Opinion ID: 596179
Heading Depth: 2
Heading Rank: 2

Heading: Categorizing The Pooled-Liability Fund

Text: 12 The Saint Louis Province of the Sisters of Mercy, through the Sisters of Mercy, Inc., manages, operates, and controls a multi-state network of nonprofit hospitals. St. John's is one of those hospitals. The Sisters of Mercy, Province of St. Louis, Self-Insurance Trust is a fund from which tort liabilities incurred by its hospitals (business units) are to be paid. Sisters of Mercy, Inc., maintains this fund by pooling assessments from each business unit, based on that hospital's past history of claims and on future risk projections. The funding of the pool is reassessed periodically on the basis of the amount each hospital has paid into the fund, and the amount each has needed to withdraw. The fund covers only hospitals controlled by the Saint Louis Province of the Sisters of Mercy or one of its business units. Joint Appendix at 125. If a hospital leaves the fold of the Saint Louis Province of the Sisters of Mercy, it may no longer participate in the fund and the fund will no longer protect it. Id. 13 The above facts describe a self-insuring scheme by the Corporate Members of Sisters of Mercy, Inc. Self-insurance is the retention of the risk of loss by the one upon whom it is ... imposed by law or contract. Physicians, 542 N.E.2d at 707. As the entity which controls, manages, or operates the hospitals, Sisters of Mercy, Inc., (along with St. John's, Nurse Lierz's employer) would likely be liable for any judgments rendered as a result of hospital employees' work. See Blanchette v. Cataldo, 734 F.2d 869, 875 (1st Cir.1984); see also Burks v. Leap, 413 S.W.2d 258, 266 (Mo.1967); Restatement (Second) of Agency § 21, § 5 cmt. c, and reporter's note to § 5, app. vol. 3 at 33 (1958). Thus, Sisters of Mercy, Inc., and St. John's have not shifted this risk to a third party in exchange for premiums, but rather have retained all the risk within the Sisters of Mercy, Inc.'s business units. The pooled liability agreement merely organizes Sisters of Mercy, Inc.'s management of the risks of its several business units. 5 14 American argues on appeal that the language of the document organizing the liability fund renders the document an insurance contract for the purposes of its other insurance clause. 6 In support of this proposition, American relies on Burckhardt v. General Am. Life Ins. Co., 534 S.W.2d 57, 64-65 (Mo.Ct.App.1975). However, in Burckhardt, the court was deciding whether an insurance policy had become an enforceable contract before the insured died. The existence, not the nature, of the contract was in dispute. Therefore, that case does not shed light on the question of whether an existing indemnity agreement between business units under unitary control is within the plain meaning of other insurance. 7 15 Since we find that the pooled liability fund is not other insurance, American is liable to St. John's or the Sisters of Mercy, Inc., for the $375,000 paid on behalf of Nurse Lierz. 16