Court Opinion

ID: 6935960
Source: CourtListenerOpinion
Date Created: 2022-07-24 00:33:07.237334+00
Date Added: 2024-06-11T16:07:27.833400
License: Public Domain

HEANEY, Senior Circuit Judge,
dissenting.
I respectfully dissent. Contrary to the majority’s construction of the evidence presented by the parties below, my review of the record convinces me that genuine issues of material fact exist as to whether the corporate veil should be pierced in this case. The critical issues presented in this case are whether the NSHMA member hospitals (1) exercised control of NSHMA; (2) knowingly undercapitalized NSHMA; and (3) made promises to Great Global that they would fund all the claims due under the North Star Program. In my view, the record presents sufficient evidence from which a jury could find that Great Global was a mere conduit for NSHMA’s self-insurance plan, that NSHMA-member hospitals promised Great Global that they would make sufficient contributions to ensure payment on all North Star Program claims, and that the hospitals failed to honor that commitment.
*430Allin Karls’ affidavits detail the formation of both companies and assert that the clear, well-publicized philosophy behind NSHMA was that, in all events, the member hospitals would fund the claims under the program. Karls describes a complex and costly committee structure whereby member hospitals were kept regularly informed of the day-today operations of NSHMA, including its capitalization. Moreover, Karls recounts conversations with more than fifty hospital administrators in which they “expressed to [Karls] their facilities’ financial commitments to NSHMA.” Appellant’s App. at 40-41.
The Appellant’s claims are also supported by the statements of representatives from some of the member hospitals. The affidavit of Michael Miller, representative of member hospital Metropolitan Medical Center (“MMC”) in Minneapolis, describes how MMC joined NSHMA with its eyes wide open. According to Miller, MMC studied the insurance options carefully before determining that “the risk of NSHMA not being able to pay on [its] claims was minimal” and that, therefore, “MMC was willing to accept that risk knowing full well that if funds were not available to pay its claims then MMC would have to make up the difference.” Appellant’s App. at 50.
Finally, from the fact that NSHMA paid Great Global a fronting fee of 4.75% of the premiums generated by the North Star Program while itself reinsuring 90-95% of the related claims, a jury could certainly infer that Great Global was acting as a mere conduit for the insurance dealings of NSHMA. That, in combination with the evidence that the member hospitals controlled NSHMA and promised Great Global that it would fund the claims from the North Star Program, makes the granting of summary judgment improvident in this case.