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Truck Insurance Exchange v. Pacificare Health Systems3/30/2005
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 977(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 977(b). This opinion has not been certified for publication or ordered published for purposes of rule 977.
This appeal hinges on the meaning of the word "injury" contained in a comprehensive hospital and professional liability insurance policy. The insurers argue that the term only pertains to bodily (and resulting mental) injuries; however, their policy ambiguously states that an injury includes, but is not limited to, bodily injury. Interpreting the ambiguity in the policy in the manner most favorable to the objectively reasonable expectations of the insured, we conclude that the insurers' policy potentially covers claims asserted against the insured that do not include allegations of bodily injury. Therefore, the insurers must provide a defense in the lawsuits brought against their insured.
FACTS
PacifiCare and the Underlying Actions
Appellant PacifiCare Health Systems, Inc. (PacifiCare) is a managed care organization that provides health insurance programs and health management services to its subscribers. PacifiCare does not own hospitals or deliver direct medical care to its subscribers. Rather, it contracts with hospitals and medical groups who furnish medical care to PacifiCare's subscribers. PacifiCare promised to deliver "quality health care" to its subscribers.
Beginning in 1999, PacifiCare became the target of numerous lawsuits. Some of the lawsuits were brought by PacifiCare subscribers. Others were brought by the doctors under contract to provide health care to PacifiCare's subscribers. The subscriber lawsuits were class actions alleging that PacifiCare intentionally or negligently caused substantial injury by employing unfair business practices aimed at limiting health care services and information provided to subscribers. The objected-to practices included capitation (paying doctors a set fee per patient, regardless of the amount of care the patient needed); giving financial rewards to doctors who limited the health care services they provided; and issuing "gag orders" restricting information given to patients regarding available medical treatments.
The subscriber lawsuits do not allege bodily injury; rather, the claim is that the subscribers paid for, but did not receive, the "quality health care" PacifiCare promised to provide, due to the deceptive and unfair manner in which PacifiCare operated its business. The subscribers allege an assortment of claims, including unjust enrichment; false advertising; unfair business practices; violations of the federal Racketeer Influenced and Corrupt Organizations Act (RICO); and violations of the Employee Retirement Income Security Act (ERISA).
The class action lawsuits brought by or on behalf of doctors under contract with PacifiCare are the flip side of the subscribers' lawsuits. The physicians allege that PacifiCare provided inadequate reimbursement for patient treatment with its capitation policy; structured financial incentives and disincentives in a way that interfered with the doctor-patient relationship and with independent medical decision-making; and misrepresented or failed to disclose its policies. The provider lawsuits assert that PacifiCare either knew or recklessly disregarded the consequences of its improper conduct, which has harmed the physicians and their patients, and affected the physicians' business and property interests. The physicians' lawsuits allege RICO violations; breach of contract; unjust enrichment;
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