Hospital Sues Patient's Insurer for Breach of Settlement

* * the judgment of the district court is affirmed. the honorable david s. doty, united states district judge for the district of united commercial travelers of * mistake. see zontelli & sons, inc. v. city of nashwauk, 373 n.w.2d 744, 752-54 not investigate hansen's medical records until three days after settling with in october, healtheast billed uct $331,893.40 for hansen's care. uct of mistake to insurer because it was in the best position to evaluate). a. minnesota. as a sophisticated party); norwest bank minn., n.a. v. verex assurance, inc., no. in a diversity suit, this court applies the substantive law of the forum state, here providers. a uct officer estimated that in 2006, the year of the healtheast claim, summary judgment is appropriate if, viewing the evidence favorably to the non- minnesota. see urban hotel dev. co., inc. v. president dev. group, l.c., 535 f.3d bore the risk of internal miscommunication). no. a04-657, 2005 wl 14922, at *4 (minn. ct. app. jan. 4, 2005) (analyzing insurer ___________ 1 days after settling, uct obtained hansen's health records. reviewing them, equitable relief. district court reasonably allocated the risk of mistake to uct. see pugh v. westreich, uct concluded that hansen misrepresented his medical history on the insurance rescinding, uct hired an expert who determined that its maximum potential liability n.w.2d 730, 734 (minn. 1980), citing olson v. shepard, 206 n.w. 711, 712-13 n.w.2d 786, 793 (minn. 1987). as discussed, uct possessed the facts necessary to uct asserts it properly rescinded the settlement based on its unilateral mistake. challenge the validity of the policy and the amount of the demand before settling. ___________ coinsurance information and lifetime reserve days. uct did not investigate hansen's uct. that october, he was admitted to healtheast. before his admission, uct mistake). healtheast. under these facts, uct's pre-settlement inaction is an easily avoidable had significant experience in handling and negotiating claims with healthcare including that he entered healtheast shortly after the policy became effective. uct nevertheless, it merely subtracted 20% from the total healtheast demand and offered mistaken parties that could have "easily" avoided the mistake before contracting); see the outcome is the same, however, under principles of mutual mistake. as rare high claims, it is not a sophisticated party in this case. this court disagrees. uct denied rescission based on unilateral mistake. see newmech cos., inc., 2008 wl for hansen's care was $134,985.44. iii. a unilateral mistake is available where enforcement is an "oppressive burden" and contends that an allocation-of-risk analysis is relevant only to a mutual mistake. this lutheran church, 104 n.w.2d at 649. a party may not, however, escape contract alsofailedtoinvestigatethe"exceptionallylarge"amounthealtheastbilled. uctdid to deny relief. see restatement (second) of contracts � 157 cmt. a. the fact that ___________ assertion is without merit. see id. (allocating risk in a claim for relief based on inthisdiversitycase,healtheastbethesdahospital("healtheast")suedunited 10 (minn. ct. app. jan. 22, 2008), citing restatement (second) of contracts � 153 mutual mistake if it bears the risk of the mistake. see winter v. skoglund, 404 granted summary judgment to healtheast. having informed healtheast that hansen was covered by its policy. healtheast cared for -2- -3- * district of minnesota. knowledge as sufficient. newmech cos., inc., 2008 wl 186251 at *10. a court may because it exceeds uct's maximum liability under its policy. uct's lone authority, uct next asserts that the district court erred in granting summary judgment by under minnesota law, rescission of a contract for mistake is ordinarily founded on filed: march 9, 2010 uct also maintains that its inaction does not reach the degree of fault required be granted for a mistake so long as the mistake was not the result of a lack of due care. healtheast bethesda hospital, * applying principles of mutual mistake to its claim of unilateral mistake. uct available facts). because uct bore the risk of mistake, the district court properly plaintiff - appellee, * the settlement, and did not calculate what it now claims is its maximum liability until v. * district court for the this court reviews the district court's judgment de novo. dg&g, inc. v. ___________ of lonsdale v. newmech cos., inc., no. 66-c7-03-001941, 2008 wl 186251, at *9- with unilateral mistake, an adversely effected party may not avoid a contract based on that bore the risk of mistake and could have avoided it by investigating hansen's defendant - appellant. * app. 1980), the appellate court reduced a trial court's award after finding that the entitled to judgment as a matter of law. baum v. helget gas prods., inc., 440 f.3d policy. a party bears the risk of mistake if it is aware, at the time of contracting, that united states court of appeals 186251 at *9-10. also beasley v. medin, 479 n.w.2d 95, 98 (minn. ct. app. 1992) (denying rescission unilateral mistake); restatement (second) of contracts � 153 (explaining that a precludes rescission. see id. in this case, uct did not exercise anything approaching c. of state law. id. uct handled more than 495,000 claims and had premium revenue exceeding $25 court awarded healtheast the full settlement amount, plus interest. uct appeals. -4- 874, 877 (8th cir. 2008). this court reviews de novo the district court's interpretation the settlement amount. uct failed to investigate hansen's health history until after other." gethsemanelutheranchurchv.zacho,104n.w.2d645,649(minn.1960). because adversely affected party did not conduct an investigation to discover readily (1981). of relief under both unilateral and mutual mistake. c8-95-2292, 1996 wl 363371, at *3 (minn. ct. app. july 2, 1996) (allocating risk no. 08-3665 a party could have avoided a mistake by reasonable care neither commands nor flexsol packaging corp. of pompano beach, 576 f.3d 820, 823 (8th cir. 2009). also allocate risk to a party where reasonable. see id.; bauer v. am. int'l adjustment before colloton, beam, and benton, circuit judges. (minn. 1985) (upholding a trial court's allocation of risk and denial of relief to * appeal from the united states it has limited knowledge of facts to which the mistake relates, but treats that -5- parties operated under a mutual mistake. the appellate court noted that relief would jurisdiction under 28 u.s.c. � 1291, this court affirms. moving party, there is no genuine issue of material fact and the moving party is the district court denied relief to uct, ruling that it was a sophisticated party ______________________________ uct contends that because healtheast's claim was substantially larger than its contract was not voidable because uct bore the risk of any mistake. the district ___________ liability based on unilateral mistake if the party bears the risk of that mistake. see city (minn. 1926). even if there is no ambiguity, fraud, or misrepresentation, relief from 15 months after settling the claim. this record of inaction strongly supports the denial on appeal, uct also contends that the judgment is a windfall to healtheast, judgment. the district court granted summary judgment to healtheast, ruling that the there is ambiguity, fraud, or misrepresentation. nichols v. shelard nat'l bank, 294 commercial travelers of america ("uct") for breach of an insurance settlement 1019, 1022 (8th cir. 2006). benton, circuit judge. rescission would impose no substantial hardship on the other party. gethsemane contract. the district court1 million. according to the record, uct reimbursed claims of varying amounts, america, * either mutual mistake or a "mistake by one [party] induced or contributed to by the hansen until his death in april 2006. the settlement agreement. during that time, uct sought clarification only of hospital for the eighth circuit including some exceeding $100,000, and has sufficient knowledge and experience to -6- however, provides no support. in ferguson v. cotler, 382 so.2d 1315 (fla. dist. ct. healthhistorydespitehavingbillinginformationshowinghansen'smedicaltreatment, generally, a party cannot avoid a contract on the basis of a unilateral mistake unless in june 2005, nels j. hansen purchased a medicare supplement policy from evaluate claim settlement issues. although the healtheast demand was atypical, the id. at 1316. here, to the contrary, uct's inaction and lack of due care preclude ordinary care. one month elapsed between healtheast's billing and the finalizing of application. uct rescinded the policy and refused to pay healtheast. months after offered to settle for $265,514.72, which healtheast accepted in november. submitted: october 21, 2009 b. healtheast sued uct for breach of contract. both moved for summary mistaken party is not entitled to relief under unilateral mistake if it bore the risk of i. ii. co., 389 n.w.2d 765, 768 (minn. ct. app. 1986) (finding that an insurance company