in managing 

that supplier relationship, in part by failing to perform 

“recommended and widely utilized due diligence.” (Id. at 7.) Dr. 

Grove, the medical director for ASC and an OSMC physician, 

testified that the decision to use preservative-free MPA 

compounded by NECC was a “medical decision” and a “medical 

judgment” made by physicians on ASC’s board of directors. (DE 

#67-3 at 30-31.) ASC’s board of directors decided to switch from 

administering preservative-based MPA to preservative-free MPA 

based on concerns for patient safety. The board considered ASC’s 

pharmacist consultants’ vetting of NECC as a supplier, and approved 

the continued use of preservative-free MPA in annual reviews. It 

is reasonable to infer that these decisions involved a professional 

standard of care. See Robertson, 63 N.E.3d at 362 (“It is 

reasonable to assume that OSMC weighed the potential benefits of 

using preservative-free MPA from NECC against the potential risks 

and determined that purchasing the medication from NECC was a 

reasonable approach. This decision is obviously one that was made 

using professional judgment.”). The OSMC Defendants’ alleged 

negligence in making these decisions is “based on the failure of 

the insured, in his or her professional status, to comply with . 
‐27‐ 

. . the standard of care for that profession.” Tri-Etch, 909 

N.E.2d at 1001 (quoting 1 Couch on Insurance § 1:35). 

The failure to meet a standard of care under a contractually 

assumed duty is not an “accident.” Tri-Etch, 909 N.E.2d at 1001;

see Allstate Ins. Co., 8 F. Supp. 3d at 1050 (“a business’s failure 

to perform its services in the manner it had promised is an ‘error 

or omission’ but not by any stretch an ‘accident’”). Although the 

OSMC Defendants “did not intentionally commit wrongdoing, this 

failure does not convert [their] actions into an ‘accident.’” 

Parchman, 2013 WL 2600406, at *5 (finding insured’s alleged 

negligence in failing to hire adequate security, maintain proper 

permits, and maintain the premises in a reasonably safe condition 

was “commercial or professional,” and “not ‘an unexpected 

happening without intention or design’”). The Lawsuits’ 

negligence claims allege a professional error or omission, rather 

than an accident or occurrence. The Court therefore finds that 

the Lawsuits’ claims that the OSMC Defendants were negligent in 

selecting NECC as a supplier of preservative-free MPA and in 

managing that supplier relationship do not allege an “accident” or 

“occurrence” under the BI/PD or Umbrella BI/PD.8

                                                            

8 Westfield also argues that the Lawsuits’ negligence claims are 

not covered by the BI/PD or Umbrella BI/PD because the selection 

and purchase of MPA from NECC does not satisfy the requirement of 

a direct causal connection between an alleged occurrence and bodily 

injury. See Huntzinger v. Hastings Mut. Ins. Co., 143 F.3d 302 

(7th Cir. 1998). Because the Court has determined that these 
‐28‐ 

Exclusions from Coverage 

Even if the Lawsuits’ negligence claims were to allege an 

“accident” or “occurrence” under the BI/PD and Umbrella BI/PD, 

these claims are excluded from coverage under the BI/PD’s Health 

Care Services Exclusion and the Umbrella BI/PD’s Professional 

Services Exclusion. See Tri-Etch, 909 N.E.2d at 1004 (holding 

that “[a]part from the fact that Tri-Etch’s error does not qualify 

as an ‘occurrence,’ there is no coverage” because the insured’s 

actions fell “squarely within exclusions of the umbrella policy”). 

A coverage exclusion is usually an affirmative defense, with the 

insurer bearing the burden of proof. Hoosier Ins. Co. v. Audiology 

Found. of Am., 745 N.E.2d 300, 309 (Ind. Ct. App. 2001). 

“Generally, insurers are allowed to limit liability in any manner 

which is not inconsistent with public policy.” Id. “[A]n 

unambiguous exclusionary clause is ordinarily entitled to 

enforcement.” Id. However, exclusions must be plainly expressed 

in the policy, and any doubts as to coverage will be construed 

against the insurer. Id. 

Westfield maintains that Indiana courts analyze the 

“efficient and predominate cause” of the injuries to determine 

whether claims are subject to policy exclusions. In Wright v. 

                                                            

claims do not allege an occurrence under the BI/PD or Umbrella 

BI/PD, it need not address the application of Huntzinger to this 

matter. 
‐29‐ 

American States Insurance Company, 765 N.E.2d 690 (Ind. Ct. App. 

2002), one child died and another was injured while riding in a 

van being driven by a daycare center employee when the van was 

involved in a collision. The court held that an auto-use exclusion 

in the daycare center’s CGL policy excluded coverage for a claim 

of negligent supervision, explaining: 

the efficient and predominating cause of the injuries 

was [the driver’s] use of the van. Without the use of 

the van, there would be no lawsuit. [The injured 

parties] are not alleging that [the daycare center’s] 

failure to investigate [the driver’s] driving record, or 

its employment of an incompetent driver with a suspended 

license was a separate or independent proximate cause of 

the harm. The immediate and efficient cause of [the 

children’s] injuries and the [injured parties’] claims 

arising from those injuries is [the driver’s] use of the 

automobile. 

Id. at 697; see Ill. Farmers Ins. Co. v. Wiegand, 808 N.E.2d 180, 

190 (Ind. Ct. App. 2004) (holding that a policy containing a motor 

vehicle exclusion barred coverage for a negligent supervision 

claim because the “immediate and efficient cause” of the minor’s 

injuries and the claims arising from those injuries was the minor’s 

use of the ATV, “and without the use of the ATV, there would be no 

claim for negligent supervision”); Property-Owners Ins. Co. v. 

Ted’s Tavern, Inc., 853 N.E.2d 973, 983 (Ind. Ct. App. 2006) 

(holding that a liquor liability exclusion in a CGL policy excluded 

coverage for negligent hiring, training and supervision claims 

where “the immediate and efficient cause of the injuries was drunk 

driving precipitated by the negligent service of alcohol”); 
‐30‐ 

Westfield Ins. Co. v. Hill, 790 F. Supp. 2d 855, 866 (2011) 

(finding that homeowners insurance policy containing an exclusion 

for sexual molestation and physical abuse precluded coverage of 

negligent supervision and failure to warn claims where “the 

efficient and predominant cause of Doe’s injuries was Comford’s 

sexual molestation and physical abuse”). 

Westfield contends that the “efficient and predominate cause” 

of the Individual Defendants’ injuries was the OSMC Physicians’ 

injection of contaminated MPA into the patients’ bodies. The 

Individual Defendants allegedly suffered injuries due to the OSMC 

Defendants’ administration of contaminated MPA to patients. (See, 

e.g., DE #29-5 at 34, ¶163 (alleging plaintiffs suffered injury or 

death “due to their receiving contaminated NECC drugs purchased by 

OSMC”), ¶164 (alleging surviving plaintiffs have suffered and will 

continue to suffer injuries “as a direct result of being exposed 

to NECC’s Contaminated Drugs”).) Several Individual Defendants 

admit that they would not have suffered any of their alleged 

injuries or damages if they or their decedents had not received 

injections of contaminated MPA. (See DE #67-2 ¶5.1 (citing DE 

#67-6 – #67-30 (Individual Defendants’ responses to Westfield’s 

First Set of Interrogs.).) 

The Individual Defendants do not dispute that Indiana courts 

apply the “efficient and predominating cause” analysis to 

determine whether a policy excludes coverage for a claim. Nor do 
‐31‐ 

they deny that they would not have suffered any of the injuries or 

damages alleged in the Lawsuits if patients had not been injected 

with contaminated MPA. They argue that Westfield mischaracterizes 

their negligence claims as based on the injections of contaminated 

MPA, and assert that the negligence that caused the harm was the 

OSMC Defendants’ “failure to select a compliment [sic] and legally 

operating supplier of preservative free MPA and its negligence in 

overseeing the relationship with that supplier.” (DE #70 at 23 

n.5.) But the Individual Defendants do not assert that the 

Lawsuits allege any injury that is separate or independent from 

the injury caused by the injection of the contaminated MPA into 

the patients’ bodies. See Hill, 790 F. Supp. 2d at 866 (efficient 

and predominating cause of the injury was acts of molestation where 

the complaint did not allege tortious conduct that was “divorced 

from [the molester’s] actions” or “assert any claim for damages . 

. . independent of the injuries caused by [the molester’s] 

actions”); Wright, 765 N.E.2d at 697 (efficient and predominating 

cause of the injuries was the use of the van where the injured 

parties did not allege that the insured’s failure to investigate 

the driver’s record or its employment of an incompetent driver 

“was a separate or independent proximate cause of the harm”). 

“Although the [OSMC Defendants’] actions or omissions could have 

contributed in some way,” it is undisputed that the Individual 

Defendants would have no injury without the injections of 
‐32‐ 

contaminated MPA into the patients’ bodies. Hill, 790 F. Supp. 2d 

at 866. Without the injections, “there would be no damages, no 

lawsuit and no negligence claim.” Id. Therefore, the efficient 

and predominant cause of the Individual Defendants’ injuries was 

the injection of the contaminated MPA into the patients’ bodies. 

Health Care Services Exclusion 

The BI/PD’s Health Care Services Exclusion provides that the 

insurance does not apply to bodily injury “arising out of . . . 

[t]he rendering or failure to render . . . [m]edical . . . or 

nursing service [or] treatment”, “health or therapeutic service 

[or] treatment”, or “[t]he furnishing or dispensing of drugs.” 

(DE #29-1 at 140; DE #29-2 at 128; DE #29-3 at 125.) Westfield 

maintains that this exclusion eliminates coverage of the Lawsuits’ 

negligence claims because the efficient and predominant cause of 

the Individual Defendants’ injuries, i.e., the injection of 

contaminated MPA into the patients’ bodies, constitutes the 

rendering of a medical, nursing, health or therapeutic service or 

treatment, or the furnishing of drugs. 

The Individual Defendants contend that the term “treatment” 

in the exclusion is ambiguous as it applies to this case. “Terms 

in a contract are given their usual and common meaning unless, 

from the contract, it can be determined some other meaning was 

intended.” Westfield Cos., 804 N.E.2d at 1274. “Treatment” is 

not defined in the Policies. The American Heritage Dictionary of 
‐33‐ 

the English Language defines “treatment” in part as “[t]he use of 

an agent, procedure, or regimen, such as a drug, surgery, or 

exercise, in an attempt to cure or mitigate a disease, condition, 

or injury.” https://ahdictionary.com/word/search.html?q= 

treatment (last visited on Mar. 14, 2017). The Individual 

Defendants admit that “a reasonable interpretation of the policy 

term ‘treatment’ is that it means the performance of the medical 

treatment – here that being the injection.” (DE #70 at 16.) They 

insist that the Lawsuits do not allege that the OSMC Defendants 

were negligent in performing the injections; rather, the Lawsuits 

allege the OSMC Defendants were negligent in selecting NECC as a 

supplier of preservative-free MPA and in managing that supplier 

relationship. The Individual Defendants argue that because the 

term “treatment” is ambiguous in this context, the Health Care 

Services Exclusion should be construed in favor of the insured and 

in favor of finding coverage. 

While Indiana courts have not addressed the Health Care 

Services Exclusion, other jurisdictions have found such exclusions 

to be unambiguous and apply to similar claims. See Maryland Cas. 

Co. v. Florida Atl. Orthopedics, P.L., 771 F. Supp. 2d 1328, 1332-

33 (S.D. Fla. 2011) (holding health care services exclusion was 

not ambiguous); Colony Ins. Co. v. Suncoast Med. Clinic, LLC, 726 

F. Supp. 2d 1369, 1376–77 (M.D. Fla. 2010) (holding that a medical 

services exclusion barred coverage for claims alleging a failure 
‐34‐ 

to have in place adequate policies, procedures, staff and assistive 

technology to ensure performance of diagnostic tests and 

communication between medical personnel because they were “an 

intricate part of the medical services provided”); Alayon Del Valle 

v. Kenyon, No. CIV. 06-2105CCC, 2009 WL 3299373, at *3 (D.P.R. 

Oct. 9, 2009) (holding that a health care services exclusion in a 

CGL policy barred coverage for claims alleging tortfeasor was 

responsible for quality management, patient safety, providing 

physician training and credentialing, utilizing management and 

medical policies, and establishing and implementing adequate 

procedures, because they were “duties directly involved in the 

provision of services and require the application of medical 

expertise”); Duncanville Diagnostic Center, Inc. v. Atlantic 

Lloyd's Ins. Co. of Texas, 875 S.W.2d 788, 792 (Tex. Ct. App. 1994)

(holding that a health care services exclusion in a CGL policy 

excluded coverage for claims of negligently administering a 

sedative, improperly hiring and training the technicians who 

administered the drugs, and failing to institute adequate policies 

and procedures). The plain language of the Health Care Services 

Exclusion eliminates coverage for bodily injury arising out of the 

rendering of a medical, nursing, health or therapeutic service or 

treatment, or the furnishing or dispensing of drugs. While the 

Individual Defendants argue the term “treatment” does not clearly 

apply to the Lawsuits’ negligence claims, they concede that a 
‐35‐ 

reasonable interpretation of “treatment” is “the performance of 

the medical treatment – here that being the injection.” (DE #70 

at 16.) The fact that patients signed consent forms to receive a 

medical procedure before being injected with preservative-free MPA 

also supports the conclusion that the injections constituted 

medical treatment. Thus, the issue is whether the Lawsuits’ 

negligence claims are excluded from coverage based on the rendering 

of the medical treatment of MPA injections. 

As discussed above, the “efficient and predominate cause” of 

the injuries alleged in the Lawsuits is the injection of 

contaminated MPA into the patients’ bodies. While the Lawsuits 

allege the OSMC Defendants were negligent in selecting NECC as a 

supplier of preservative-free MPA and in managing that supplier 

relationship, “creative pleading . . . cannot hide the reality 

that the immediate and efficient cause of the injuries” was the 

injection of the contaminated MPA. Property-Owners, 853 N.E.2d at 

983; see Hill, 790 F. Supp. 2d at 866 (finding sexual molestation 

exclusion barred coverage even though the injuries were “frame[d] 

. . . in the language of negligent supervision and failure to 

warn”). Without the injections, there would be no injuries, no 

Lawsuits, and no negligence claims. Because the injections are 

the efficient and predominate cause of the alleged injury, and the 

injections clearly constitute medical “treatment,” the Health Care 

Services Exclusion eliminates coverage of the Lawsuits’ claims of 
‐36‐ 

negligence in selecting NECC as a supplier of preservative-free 

MPA and in managing that supplier relationship. Therefore, the 

Court holds that no coverage exists, and no duty to defend or to 

indemnify arises, under the BI/PD with respect to the negligence 

claims asserted against the OSMC Defendants in the Lawsuits. 

Professional Services Exclusion 

The Umbrella BI/PD’s Professional Services Exclusion provides 

that the insurance does not apply to bodily injury “due to 

rendering . . . any professional service,” which includes 

“[m]edical . . . or nursing service [or] treatment,” “[a]ny health 

or therapeutic service [or] treatment,” and “[s]ervice in the 

practice of pharmacy.” (DE #29-1 at 297; DE #29-2 at 286; DE #29-

3 at 285-86.) The Umbrella BI/PD does not define “professional 

service.” Westfield asserts that the “efficient and predominating 

cause” of the Individual Defendants’ injuries, i.e., the injection 

of contaminated MPA into the patients’ bodies, eliminates coverage 

of the Lawsuits’ negligence claims under this exclusion. Westfield 

also maintains that this exclusion eliminates coverage because the 

negligence claims are based on acts taken by the OSMC Defendants 

in the course of providing professional services. 

The plain language of the Professional Services Exclusion 

eliminates coverage for bodily injury due to medical, nursing, 

health, or therapeutic service or treatment. Other courts have 

found professional services exclusions to be unambiguous. See, 
‐37‐ 

e.g., Maryland Cas. Co., 771 F. Supp. 2d at 1332-33 (holding that 

professional services exclusion was not ambiguous); see also Nat’l 

Fire Ins. Co. of Hartford v. Kilfoy, 874 N.E.2d 196, 201-02 (Ill. 

Ct. App. 2007) (holding that professional services exclusion 

excluded coverage of claims of negligent hiring, administrative 

supervision, and business operation of a surgical facility); 

Duncanville Diagnostic Center, 875 S.W.2d at 790-92 (holding that 

professional services exclusion in a CGL policy excluded coverage 

for claims of negligently administering a sedative, improperly 

hiring and training the technicians who administered the drugs, 

and failing to institute adequate policies and procedures). 

The Individual Defendants maintain that the term “treatment” 

in the Professional Services Exclusion as applied here is 

ambiguous, and that such ambiguity should be construed against 

Westfield. They cite Burton v. Choctaw County, 730 So. 2d 1 (Miss. 

1997), in which the court found the term “nursing treatment” in a 

professional services exclusion of a CGL policy to be ambiguous. 

Id. at 8. The court found that “[r]easonable people could easily 

differ about whether various actions constitute ‘treatment,’ and 

just as easily, they could differ about whether those ‘treatments’ 

constitute ‘professional services.’” Id. The Burton court held 

that the question of whether the tortfeasor’s actions “constituted 

‘nursing treatment’ should have been submitted to a jury in the 

face of the ambiguity.” Id. at 9. While the Individual Defendants 
‐38‐ 

contend that an ambiguity arises as to whether “treatment” includes 

the OSMC Defendants’ alleged negligence in selecting NECC as a 

supplier of preservative-free MPA and in managing that supplier 

relationship, they concede that a reasonable interpretation of 

“treatment” is “the performance of the medical treatment – here 

that being the injection.” (DE #70 at 16.) 

As explained above, Indiana courts consider the “efficient 

and predominating cause” of the injury to determine whether an 

exclusion eliminates coverage under a policy. The Court has found 

that the efficient and predominating cause of the injuries alleged 

in the Lawsuits was the injection of contaminated MPA into the 

patients’ bodies. Because the injections indisputably constitute 

the rendering of a medical service or “treatment,” the Lawsuits’ 

negligence claims are excluded from coverage under the 

Professional Services Exclusion. 

Even if the Court were to disregard the efficient and 

predominating cause of the alleged injuries, the Professional 

Services Exclusion would still eliminate coverage of the Lawsuits’ 

negligence claims. In Erie Insurance Group v. Alliance 

Environmental, Inc., 921 F. Supp. 537 (S.D. Ind. 1996), the court 

considered a CGL policy that excluded coverage for liability for 

damages due to “any service of a professional nature.” Id. at 

541. The court stated that when determining whether alleged wrongs 

are within the scope of a professional services exclusion, “the 
‐39‐ 

focus must be on whether the claimant is seeking to impose 

liability for acts which were taken in the course of providing 

professional services and which drew upon (or at least should have 

drawn upon) the professional’s training, skill, experience, or 

knowledge.” Id. at 543. The court explained: 

not every action a professional takes in the course of 

providing professional services will be a professional 

service for insurance purposes, but that when the 

professional draws upon (or at least should draw upon) 

his or her professional knowledge, experience, and 

training in taking some action, that is a professional 

service for insurance purposes. 

Id. at 545–46 (citing Collins v. Covenant Mut. Ins. Co., 604 N.E.2d 

1190 (Ind. Ct. App. 1992), vacated on other grounds, 644 N.E.2d 

116 (Ind. 1994)). Thus, when “the insured is being sued for taking 

actions in the course of providing professional services, and where 

those actions both are reasonably related to the services being 

provided and involve the use of (or failure to use) professional 

knowledge, skill, experience, or training, the ‘professional 

services’ exclusion applies.” Id. at 547. 

The Individual Defendants rely upon case law from other 

jurisdictions to argue that medically related conduct does not 

constitute “professional services.” Like Erie, those courts 

generally considered whether the alleged conduct required 

specialized skill and training in determining whether a 

professional services exclusion eliminated coverage. See

Jefferson Ins. Co. of N.Y. v. Nat'l Union Fire Ins. Co. of 
‐40‐ 

Pittsburgh, Pa., 677 N.E.2d 225, 230-31 (Mass. Ct. App. 1997) 

(ambulance company’s delay in responding to a medical emergency 

due to a miscommunication regarding the emergency’s location did 

not constitute “professional services” because it was 

“nonspecialized, clerical or administrative activity requiring 

neither special learning, intellectual skill, nor professional 

judgment”); Duke Univ. v. St. Paul Fire & Marine Ins. Co., 386 

S.E.2d 762 (N.C. Ct. App. 1990) (negligent failure to lock casters 

on a dialysis chair not within the term “professional services”); 

Guaranty Nat’l Ins. Co. v. North River Ins. Co., 909 F.2d 133, 136 

(5th Cir. 1990) (professional services exclusion did not bar 

coverage of a negligence claim for placing psychiatric patient in 

an “open” fourth floor room who jumped through a window to her 

death because “[t]he decision to protect the open unit patients 

through screws in the window sashes rather than through fixed, 

protective screens over the windows . . . was not a professional, 

medical decision”); Med. Records Assocs., Inc. v. Am. Empire 

Surplus Lines Ins. Co., 142 F.3d 512, 514 (1st Cir. 1998) (feesetting and billing was not “a professional service” under an E&O 

policy). 

Here, the evidence demonstrates that the OSMC Defendants’ 

selection of NECC as their supplier of preservative-free MPA and 

management of that supplier relationship was (1) reasonably 

related to the medical services being provided, and (2) involved 
‐41‐ 

the use of (or failure to use) professional knowledge, skill, 

experience, or training. See Erie Ins. Grp., 921 F. Supp. at 547. 

It is undisputed that the OSMC Defendants provided medical services 

to patients in the form of epidural MPA injections. ASC’s board 

of directors, consisting of 11 physicians and ASC’s CEO, made the 

decision to switch from administering preservative-based MPA to 

preservative-free MPA based on concerns for patient safety, and 

conducted annual reviews in which they approved the continued use 

of preservative-free MPA. ASC’s pharmacist consultants vetted 

NECC as a supplier of certain medications, and ASC’s board of 

directors made the decision to use NECC as a supplier. Dr. Grove 

testified that the decision to use preservative-free MPA 

compounded by NECC was a “medical decision” and a “medical 

judgment” made by physicians on ASC’s board of directors. (DE 

#67-3 at 30-31.) It is reasonable to assume that ASC’s board of 

directors relied on the physicians’ knowledge, skill, experience 

and training in making this medical decision. The Court notes 

that the Court of Appeals also had “little trouble concluding that 

the selection of preservative-free MPA—in particular, 

preservative-free MPA made by NECC—in favor of MPA with 

preservatives from other suppliers, were actions that involved the 

exercise of professional medical skill and judgment.” Robertson, 

63 N.E.3d at 361; see id. at 364 (holding that claims “that 

Defendants were allegedly negligent . . . in choosing NECC without 
‐42‐ 

proper vetting, are allegations that claim negligence in decisions 

that were made using professional expertise”). 

The OSMC Defendants’ selection of NECC as their supplier of 

preservative-free MPA and management of that supplier relationship 

was reasonably related to the medical service of administering 

preservative-free MPA injections to patients, and involved the use 

of the physicians’ professional knowledge, skill, experience, 

and/or training. Therefore, the Professional Services Exclusion 

eliminates coverage of the Lawsuits’ claims that the OSMC 

Defendants were negligent in selecting NECC as their supplier of 

preservative-free MPA and in managing that supplier relationship. 

The Court holds that no coverage exists, and no duty to defend or 

to indemnify arises, under the Umbrella BI/PD with respect to the 

negligence claims asserted against the OSMC Defendants in the 

Lawsuits. 

CONCLUSION 

 For the reasons set forth above, Westfield’s Motion for 

Summary Judgment (DE #64) is GRANTED. The Clerk of the Court is 

DIRECTED to enter a DECLARATORY JUDGMENT in favor of Westfield and 

against all defendants declaring that no coverage exists under 

Commercial Package Policy No. TRA 3413228 based on the personal 

and advertising injury, umbrella personal and advertising injury, 

bodily injury and property damage, and umbrella bodily injury and 

property damage coverage provisions, and thus, Westfield has no 
‐43‐ 

duty to defend or indemnify defendants OSMC, ASC, or OSMC 

Physicians with respect to the claims asserted by the Individual 

Defendants in the Lawsuits filed in Elkhart Superior Court and the 

Medical Malpractice Complaints filed with the Indiana Department 

of Insurance. 

DATED: March 28, 2017 /s/ RUDY LOZANO, Judge 

 United States District Court