United States District Court, D. New Hampshire
OPINION AND ORDER
JOSEPH N. LAPLANTE, District Judge.
The possible contamination of surgical instruments after exposure to a communicable neurological disease-and whether those instruments constitute "premises" under the terms of an insurance policy-led to a coverage dispute that culminated in this litigation. Plaintiff Catholic Medical Center ("CMC") seeks a declaratory judgment that defendant Fireman's Fund Insurance Company ("Fireman's Fund") wrongfully denied coverage for certain losses after a CMC neurosurgical patient was diagnosed several months after surgery, necessitating the destruction of the potentially contaminated instruments and causing temporary suspension of CMC's neurosurgery program. The parties have filed cross-motions for summary judgment. Having reviewed the insurance policy at issue and the undisputed factual record, and having held oral argument, the court finds that CMC's claims are not covered. Fireman's Fund's motion is therefore granted; CMC's is denied.
I. Summary Judgment
Summary judgment is properly granted when the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law. See Fed.R.Civ.P. 56(a). The court "views all facts and draws all reasonable inferences in the light most favorable to the non-moving" parties. Estrada v. Rhode Island, 594 F.3d 56, 62 (1st Cir. 2010). On cross-motions for summary judgment, "the court must consider each motion separately, drawing inferences against each movant in turn." Merchants Ins. Co. of N.H., Inc. v. U.S. Fid. & Guar. Co., 143 F.3d 5, 7 (1st Cir. 1998) (quotation marks omitted). This rule is largely academic here since, as previously noted, the material facts are undisputed.
II. Factual Background
On May 24, 2013, CMC personnel performed neurosurgery on a patient. Several months after the surgery, CMC learned that the patient was experiencing symptoms consistent with Cruetzfeldt-Jakob Disease ("CJD"), a communicable, incurable and fatal neurological disease. A lab test in mid-August 2013 established that the patient likely had CJD. The patient died soon after and post-mortem analysis confirmed the CJD diagnosis. CMC also determined that eight patients had undergone neurosurgery at CMC since May 24, 2013. CMC had two sets of neurosurgery instruments, so it was possible that some, none, or all of these eight patients underwent surgery with the same instruments used on the CJD patient, potentially exposing them to the disease.
CMC reported the incident to the New Hampshire Department of Health and Human Services ("New Hampshire HHS"), as required by law because CJD is a communicable disease. Representatives from New Hampshire HHS met daily with CMC personnel to formulate a response. Since it could not be determined which of the two surgical kits was used on the original patient, New Hampshire HHS advised CMC that both kits had to be decontaminated, a process that will result in the destruction of the instruments. Although DHHS had the authority to issue a formal order requiring CMC to take steps in response to the CJD incident, it did not do so because CMC had already taken the required steps or agreed to do so without resistance.
Aside from quarantining the affected instruments and issuing various notifications to the public and the eight post-incident surgical patients, CMC undertook no other action, such as additional decontamination, evacuation or operating room closure. CMC was, however, forced to suspend its neurosurgery program from August 16, 2013 until February 24, 2014, when it completed its purchase of new instruments.
CMC notified Fireman's Fund of a potential claim as soon as it became aware of the CJD incident, and later filed a formal claim for the loss of the surgical instruments and losses occasioned by the suspension of CMC's neurosurgery program. Fireman's Fund denied the claim as a non-covered loss, and also denied CMC's subsequent request to reconsider its position. CMC filed suit in New Hampshire Superior Court in March 2014. Fireman's Fund timely removed the case to this court.
III. The Insurance Policy
During the relevant time period, Fireman's Fund insured CMC pursuant to a Commercial Property policy. As pertinent to this case, the policy includes two endorsements. The first is a Health Care Extension Endorsement, which, in turn, includes Communicable Disease Coverage, which provides, in relevant part:
13. Communicable Disease Coverage
a. We will pay for the following under Communicable Disease Coverage:
(1) Direct Physical loss or damage to Property Insured caused by or resulting from a covered communicable disease event at the ...