In the

United States Court of Appeals

For the Seventh Circuit

____________

No. 03-1868

INDIANA FUNERAL DIRECTORS INSURANCE TRUST,

Plaintiff-Appellant,

v.

TRUSTMARK INSURANCE CORPORATION,

Defendant-Appellee.

 ____________

Appeal from the United States District Court

for the Southern District of Indiana, Indianapolis Division.

No. IP 97-1248-C(G/Y)—John Paul Godich, Magistrate Judge.

____________

ARGUED SEPTEMBER 3, 2003—DECIDED OCTOBER 21, 2003

____________

Before RIPPLE, ROVNER, and DIANE P. WOOD, Circuit

Judges.

ROVNER, Circuit Judge. The Indiana Funeral Directors Insurance Trust (“IFIT”) is an Indiana trust formed

by several small funeral directors to sponsor a self-funded employee welfare benefit plan. After purchasing insurance from other providers, IFIT eventually bought a policy from Trustmark Insurance Corporation (“Trustmark”),

which agreed to reimburse IFIT for medical expenses that

exceeded a designated “stop loss” amount. IFIT brought this

suit against Trustmark in federal district court, claiming
2 No. 03-1868

that Trustmark failed to provide indemnification as required by the policy. A magistrate judge, sitting by consent

of the parties, 28 U.S.C. § 636(c), entered summary judgment in favor of Trustmark. IFIT appeals and we affirm.

Soon after IFIT formed in 1972, it retained Benefit Actuaries, Inc., to administer its welfare benefit plan. In 1980

Benefit Actuaries purchased “stop loss” health insurance on

IFIT’s behalf from Trustmark. Under a “stop loss” plan, employers pay for employee medical expenses, and the insurer

indemnifies the employer for expenses that exceed a

designated dollar amount. See generally Safeco Life Ins. Co.

v. Musser, 65 F.3d 647, 649 (7th Cir. 1995).

In 1997 four IFIT employees incurred significant medical expenses, all exceeding the $60,000 stop loss figure

designated in the policy. Unable to pay these bills in full,

IFIT asked Trustmark to indemnify it for the expenses as

charged; Trustmark, however, refused, asserting that it

only had a contractual obligation to indemnify IFIT for expenses that IFIT had actually paid. IFIT then negotiated

lower costs with the medical service providers, and paid the

claims. The record is silent, however, as to how much IFIT

paid on each claim, which is significant because Trustmark

was obligated to indemnify only if IFIT paid more than

$60,000 on a claim.

In July 1997, IFIT filed suit against Trustmark and

Benefit Actuaries in federal district court seeking damages

under Indiana law and declaratory relief under the Employee Retirement Income and Security Act, 29 U.S.C.

§ 1001, et seq. IFIT alleged that Trustmark owes it approximately $150,000, the cumulative difference between the

four employees’ medical expenses and the designated stop

loss amount. After discovery, the magistrate judge entered

summary judgment in favor of Trustmark.

Nearly five months later, IFIT moved for leave to amend

its complaint under Fed. R. Civ. P. 15(a), seeking to add ad-
No. 03-1868 3

ditional state-law claims. The magistrate judge, however,

denied this request and entered partial final judgment under Fed. R. Civ. P. 54(b) as to Trustmark, enabling IFIT to

proceed with this appeal. IFIT’s claims against Benefit

Actuaries are still pending.

On appeal IFIT contends that the magistrate judge erred

by granting Trustmark’s request for summary judgment.

We review this decision de novo, viewing the facts and

drawing all reasonable inferences in the light most favorable to the nonmoving party. McCoy v. Harrison, 341

F.3d 600, 604 (7th Cir. 2003). Summary judgment is proper

when there is no genuine issue of material fact in dispute

and the moving party is entitled to judgment as a matter of

law. Fed. R. Civ. P. 56(c); Scott v. Trump Ind., Inc., 337 F.3d

939, 945 (7th Cir. 2003). Judgment as a matter of law is

appropriate when a party “fails to make a showing sufficient to establish the existence of an essential element to

that party’s case, and on which that party will bear the

burden of proof at trial.” Celotex Corp. v. Catrett, 477 U.S.

317, 322 (1986). Indeed, if it is clear that a plaintiff will be

unable to satisfy the legal requirement necessary to establish its case, summary judgment is not only appropriate but

required. Id. 

Under Indiana law, insurance contracts are governed by

the same rules of construction as other contracts. USA Life

One Ins. v. Nuckolls, 682 N.E.2d 534, 537-38 (Ind. 1997).

The interpretation of a policy is primarily a question of law,

even if the policy language is ambiguous. Id. The insured is

required to prove that its claims fall within the coverage

provision of its policy, but the insurance provider bears the

burden of proving specific exclusions or limitations to policy

coverage. See Erie Ins. Group v. Sear Corp., 102 F.3d 889,

892 (7th Cir. 1996) (applying Indiana law).

IFIT argues that Trustmark was required to reimburse

it for the face value of the medical expenses, to the extent
4 No. 03-1868

the $60,000 attachment point was exceeded. Under the

terms of the policy, Trustmark was obligated to cover bills

that were actually paid in excess of the attachment point.

But IFIT submitted no evidence that it paid claims that exceeded $60,000; indeed, it submitted no evidence that it

made any payments at all. At oral argument, IFIT’s counsel

stated that two of the four employees’ costs exceeded

$60,000 even after the claims were negotiated downward,

but also acknowledged that there is no evidence of these

payments in the record. This failure of proof is fatal. See

Pugh v. City of Attica, Ind., 259 F.3d 619, 625 (7th Cir.

2001) (to survive summary judgment, plaintiff must submit

evidence to support its position).

IFIT also argues that the magistrate judge should not

have entered summary judgment because it was insolvent.

The policy provides:

Insolvency or bankruptcy of the Contract Holder. Insolvency or bankruptcy of the Contract Holder shall not

release the Company from the payment of benefits for

loss incurred prior to the date of termination, to the extent such benefits would be payable in the absence of

such insolvency or bankruptcy, provided claim for such

benefit is submitted in accordance with the Section 21

of this Contract.

(App. at 005.) 

The parties do not agree on the meaning of this provision.

IFIT argues that Trustmark is obligated to pay in the event

of IFIT’s insolvency, without regard to whether the claims

were actually paid by IFIT. Trustmark on the other hand

contends that it must pay only if IFIT has actually made

payments in excess of the attachment point. But we need

not resolve this dispute. The magistrate judge correctly

entered summary judgment in favor of Trustmark because

IFIT supplied no evidence that it was insolvent. Indeed,

IFIT paid the claims; it did not act as if it were insolvent.
No. 03-1868 5

Without any evidence of its feeble financial status, IFIT’s

reliance on the policy’s insolvency provision to recover under the policy is doomed under either interpretation; summary judgment in favor of Trustmark was appropriate.

Finally, IFIT argues that the magistrate judge erred by

denying its request for leave to amend its complaint, a decision we review for abuse of discretion. See Park v. City of

Chicago, 297 F.3d 606, 612 (7th Cir. 2002). IFIT sought to

add state-law claims for civil conspiracy and breach of good

faith, but the magistrate judge concluded that doing so

would be futile because these new claims were not actionable under Indiana law. Under Rule 15, courts may deny an

amendment for undue delay, bad faith, dilatory motive, prejudice, or futility. See Rodriguez v. United States, 286 F.3d

972, 980 (7th Cir. 2002).

The magistrate judge did not abuse his discretion by

denying IFIT’s request to amend its complaint. IFIT’s proposed amended complaint alleged that Trustmark and

Benefit Actuaries conspired to charge excessive premiums

in violation of Michigan law. But IFIT does not explain how

Michigan law is applicable to this dispute. IFIT is an Indiana trust; Trustmark is an Illinois corporation; and while

Benefit Actuaries is a Michigan corporation, neither IFIT’s

nor Trustmark’s dealings at issue here had any connection with Michigan. IFIT also wanted to add a claim that

Trustmark breached its duty of good faith by failing to disclose its methodology for calculating premiums. Although

Indiana recognizes a duty for insurers to deal in good faith

with their insured, see Erie Ins. Co. v. Hickman, 622 N.E.2d

515, 518-19 (Ind. 1993), this cause of action has not been

extended beyond disputes regarding coverage. The allegation in the proposed amended complaint centered on the

setting of premiums, not on recovering under the policy.

AFFIRMED.
6 No. 03-1868

A true Copy:

Teste: 

 ________________________________

Clerk of the United States Court of

Appeals for the Seventh Circuit 

USCA-02-C-0072—10-21-03