Opinion ID: 1057747
Heading Depth: 3
Heading Rank: 1

Heading: a Healthcare Professional, when acting within

Text: the scope of his or her specialty and training[.] (Emphasis in original.) TDC takes the position that the alleged breach, injury, and damages resulted from a misrepresentation in a contract, which is not within the scope of a provider's specialty and training, and therefore lacked a causal nexus with professional services rendered. TDC acknowledges that there were professional services employed in the birth of the child. TDC argues, however, that the breach was the misrepresentation and the injury and damages sustained were incurred due to a lack of compensation under the fund based on the contractual misrepresentation, not resulting from the professional service itself as would be alleged in a tort action. The Davidsons argue that the lack of compensation cannot be severed from the professional services because one of the elements required for compensation under the fund, in addition to a qualifying birth injury, is that the child must have been delivered by a participating professional service provider or in a participating hospital. The Davidsons therefore contend that the injury would not have been possible without the rendering of professional services, and so the claim is one arising from professional services. 6 The parties point to separate portions of the Policy to support their respective arguments. TDC argues that a plainlanguage reading of the term resulting from professional services, as stated in Section II(b) describing the coverage under the policy, requires a direct nexus, and that a contractual misrepresentation that is out of the scope of the doctor's professional training lacks this nexus. The Davidsons respond that the operative language defining a covered claim is clarified by the Definitions of Section VII to include any claim arising from professional services and not otherwise excluded by the policy. The Court is left to resolve this apparent conflict. TDC has conceded that the use of different language in the drafting of the contract was not accidental and that arising from has a broader definition than resulting from. We have said that when considering the meaning of any part of a contract, we will construe the contract as a whole. Cappo Mgmt. V, Inc. v. Britt, 282 Va. 33, 37, 711 S.E.2d 209, 211 (2011) (quoting Lansdowne Dev. Co. v. Xerox Realty Corp., 257 Va. 392, 401, 514, S.E.2d 157, 161 (1999)); see Vega v. Chattan Assocs., Inc., 246 Va. 196, 199, 435 S.E.2d 142, 143 (1993). As a result, despite TDC's urging that we should apply a plain-language reading of the term resulting from, we are obligated to consider both 7 phrases and resolve the ambiguity that arises from their presence in the same contract. We have consistently held that [i]n the event of an ambiguity in the written contract, such ambiguity must be construed against the drafter of the agreement. Cappo Mgmt., 282 Va. at 37, 711 S.E.2d at 211 (quoting Martin & Martin, Inc. v. Bradley Enters., Inc., 256 Va. 288, 291, 504 S.E.2d 849, 851 (1998)) (alteration in original); see Mahoney v. NationsBank of Va., 249 Va. 216, 222, 455 S.E.2d 5, 9 (1995); Winn v. Aleda Constr. Co., 227 Va. 304, 307, 315 S.E.2d 193, 195 (1984). This document, therefore, must be construed against TDC, using the broader construction attributable to arising from. Employing this broader construction thus permits a less direct nexus between the professional services rendered and the damages incurred, although such nexus must still be present. We conclude that, using the common understanding of the language, the term arising from is sufficient to include the professional services rendered in the birth of the Davidsons' child, as the rendering of such services would have been required to receive a payment from the Birth Injury Fund and therefore to recover damages in the underlying suit. While not looking at this precise issue, the Fourth Circuit has had occasion to consider the definition of professional services in a professional liability insurance contract 8 construed under Virginia law, and its conclusion reinforces today's decision. See St. Paul Fire & Marine Ins. Co. v. Jacobson, 48 F.3d 778, 782 (4th Cir. 1995). The Court stated that, in determining whether an insured physician has engaged in a professional service, courts must look at the nature of the insured's act or the service provided which gave rise to the damages complained of. Id. There, as in this case, the provider's actions included both acts that would be construed as professional services and others that would not, and the parties disagreed on which . . . acts one must look to in determining whether the suit arose from professional services. Id. The Fourth Circuit held that, because [t]he act complained of in the instant civil action[] necessarily included [a] medical act, the act was a professional service under the terms of the policy. Id. In the case at bar, the alleged breach — non-participation in the Birth Injury Fund at the time of delivery — and resulting damages could not have occurred without the professional medical services provided, i.e., the delivery of the child by WHA. The delivery of the child by WHA was as necessary an element in the chain of causation as WHA's failure to participate in the fund as represented; in the absence of either, the Davidsons could not be owed compensation under the fund and there could be no 9 damages. We thus affirm the ruling of the circuit court as to this issue. C. Whether the liability ar[ose] out of any . . . violation of any statute. Section VI of the policy, styled Exclusions, states that TDC will not pay any damages arising from, or defend against, any of the following: . . . f. Liability arising out of any: . . . 3. violation of any statute, code, ordinance, or regulation. (Emphasis added.) Arguing that WHA's misrepresentation of its participation was in violation of Code § 38.2-5004.1, which requires disclosure of participation status to patients, TDC disclaims any obligation to pay. TDC argues that the Court should apply the plain meaning of the phrase arising out of, and that, because the liability arises out of actions that also violate Code § 38.2-5004.1, the claim should be excluded from coverage under the policy. The Davidsons agree that a plain-language reading is appropriate, but argue that such a reading requires the Court to consider from where the liability itself arises. In this case, they argue, the liability is not based on a violation of the statute, although one may have occurred, but rather on the breach of WHA's contractual obligation to participate in the Birth Injury Fund as claimed in the amended complaint. 10 Thus, the Court is once again asked to construe the term arising in the context of this insurance policy. Unlike the first question, however, which required the Court to choose between the narrower term (resulting from) and the broader term (arising from), the parties here both correctly acknowledge that, under Virginia law, a plain meaning application is appropriate. See Bentley Funding Group, L.L.C. v. SK&R Group, L.L.C., 269 Va. 315, 329, 609 S.E.2d 49, 56 (2005) (When contract terms are clear and unambiguous, we must construe those terms according to their plain meaning. (quoting Lansdowne, 257 Va. at 400, 514 S.E.2d at 161)); accord, Bridgestone/Firestone, Inc. v. Prince William Square Assocs., 250 Va. 402, 407, 463 S.E.2d 661, 664 (1995). Here, we conclude that a plain reading of the contract requires that the Court direct its attention to the elements necessary for liability, as pled in the action brought by the Davidsons against WHA. Consistent with our interpretation of the similar term arising from in Part II.B., while there need not be a direct causal nexus between the statutory violation and the liability, there must be a sufficient nexus between them to consider the liability to be arising out of the statutory violation in order for the claim to be exempt. We therefore consider the allegations within the wellestablished framework of breach of contract claims: a legally 11 enforceable obligation between the defendant and plaintiff, breached by defendant, which proximately caused damages to the plaintiff. Filak v. George, 267 Va. 612, 619, 594 S.E.2d 610, 614 (2004). Here, liability would thus arise out of a finding that a contract existed between WHA and the Davidsons that included a legal obligation to participate in the Birth Injury Fund, that WHA materially breached the contract by failing to participate in the fund, and that this breach proximately caused the damages – the lack of compensation from the fund – when the Davidsons' child was delivered by this provider and suffered an injury otherwise compensable by the fund. The alleged liability arises specifically out of WHA's failure to participate after a promise of participation — that is, failure to act in accordance with the terms of the express contract when performing its services — not its failure to accurately notify of participation, which is the act alleged to be in violation of the statute. Thus, WHA would be equally liable for breach of the contract if it were indeed a participant in the Birth Injury Fund at the time of the notification but not at the birth, thereby complying with the statute but denying the child coverage. Furthermore, WHA would be in no way liable if it had not been a participant at the time of the notification but began paying into the fund in Mrs. 12 Davidson's eighth month of pregnancy, therefore having violated the statute but resulting in no damages to the Davidsons. The Davidsons will have to prove at trial that the promise of participation was a material aspect of WHA's performance of the contract and that it was breached. Nonetheless, the fact that the breach is in part evidenced by a written notification reflecting the misrepresentation of its participation status at the alleged initiation of the contract does not bear upon the liability. The statute has no private cause of action, and the misrepresentation in the notification is incidental to the breach of contract action. The performance of the alleged contract included WHA's promise of participation in the fund. Thus, using even the broad and common meaning of the term, the alleged liability is arising out of the elements of the breach of the contract, not a violation of the statute. None of these elements – the lack of participation months after a representation of participation, the delivery of the baby, and alleged resulting lack of coverage – arise out of a violation of the statute. Interpreting arising out of to include any overlap with statutory law, even when that law affords no cause of action and is not necessary to the elements of the cause of action, would be outside the scope of the common usage of the term. We therefore affirm the ruling of the circuit court as to this issue. 13