Court Opinion

ID: 3003077
Source: CourtListenerOpinion
Date Created: 2015-09-24 20:38:25.276948+00
Date Added: 2024-06-11T15:03:19.400020
License: Public Domain

In the

United States Court of Appeals
              For the Seventh Circuit

No. 08-1997

H EALTH C ARE INDUSTRY L IABILITY
INSURANCE P ROGRAM,
                                               Plaintiff-Appellee,
                               v.

M OMENCE M EADOWS N URSING C ENTER, INC., and
JACOB G RAFF,

                                         Defendants-Appellants.

           Appeal from the United States District Court
                 for the Central District of Illinois.
       No. 07 C 02005—David G. Bernthal, Magistrate Judge.

      A RGUED JANUARY 9, 2009—D ECIDED M AY 20, 2009

 Before M ANION, R OVNER, and S YKES, Circuit Judges.
  M ANION, Circuit Judge. Vanessa Absher and Lynda
Mitchell sued Momence Meadows Nursing Center, Inc.,
and its owner and operator, Jacob Graff (collectively
“Momence”). They sought damages for themselves and
on behalf of the United States and the State of Illinois
for alleged violations of the federal False Claims Act
2                                               No. 08-1997

(“FCA”), 31 U.S.C. § 3729 et seq., and the Illinois Whistle-
blower Reward and Protection Act (“IWRPA”), 740 ILCS
175/1 et seq. The Health Care Industry Liability Insurance
Program (“Healthcap”) filed this action seeking a declara-
tion that it had no duty to defend Momence in that law-
suit under a commercial general liability policy it had
issued to Momence. The district court found that
Healthcap had no duty to defend Momence, and
Momence appeals. We affirm.

                             I.
   Vanessa Absher and Lynda Mitchell are former em-
ployees at Momence’s nursing center. In their third
amended complaint (which we will refer to hereafter as
the “underlying complaint”), Absher and Mitchell sought
treble damages for exposing thousands of false charges
Momence submitted to Medicare and Medicaid. Their
theory of recovery was predicated on the statutory re-
quirement that Medicare and Medicaid providers may
not submit claims for services that failed to meet “profes-
sionally recognized standards of health care.” 42 U.S.C.
§ 1320c-5(a)(2). According to Absher and Miller, Momence
violated that requirement by certifying on its annual cost
reports that it was meeting the required standard of
care when, in fact, Momence’s management knew that
it was not.
  The underlying complaint provides detailed allegations
of how Momence was not meeting the standard of care
for Medicare and Medicaid. It alleges, for instance, that
Momence failed to maintain the minimum staffing levels
No. 08-1997                                               3

for nurse and nurse assistants, failed to ensure its
residents received their medications as prescribed by
their physicians, failed to ensure residents received
adequate nutrition and assistance with meals, and failed
to provide the residents with clean and dry beds, clothes,
and regular baths. The underlying complaint devotes
several pages to further elaborating these alleged standard-
of-care failures. Included in those pages is a detailed
description of the resulting injuries patients suffered
from Momence’s substandard care, such as scabies,
sepsis, seizures, and death.
   The underlying complaint sets forth four counts. In
count one, the plaintiffs seek statutory and treble
damages under the FCA for Momence’s submission of
false claims to the United States. In count two, they seek
statutory and treble damages under the IWRPA for
Momence’s submission of false claims to the state of
Illinois. In counts three and four, Absher and Mitchell seek
damages under the anti-retaliation provisions of the
FCA and IWRPA, respectively. Mitchell claims that
Momence terminated her in retaliation for complaining
to Momence’s management about the failures to provide
adequate care. Absher alleges constructive discharge
for the same reason.
  As Absher and Mitchell’s suit proceeded, Healthcap
brought this action seeking a declaration that it had no
duty to defend or indemnify Momence in the under-
lying suit based on a commercial general liability policy
Healthcap issued to Momence in 2004. That policy pro-
vides Momence with multiple lines of coverage. Relevant
4                                                    No. 08-1997

to this appeal are the commercial general liability coverage
(“CGL coverage”) and the professional liability coverage
(“PL coverage”).1 The CGL coverage has two separate
coverage sections, CGL coverage A,2 which provides
coverage for bodily injury and property damage, and CGL
coverage B,3 which addresses personal and advertising

1
    The part of the PL coverage relevant to this appeal provides:
      We will pay those sums that the insured becomes legally
      obligated to pay as “damages” because of injury to which
      this insurance applies. . . . The injury must be caused by a
      “medical incident.” . . . The “medical incident” must arise
      out of the providing or withholding of the following
      professional services: Medical, surgical, dental, or nursing
      treatment to a person. . . . We will have the right and
      duty to defend any “suit” seeking those “damages” . . . .
2
    CGL coverage A states in relevant 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.
    The policy further defines “bodily injury” as “bodily injury,
    sickness or disease sustained by a person, including death
    resulting from any of these at any time.”
3
    The pertinent part of CGL coverage B states:
      We 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. We will
      have the right and duty to defend the insured against any
      “suit” seeking those damages.
                                                    (continued...)
No. 08-1997                                                        5

injury liability. In addition, the CGL coverage contains
an employment-related practices exclusion 4 applicable to
both CGL coverage A and CGL coverage B.
  Approximately a year after filing suit, Healthcap moved
for summary judgment, arguing that it had no duty to
defend or indemnify Momence. In a comprehensive

3
  (...continued)
The policy defines “personal and advertising injury” to mean an
      injury, including consequential “bodily injury,” arising out
      of one or more of the following offenses:
      ....
      Oral or written publication of material that slanders or libels
      a person or organization or disparages a person’s or organi-
      zation’s goods, products or services.
      ....
      Oral or written publication of material that violates a
      person’s right of privacy.
4
    That exclusion provides:
  This insurance does not apply to any claim or “suit” by or on
behalf of:
      A person arising out of any:
      Refusal to employ that person;
      Termination of that person’s employment; or
      Employment-related practices, policies, acts or omissions,
      such as coercion, demotion, evaluation, reassignment,
      discipline, defamation, harassment, humiliation or discrimi-
      nation directed at that person . . . .
6                                                No. 08-1997

opinion, the magistrate judge 5 held that Healthcap had
no duty to defend Momence. The court further held that
the issue of indemnification was not ripe for considera-
tion because Momence had yet to incur any liability in
the underlying action. It therefore dismissed the action
without prejudice with leave for Momence to reinstate
the suit after the underlying proceedings became final
and liability had been determined. Momence appeals.

                             II.
  On appeal, Momence asserts that the magistrate judge
erred in concluding that Healthcap had no duty to
defend it in the underlying litigation. We review the
lower court’s grant of summary judgment, as well as its
construction of the commercial general liability policy,
de novo. Lyerla v. AMCO Ins. Co., 536 F.3d 684, 687 (7th
Cir. 2008). Since this is a diversity action, state law
applies. RLI Ins. Co. v. Conseco, Inc., 543 F.3d 384, 390 (7th
Cir. 2008). The parties proceed under the assumption
that Illinois law applies; so will we.
  Momence first argues that the magistrate judge’s opin-
ion “contain[s] an inherent inconsistency requiring rever-
sal.” According to Momence, the inconsistency is the
lower court’s granting of summary judgment on the duty
to defend while postponing judgment on the duty to
indemnify. If there really were no duty to defend,
Momence points out, then the magistrate judge would

5
  The parties consented to proceeding before the magistrate
judge. See 28 U.S.C. § 636(c).
No. 08-1997                                                  7

have held that there was no duty to indemnify either, since
the duty to defend is broader than the duty to indemnify.
BASF AG v. Great Am. Assur. Co., 522 F.3d 813, 819 (7th Cir.
2008) (applying Illinois law). But because the lower court
left open the question of indemnification, Momence reads
the magistrate judge’s action as admitting that a possibility
still exists that the policy covers the underlying suit. And
because the possibility of coverage triggers the duty to
defend, see, e.g., Gibraltar Cas. Co. v. Sargent & Lundy, 574
N.E.2d 664, 673 (Ill. App. Ct. 1991), Momence therefore
argues that the lower court wrongly held that Healthcap
had no duty to defend.
  The “inherent inconsistency” Momence believes is
present in the magistrate’s decision is of no moment to
us. Where, as here, the duty to defend is broader than
the duty to indemnify, a finding of no duty to defend
necessarily precludes a finding of a duty to indemnify.
As the Illinois Supreme Court stated in Crum & Forster v.
Resolution Trust Corp.:
  In cases such as the instant case where no duty to
  defend exists and the facts alleged do not even fall
  potentially within the insurance coverage, such facts
  alleged could obviously never actually fall within the
  scope of coverage. Under no scenario could a duty to
  indemnify arise. Clearly, where there is no duty to
  defend, there will be no duty to indemnify . . . .
620 N.E.2d 1073, 1081 (Ill. 1993) (internal citations omit-
ted); see also Sokol & Co. v. Atl. Mut. Ins. Co., 430 F.3d 417,
421 (7th Cir. 2005) (“Since the claim at issue in Crum &
8                                                    No. 08-1997

Forster did not even potentially fall within the scope of
coverage for purposes of the duty to defend, it logically
followed that the claim would not actually fall within
the scope of coverage for purposes of the duty to indem-
nify.”).
  In this case, just as in Crum & Forster, the duty to
defend subsumes the duty to indemnify.6 Holding that
an insurer has no duty to indemnify therefore follows
inexorably from holding that an insurer has no duty
to defend. Accordingly, if the magistrate judge properly
ruled that Healthcap did not have a duty to defend,
Healthcap was likewise entitled to summary judgment on
the issue of indemnification. We need not consider the
issue any further, however, because Healthcap has not
cross-appealed. See Greenlaw v. United States, 128 S. Ct.
2559, 2564 (2008) (“[I]t takes a cross-appeal to justify a
remedy in favor of an appellee.”).

6
  The case cited by the magistrate judge to support holding off
on deciding the duty to indemnify, Premcor USA, Inc. v. American
Home Assurance Co., 400 F.3d 523 (7th Cir. 2005), is not applicable
here because it is one of the rare cases where the duty to defend
and the duty to indemnify are independent of each other. The
umbrella insurance policy at issue in Premcor did not obligate
the umbrella insurer to defend the insured because the primary
insurer’s policy provided unlimited defense costs. Id. at 529.
However, the umbrella insurer was still on the hook to indem-
nify the insured for any liability past the primary insurer’s
insurance limits. See id. at 525. Thus, the court in Premcor
could only rule on the duty to indemnify after liability in the
underlying suit had definitively been decided. Id. at 530.
No. 08-1997                                                 9

   That brings us back to the duty to defend, the sole
issue on appeal. Illinois courts determine an insurer’s
duty to defend by comparing the allegations in the under-
lying complaint to the relevant provisions of the insur-
ance policy. Outboard Marine, 607 N.E.2d at 1212. “An
insurer is obligated to defend its insured if the under-
lying complaint contains allegations that potentially fall
within the scope of coverage.” Lyerla, 536 F.3d at 688 (citing
Gen. Agents Ins. Co. of Am., Inc. v. Midwest Sporting Goods
Co., 828 N.E.2d 1092, 1098 (Ill. 2005)). In other words, if
any portion of the suit potentially falls within the scope
of the coverage, the insurer is obligated to defend. Valley
Forge Ins. Co. v. Swiderski Elecs., Inc., 860 N.E.2d 307, 315
(Ill. 2006) (noting that insurer has duty to defend “even if
only one of several theories of recovery alleged in the
complaint falls within the potential coverage of the pol-
icy”). An insurer may refuse to defend only if “it is clear
from the face of the underlying complaint that the al-
legations set forth in the complaint fail to state facts
that bring the case within, or potentially within, the
coverage of the policy.” Id.
  Momence argues that the allegations contained in
counts one and two of the underlying complaint—the FCA
claims and their IWRPA counterparts—potentially fall
within the scope of the PL coverage and the CGL cover-
age. As quoted above, the PL coverage obligates Healthcap
to defend any suit seeking damages “because of” an
“injury” that is “caused by a ‘medical incident’ ” arising
out of the providing or withholding of various professional
services, including medical or nursing treatment. Momence
points to the allegations of physical harm to the residents
10                                             No. 08-1997

incorporated in counts one and two as the “injury.” That
physical harm to the residents arose out of a medical
incident, Momence asserts, because (according to the
underlying complaint) it resulted from the provision of
shoddy medical and nursing treatment. Momence therefore
concludes that the underlying complaint seeks damages
“because of” the physical harm to the residents. As
Momence puts it, “[b]ut for the inadequate care and
resulting bodily injury, there would have been no lost
services and no false claim[s].”
  Momence uses a similar chain of logic to place counts
one and two potentially under the umbrella of CGL
coverage A, which covers bodily injury and property
damage. CGL coverage A obligates Healthcap to pay those
sums Momence becomes “legally obligated to pay as
damages because of ‘bodily injury’ ” and to defend
Momence “against any ‘suit’ seeking those damages.”
(emphasis added). As with its PL coverage argument,
Momence claims that the injury to the residents is the
essential foundation of counts one and two of the underly-
ing complaint. Without such injury, Momence contends,
the FCA claims and the companion state-law IWRPA
claims would not have been brought. Momence asserts
that any damages that may result from counts one and
two are therefore “because of” the “bodily injury” suffered
by Momence residents, thus triggering Healthcap’s duty
to defend.
  Rather than triggering the duty, that line of argument
effectively bypasses it. The injuries to the residents as
alleged by the plaintiffs relate back to Momence’s cost
No. 08-1997                                                 11

reports to the government where it certified that it pro-
vided quality services and care. Plaintiffs claim Momence
knew that was false. The statutory damages they seek
result from those allegedly false filings, and not from
any alleged bodily injury to the residents. Although the
allegations in the underlying complaint detailing the
injuries suffered by Momence residents put a human
touch on the otherwise administrative act of false
billing, they need not be proven by the plaintiffs to
prevail. Under the FCA and the IWRPA, the plaintiffs
do not have to show that any damages resulted from the
shoddy care. See Horizon W. Inc. v. St. Paul Fire & Marine
Ins. Co., 214 F. Supp. 2d 1074, 1077-79 (E.D. Cal. 2002)
(citing 31 U.S.C. § 3729(a)) (“Liability under the FCA is
based solely upon the creation or presentation of false
claims to the government, not upon the underlying con-
duct used to establish the falsity of such a claim.”), aff’d,
45 Fed. Appx. 752 (9th Cir. 2002). Instead, all the plain-
tiffs need to show is that Momence billed the govern-
ment for services and a level of care that it knew it was
not providing.7 See United States ex rel. Fowler v. Caremark

7
  Momence contends that the underlying complaint is really not
a qui tam action because the FCA and IWRPA claims in the
underlying suit are without merit. Specifically, Momence
argues that the underlying complaint fails to set forth the
specific false claims that were submitted. We take no position
on the merits of the underlying suit’s FCA and IWRPA claims.
We merely note that even if those claims were meritless, that
would not affect the analysis of the duty to defend. See, e.g.,
                                                 (continued...)
12                                                     No. 08-1997

RX, L.L.C., 496 F.3d 730, 740-41 (7th Cir. 2007) (providing
elements of FCA claim); see also Scachitti v. UBS Fin. Servs.,
831 N.E.2d 544, 557 (Ill. 2005) (noting the similarity be-
tween the FCA and the IWRPA and finding case law on
the FCA “instructive” regarding the interpretation of the
IWRPA).
  Other courts have recognized this distinction between
the proof required for the FCA claim and the conduct
underlying the false claims. They uniformly hold that
an insurer is not obligated to defend a qui tam suit merely
because the insurer would have to defend the insured
against a suit for damages resulting from the insured’s
conduct underlying the qui tam action. 8 The case upon

7
  (...continued)
Valley Forge Ins. Co., 860 N.E.2d at 315 (noting that groundless,
false, or fraudulent allegations in the underlying suit do not
affect the duty to defend).
8
  See, e.g., Zurich Am. Ins. Co. v. O’Hara Reg’l Ctr. for Rehab., 529
F.3d 916, 921-22 (10th Cir. 2008) (noting in a similar FCA case
that “[t]he government’s injury was not caused by [the nursing
home’s] failure to provide professional services, but instead
resulted from [the nursing home’s] submission of false and
fraudulent claims for reimbursement. . . . [T]he problem was
not the actual level of services provided . . . but rather that [the
nursing home] billed for services it did not provide—namely,
enhanced services.”); Horizon W. Inc. v. St. Paul Fire & Marine
Ins. Co., 45 Fed. Appx. 752, 754 (9th Cir. 2002) (unpublished)
(affirming the district court’s holding that insurer had no duty
to defend insured in FCA suit under professional liability
                                                       (continued...)
No. 08-1997                                                        13

which Momence principally relies, Watts Industries, Inc. v.
Zurich American Insurance Co., 18 Cal. Rptr. 3d 61 (Cal. Ct.
App. 2004), does not hold to the contrary. Although the
underlying suit in Watts began as a qui tam action on
behalf of southern California municipalities, the municipal-
ities themselves soon intervened. Id. at 64. They asserted
claims for damages on their own behalf against
water systems manufacturers who allegedly sold the
municipalities below-grade parts. In deciding that the
manufacturers’ insurer had a duty to defend the suit
under the “property damage” portion of the CGL policy,
the court focused exclusively on the damages the munici-
palities sought: the cost of replacing the substandard parts
and the costs of future water quality monitoring. Id. at
68. No mention was made of the qui tam claims; they
did not enter into the court’s analysis.
  Despite the lack of supporting precedent and a long line
of cases holding to the contrary, Momence nevertheless
persists in pressing its position that the FCA and IWRPA

8
   (...continued)
policy); Jenkins v. St. Paul Fire & Marine Ins. Co., 8 Fed. Appx. 573,
574 (8th Cir. 2001) (unpublished) (same); M/G Transp. Servs., Inc.
v. Water Quality Ins. Syndicate, 234 F.3d 974, 978 (6th Cir. 2000)
(holding, in suit to determine insurer’s duty to defend FCA
suit seeking recovery of government funds paid after the
insured allegedly submitted false records of Clean Water Act
compliance, that insured’s arguments in favor of a duty to
defend were “thinly disguised attempts to bootstrap liability
for FCA violations into the coverage provided by the environ-
mental pollution policies”).
14                                               No. 08-1997

claims are at least potentially covered. Momence points
out that the factual allegations of the underlying com-
plaint control, not the legal theory alleged. The under-
lying complaint contains a plethora of factual allegations
detailing the residents’ personal injuries. Based on those
allegations, Momence asserts that the suit must be
covered by Healthcap’s policy.
   Momence is correct that the factual allegations in the
complaint, and not the legal labels a plaintiff uses, control.
See, e.g., Lexmark Int’l, Inc. v. Transp. Ins. Co., 761 N.E.2d
1214, 1221 (Ill. App. Ct. 2001). But factual allegations are
only important insofar as they point to a theory of recov-
ery. See, e.g., USF&G v. Wilkin Insulation Co., 578 N.E.2d
926, 932 (Ill. 1991) (“[A]n insurer has a duty to defend its
insured if any theory of recovery alleges potential cover-
age.” (second emphasis added)); Ill. Emcasco Ins. Co. v. Nw.
Nat’l Cas., 785 N.E.2d 905, 908 (Ill. App. Ct. 2003) (noting
that duty to defend arises “if the insurance covers the
liability on any set of facts consistent with the allega-
tions needed to support recovery on any theory raised in
the complaint”) (emphases added). And it is impossible
to construe the underlying complaint as raising any
theory of recovery based on bodily injury. Neither of the
plaintiffs in the underlying suit seeks damages for
personal injury caused by substandard medical care. Nor
could they—Absher and Mitchell were employees of
Momence, not residents, and they lack standing to sue on
No. 08-1997                                                      15

the residents’ behalf.9 See BASF AG, 522 F.3d at 820-21;
Kittay v. Allstate Ins. Co., 397 N.E.2d 200, 203 (Ill. App. Ct.
1979).
  Momence makes two other arguments in favor of cover-
age, both of which lack merit. Momence maintains that
Absher’s and Mitchell’s claims of emotional distress in
counts three and four (the retaliation claims) are properly
classified as claims for “bodily injury” under CGL
coverage A, which defines “bodily injury” as “bodily
injury, sickness or disease sustained by a person.”
Momence attempts to sidestep Illinois case law clearly

9
  Momence suggests that Absher “may have standing” to
bring a claim against Momence on behalf of her mother, who
was a resident of Momence and died there a few weeks before
Absher left Momence’s employ. (Emphasis added.) But the
underlying complaint is absolutely devoid of any factual
allegations suggesting such a claim. See E.E.O.C. v. Lee’s Log
Cabin, Inc., 546 F.3d 438, 443-44 (7th Cir. 2008) (“Federal plead-
ing rules require the plaintiff to ‘give the defendant fair notice
of what the . . . claim is and the grounds upon which it rests.’”
(quoting Bell Atl. Corp. v. Twombly, 127 S. Ct. 1955, 1964 (2007)).
The underlying complaint does not mention Absher’s mother.
Nor does it contain any allegation suggesting that Momence was
at fault for her death. Indeed, it does not even list the estate of
Absher’s mother as a party to the suit. While an insurer certainly
has a duty to defend its insured against any complaint that
leaves open the possibility of coverage, Ill. Emcasco Ins. Co., 785
N.E.2d at 907, that duty is premised on the facts the parties to
the underlying complaint actually alleged in their complaint, not
on those facts that a nonparty to the suit could have alleged had it
decided to sue as well.
16                                                   No. 08-1997

holding to the contrary 1 0 by contending that the policy
itself classifies such claims as “bodily injury.” We need not
describe in detail the tortured interpretation of the policy
Momence presents to support that assertion. For even
if Momence is correct that the policy counts emotional
distress as “bodily injury”—and it does not—the
employment-related practices exclusion forecloses cover-
age of any claims for damages arising from counts
three and four of the underlying complaint.
  Specifically, that exclusion provides that the CGL
coverage does not extend to “any claim” by a “person
arising out of any . . . [t]ermination of that person’s employ-
ment[ ] or [e]mployment-related practices, policies, acts or
omissions, such as coercion, . . . defamation, harassment,
humiliation or discrimination directed at that person.”
(Emphases added.) In counts three and four, Mitchell and
Absher allege that Momence retaliated against them
because they had attempted to call to the attention of
Momence’s management the failure to provide the requi-
site level of care. They also allege that the retaliation
culminated in Momence terminating Mitchell’s employ-
ment and constructively discharging Absher. Those
allegations fall squarely within the employment-related
practices exclusion.

10
   See SCR Med. Transp. Servs., Inc. v. Browne, 781 N.E.2d 564, 571
(Ill. App. Ct. 2002) (collecting cases restricting term “bodily
injury” in insurance policy to “actual physical injury,” as
opposed to broadening it to include mental anguish and
mental distress).
No. 08-1997                                                17

  Momence’s arguments against the application of the
exclusion are unconvincing. Momence contends that
Absher’s allegations of constructive discharge do not
amount to an “employment practice” because she left
Momence on her own. But a constructive discharge is
the legal equivalent of a formal termination, Pa. State
Police v. Suders, 542 U.S. 129, 141 (2004), and a termination
is unambiguously within the employment exclusion.
Moreover, constructive discharge is an allegation con-
cerning an employer’s “[e]mployment-related practices,
policies, acts or omissions” and thus falls within the
ambit of the employment-related practices exclusion.
  Momence also argues that the following allegation
in count three falls outside of the employment-related
practices exclusion: “Momence Meadows[’s] management
faxed Plaintiff Absher’s letter of resignation to potential
employers in an effort to prevent her from finding other
employment.” 11 The exclusion does not cover that allega-
tion, Momence asserts, because Absher was no longer
a Momence employee when the alleged faxing occurred.
The exclusion, however, is not limited to alleged wrongs
occurring during the employment relationship. Rather,
the exclusion bars any claim “arising out of” any
“[e]mployment-related . . . acts,” including discrimina-
tion. Cf. Am. Alliance Ins. Co. v. 1212 Rest. Group, L.L.C.,
794 N.E.2d 892, 900 (Ill. App. Ct. 2003) (“Posttermination
acts of defamation or other employment-related practices

11
 Absher stated in the letter that she was “taking an emergency
mental health leave of absence.”
18                                              No. 08-1997

can reasonably arise directly and proximately from the
termination.”).
  The retaliation alleged here is unequivocally
“employment-related.” It was Momence’s alleged attempt
to “settle the score” with Absher for actions she took
during their employment relationship. Indeed, the only
reason Momence was in possession of Absher’s resigna-
tion letter was by virtue of its employment relationship
with her. The exclusion therefore applies to that allega-
tion of retaliation.
  That brings us to Momence’s final argument in favor
of a duty to defend. Momence claims that the allegations
of retaliation based on its use of Absher’s resignation
letter, its termination of Mitchell for speaking out against
the deficiencies in resident care, and its wrongful
reporting of both Absher and Mitchell to the Illinois
Department of Professional Regulation 1 2 are potentially
covered under the PL coverage. The PL coverage
contains no exclusion for employment-related practices,
so the only issue is whether those allegations potentially
fall within the scope of the PL coverage. To show that they
potentially are within the scope of that coverage, Momence
turns to the PL coverage’s definition of “injury.” That
definition includes “personal injury.” Because “personal
injury” is not specifically defined in the PL coverage,
Momence imports the definition of “personal and ad-

12
  The underlying complaint alleges that Momence “filed
fabricated charges against both Plaintiffs with the Illinois
Department of Professional Regulation.”
No. 08-1997                                               19

vertising injury” from CGL coverage B. The definition of
“personal and advertising injury” found there includes
publishing oral or written statements that either
disparage a person’s services or violate a person’s right to
privacy. According to Momence, the above allegations
concern either disparagement (in the case of Mitchell’s
termination and the wrongful reporting of Mitchell and
Absher to the Illinois nursing regulators) or invasion of
privacy (in the case of Absher’s resignation letter, which
contained details about her mother’s death). Therefore,
Momence concludes, those allegations fall within the
scope of the PL coverage.
  A glaring problem with this argument is that injury is
defined in the PL coverage to include “personal injury,” not
“personal and advertising injury.” But even if we except
Momence’s grafting of “advertising injury” into the PL
coverage’s definition of “injury,” Momence’s argument is
still a loser—it runs aground on the plain text of the PL
coverage. The PL coverage does not cover just any
personal injury. It states that an injury, personal or other-
wise, “must be caused by a ‘medical incident.’ ” The
“medical incident,” in turn, “must arise out of the pro-
viding or withholding of the following professional
services: [m]edical, surgical, dental, or nursing treatment
to a person.” Nowhere has Momence explained how
Mitchell’s and Absher’s alleged injuries arise from the
“providing or withholding” of “professional services.” So
even if it is true that the retaliation Absher and Mitchell
experienced was an “injury” as the PL coverage defines
that term, it was not an injury caused by a “medical
incident”—and thus not covered under the PL coverage.
20                                            No. 08-1997

                           III.
  The wrongdoings for which the plaintiffs in the underly-
ing suit attempt to hold Momence liable are the filing
of false claims and the unlawful employment actions
taken against Absher and Mitchell, not the injuries
suffered by the Momence residents. Because none of the
policy provisions cover such claims, Healthcap does not
have a duty to defend Momence in the underlying suit.
We A FFIRM .

                          5-20-09