            IN THE SUPREME COURT OF THE STATE OF DELAWARE

CORVEL CORPORATION,                           §
                                              §      No. 513, 2013
               Defendant Below-               §
               Appellant,                     §      Court Below: Superior Court of the
                                              §      State of Delaware, in and for
       v.                                     §      New Castle County
                                              §
HOMELAND INSURANCE                            §      C.A. No. N11C-01-089
COMPANY OF NEW YORK,                          §
                                              §
               Plaintiff Below-               §
               Appellee.                      §

                                Submitted: December 3, 2014
                                  Decided: March 6, 2015


Before STRINE, Chief Justice, HOLLAND, VALIHURA, and VAUGHN,
Justices, BOUCHARD,* Chancellor, constituting the Court en Banc.


Upon appeal from the Superior Court. REVERSED and REMANDED.


Kevin G. Abrams, Esquire, John M. Seaman, Esquire, (argued), Steve C. Hough,
Esquire, Abrams and Bayliss LLP, Wilmington, Delaware; Somer G. Brown, Esquire,
(argued), Cox, Cox, Filo, Camel & Wilson LLC, Lake Charles, Louisiana, for
Appellant.

James W. Semple, Esquire, (argued), Corrine Elise Amato, Esquire, Morris James
LLP, Wilmington, Delaware; Michael J. Rosen, Esquire, Peter F. Lovato, III, Esquire,
Boundas, Skarzynski, Walsh & Black, LLC, Chicago, Illinois, for Appellee.


______________

* Sitting by designation under Del. Const. art. IV, § 12.
VAUGHN, Justice, for the Majority:

         Defendant Below/Appellant, CorVel Corporation (“CorVel”), appeals from an

order of the Superior Court granting partial summary judgment in favor of Plaintiff

Below/Appellee, Homeland Insurance Company of New York (“Homeland”). The

case arises from class actions filed against CorVel and others in the State of

Louisiana. In those actions, medical service providers alleged that CorVel violated

notice provisions contained in a Louisiana statute known as the Preferred Provider

Organizations Act.1 CorVel eventually entered into a settlement in which it resolved

all of the Louisiana litigation.

         CorVel was insured under an errors and omissions insurance policy issued by

Homeland. The policy had a number of exclusions, one of which was an exclusion

for “penalties.” The issue in this case is whether the amount that CorVel paid to settle

the Louisiana litigation was a “penalty,” and, therefore, not a covered loss under the

insurance policy. The Superior Court concluded that the amount paid was a

“penalty.” We have concluded that it was not a “penalty,” and that the policy’s

exclusion for “penalties” does not apply.




1
    The act is also known as the “Any Willing Provider Act.”

                                                 2
               I.   FACTUAL AND PROCEDURAL HISTORY

      CorVel, a Delaware corporation, owns and operates a Preferred Provider

Organization (“PPO”) network throughout the United States. As part of its national

network, CorVel had PPO agreements with medical providers in Louisiana. Under

the agreements, the medical providers agreed to discount rates on certain medical

services. CorVel also entered into agreements with group workers’ compensation

payers, such as employers, who utilized CorVel’s discounted PPO rates when paying

for workers’ compensation services.

      By statute, the State of Louisiana has approved PPO networks and their

discounted rates, but has imposed certain statutory requirements. One requirement

is that the PPO give notice to a medical provider when a discount is to be applied.

The notice provisions of the Louisiana statute can be satisfied in either one of two

ways. One way is by issuing a benefit card to a patient that the patient can then

present to the medical provider. The other way is by issuing a written notice to the

medical provider that a certain group purchaser is a PPO participant.

      Failure to comply with the notice requirements subjects a PPO to financial

consequences under La. R.S. § 40:2203.1(G), which reads as follows:

            Failure to comply with the [notice provisions] of this
            Section shall subject a group purchaser to damages payable
            to the provider of double the fair market value of the

                                         3
              medical services provided, but in no event less than the
              greater of fifty dollars per day of noncompliance or two
              thousand dollars, together with attorney fees to be
              determined by the court.

       Two class actions were brought against CorVel and others in Louisiana state

court alleging that CorVel had failed to comply with the statutory notice provisions.

The actions sought damages under La. R.S. § 40:2203.1(G). Both actions made the

same allegations and sought the same relief. The first action was captioned SWLA

Hospital Assoc. d/b/a Lake Charles Memorial Hospital v. CorVel (the “LCMH

Arbitration”).2 The second action, filed September 30, 2009, was captioned George

Raymond Williams M.D. Orthopedic Surgery v. SIF Consultants of Louisiana, Inc.

(the “Williams Litigation,” and together with the LCMH Arbitration, the “Louisiana

Litigation”).3 On March 24, 2011, Homeland and Executive Risk Specialty Insurance

Co. (“Executive Risk”), another CorVel insurer, were also made parties to the

Williams Litigation under La. R.S. § 22:1269, which provides that under certain

conditions an “injured person . . . shall have a right of direct action against the insurer

within the terms and limits of the policy; and, such action may be brought against the

insurer alone.”4


2
  See CorVel Corp. v. Sw. La. Hosp. Ass’n, 2007 WL 594904 (W.D. La. Feb. 21, 2007) (ordering
the parties to enter arbitration for statutory claims under La. R.S. § 40:2203.1).
3
  Williams v. SIF Consultants of Louisiana, Inc., 2013 WL 7330225 (La. Dist. Ct. Jul. 29, 2013).
4
  La. R.S. § 22:1269.

                                               4
       On July 23, 2011, CorVel agreed to settle the Louisiana Litigation and other

claims pending before the Louisiana Office of Workers’ Compensation for $9

million, including an amount for attorneys’ fees payable to plaintiff class counsel.

As part of the settlement, CorVel assigned to the plaintiff class its rights under the

insurance policy issued by Homeland and Executive Risk.5

       On January 10, 2011, Homeland filed an action against CorVel in the Delaware

Superior Court seeking, among other things, declaratory relief that any amount paid

by CorVel to the plaintiff class as a result of the Louisiana Litigation was a “penalty”

under La. R.S. § 40:2203.1(G) and not a covered loss under the insurance policy.

       The Homeland policy provided, in pertinent part, as follows:

               The Underwriters will pay on behalf of the Insured any
               Loss which the Insured is legally obligated to pay as a
               result of any Claim that is first made against the Insured .
               . . and reported to the Underwriter either during the Policy
               Period or in any event within ninety (90) days after the end
               of the Policy Period, in accordance with CONDITION (B)
               of this Policy.

               “Loss” means . . . Defense Expenses and any monetary
               amount which an Insured is legally obligated to pay as a
               result of a claim.



5
 Appellant’s Op. Br. App. at A265-66 (“CorVel shall assign to the Class any and all of the its rights
to: (a) receive any and all proceeds available/awarded pursuant to CorVel’s insurance policies with
respect to the released claims . . . and (b) pursue declaratory judgment and/or damages action with
respect to indemnity coverage under these policies for the released claims.”).

                                                 5
                Loss shall include:

                (1) a claimant’s attorney’s fees and court costs, but only in
                an amount equal to the percentage that the amount of
                monetary damages covered under this Policy for any
                settlement or judgment bears to the total amount of such
                settlement or judgment . . .

                (3) punitive, exemplary or multiplied damages where
                insurable by law . . .

                Loss shall not include:

                (1) fines, penalties or taxes; provided that (A) punitive
                damages shall not be deemed to constitute fines, penalties
                or taxes for any purpose herein . . . .

         Executive Risk sought and received approval to intervene in the Superior Court

action filed by Homeland.6 The Executive Risk policy contained language similar to

the Homeland policy, and, of importance to this case, also excluded penalties from

coverage.

         On June 13, 2013, the Superior Court issued an opinion and order granting

summary judgment to Executive Risk and partial summary judgment to Homeland on

the ground that the amount that CorVel paid to settle the Louisiana Litigation was a

penalty.

         When the Superior Court issued its June 13, 2013, opinion, a motion for partial


6
    Executive Risk has since settled with CorVel and been dismissed from the case.

                                                 6
summary judgment filed by the plaintiff class against Executive Risk in the Williams

Litigation was pending in Louisiana. In the motion, the plaintiff class contended that

damages under La. R.S. § 40:2203.1(G) were statutory damages and not penalties.

Executive Risk contended, as Homeland does here, that the damages under the statute

were penalties. Because the insurance policy excluded penalties from the definition

of Loss, the insurance company argued that the amount paid by CorVel to the plaintiff

class was not covered under the policy issued to CorVel.

       On July 29, 2013, almost seven weeks after the Superior Court issued its

opinion and order, the Louisiana trial court issued an opinion in the Williams

Litigation granting the plaintiff class’ motion for partial summary judgment and

holding that damages under La. R.S. § 40:2203.1(G) are statutory damages, not

penalties.7 Thus, according to the Louisiana trial court, the insurance policy issued

to CorVel covered the amount paid to the plaintiff class in the Louisiana Litigation.

       Executive Risk appealed the trial court’s decision to the State of Louisiana

Court of Appeals for the Third Circuit. The appellate court affirmed the trial court’s

judgment. It also found that damages under La. R.S. § 40:2203.1(G) are statutory

damages, or damages punitive in nature, but not penalties.8 Based on these findings,


7
  Williams v. SIF Consultants of Louisiana, Inc., 2013 WL 7330225 (La. Dist. Ct. Jul. 29, 2013).
8
  Williams v. SIF Consultants of Louisiana, Inc., 133 So.3d 707 (La. Ct. App. 2014), reh’g denied
(Apr. 9, 2014).

                                               7
the appellate court concluded that the settlement amount paid by CorVel was a

covered loss under the policy issued by Executive Risk. Executive Risk subsequently

settled in that case, and no appeal was taken to the Louisiana Supreme Court from the

decision of the appellate court.

       Meanwhile, in Delaware, the Superior Court sent a letter to counsel on July 26,

2013, three days before the Louisiana trial court’s decision in the Williams Litigation

was issued, stating that “to the extent there are claims still pending in this litigation,

a trial date will be assigned promptly.”9 The Delaware Superior Court requested that

each party identify the claims it intended to present at trial and state the number of

trial days the party would need.

       On August 15, 2013, after the Louisiana trial court’s decision in the Williams

Litigation was issued, counsel for Homeland and Executive Risk wrote to the

Delaware Superior Court that no issues remained and that the docket should be

marked closed. On August 22, 2013, counsel for CorVel responded with a letter

stating that a trial was still necessary on its affirmative defenses -- i.e., that

Homeland’s denial of coverage was barred by waiver and estoppel. But after further

correspondence between the court and counsel, the Superior Court entered an order



9
 The judge who issued the June 13, 2013, opinion and order retired shortly thereafter. The July 26,
2013, letter was written by his successor.

                                                8
on August 27, 2013, closing the case on the docket. In that order, the Superior Court

referred to its June 13, 2013, order as its final order and judgment.

       On September 3, 2013, CorVel filed a Motion to Alter or Amend the August

27, 2013, order under Superior Court 59(d), or, alternatively, a Motion for Relief

from Judgment under Rule 60(b). The Superior Court denied both motions in a

September 20, 2013, order. In that order, however, the Superior Court referred to its

August 27, 2013, order as its final order.

      On September 26, 2013, CorVel filed its appeal to this Court. Homeland filed

a Motion to Dismiss the Appeal on the grounds that the Superior Court’s final order

was its June 13, 2013, opinion and order, and that the appeal was therefore untimely.

This Court denied Homeland’s motion without prejudice.

                                 II. DISCUSSION

      Homeland has renewed its Motion to Dismiss the Appeal. Homeland argues

that the June 13, 2013, opinion and order granted the entirety of the relief it sought,

resolved all claims as to all parties, mooted the remaining arguments, and expressed

the Superior Court’s decision to resolve all of the claims presented. Homeland

contends that the trial court’s June 13, 2013, opinion and order clearly and

unambiguously granted Homeland’s motion for summary judgment, holding that there

was no coverage for the amount CorVel paid to the plaintiff class to settle the

                                             9
Louisiana Litigation under the insurance policy.

       The question of whether an order constitutes a final judgment depends on

“whether the judge has or has not clearly declared his intention in this respect in his

opinion.”10 CorVel had pled affirmative defenses. In June 2012, the Superior Court

entered an order that apparently was intended to stay discovery “on issues not

resolved through the Court’s adjudication of any dispositive motions.” The June 13,

2013, opinion and order did not expressly address affirmative defenses, and it appears

that CorVel, at least initially, contemplated proceeding on those defenses after the

motion for partial summary judgment was granted. On this record, we find that the

August 27, 2013, order was the Superior Court’s final order and that CorVel’s appeal

was timely filed.

       We review a grant of summary judgment de novo.11 Interpretation of a statute

is a question of law, which we also review de novo.12

       “Comity permits one state to give effect to the laws of a sister state, not out of

obligation, but out of respect and deference.”13              We have acknowledged that

10
   J. I. Kislak Mortgage Corp. v. William Matthews, Builder, Inc., 303 A.2d 648, 650 (Del. 1973)
(quoting United States v. F. & M. Schaefer Brewing Co., 356 U.S. 227, 232 (1958)).
11
   Kelty v. State Farm Mut. Auto. Ins. Co., 73 A.3d 926, 929 (Del. 2013) (citing E. Sav. Bank, FSB
v. CACH, LLC, 55 A.3d 344, 347 (Del. 2012)).
12
   Kelty, 73 A.3d at 929 (citing Sussex Cnty. Dep’t of Elections v. Sussex Cnty. Republican Comm.,
58 A.3d 418, 421 (Del. 2013)).
13
   Columbia Cas. Co. v. Playtex FP, Inc., 584 A.2d 1214 (Del. 1991) (quoting 16 Am. Jur. 2d,
Conflict of Laws § 10, at 28 (1979)).

                                               10
“important and novel issues of other sovereigns are best determined by their courts

where practicable.”14 Where a foreign statute has been interpreted by courts of the

state of its origin, such interpretation should be followed in other states where the

statute is applied.15 Pursuant to the doctrine of comity, the courts of a sister state

should adopt the decision of the highest tribunal of the enacting state concerning

construction of the statute.16

        CorVel argues that, in accordance with the doctrine of comity, we should show

deference to the Louisiana appellate court, and adopt its interpretation of La. R.S.

§ 40.2203.1(G). We agree. The Louisiana appellate court considered the same

Louisiana statute and analyzed almost identical insurance policy language as that

involved in this case. Because the Louisiana appellate court in the Williams

Litigation is the highest Louisiana appellate court to construe La. R.S.

§ 40.2203.1(G), we adopt its reasonable interpretation as our own. We find that La.


14
   Martinez v. E.I. DuPont de Nemours and Co., Inc., 86 A.3d 1102, 1110 (Del. 2014).
15
   2 Sutherland Statutory Construction § 37:3 (7th ed.) (internal citations omitted). See, e.g., Kahn
v. Pony Express Courier Corp., 20 P.3d 837, 849 (Or. Ct. App. 2001) (examining decisions of the
Montana appellate courts interpreting and applying a Montana statute to determine its intent);
Peterson v. Ely, 569 P.2d 1059 (Or. 1977) (construing Washington statute in accordance with
decisions of Washington Supreme Court); People ex rel. Shults v. Lombard, 398 N.Y.S.2d 932 (Co.
Ct. 1977) (“The decision of the foreign court of last resort is controlling on the question to be
decided by a court of this State, and this is especially true when a question arises with respect to the
statute and constitution of the foreign state.”) (internal citations omitted)); King v. Klemp, 57 A.2d
530, 533 (N.J. Ch. 1947) (“[W]here the construction of a foreign statute is involved, our courts will
accept as controlling the interpretation placed thereon by the courts of that state.”).
16
   See supra footnote 15.

                                                  11
R.S. § 40.2203.1(G) provides for statutory damages, not penalties. Thus, we find that

the amount CorVel paid to settle the Louisiana Litigation, including attorneys’ fees,

is not excluded from the definition of “Loss” by the insurance policy provision that

excludes “penalties.”

       In our view, the Dissent is based upon several flawed premises. The Dissent

maintains that the Superior Court rendered its decision well before the Louisiana trial

court issued its ruling. In other words, it takes to task the District Court of Louisiana

for the 27th Judicial District for not deferring to the Delaware Superior Court. The

fact is that the Louisiana Litigation had been in progress for many years prior to the

filing of the Delaware suit.17 The center of this litigation has been in Louisiana and

the dispute underlying the Delaware declaratory action arises out of the Louisiana

Litigation.

       The Delaware suit was filed on January 10, 2011,18 after the Louisiana Court

of Appeals for the Third Circuit affirmed a ruling in another case that had negative




17
   In 2004 and 2005, CorVel and LCMH were embroiled in legal action in Louisiana. On December
22, 2006, LCMH instituted a putative class arbitration against CorVel (Sw. La. Hosp. Ass’n. d/b/a
Lake Charles Mem’l Hosp. v. CorVel). LCMH claimed that CorVel violated Louisiana law, and
sought coverage from an insurance policy issued by Homeland. On September 30, 2009, the
Williams Litigation was filed. The lawsuit claimed the same violation of Louisiana law as claimed
by LCMH against CorVel (and against Homeland).
18
   Homeland Ins. Co., et al. v. CorVel Corp., 2013 WL 3937022 (Del. Super. Jun. 13, 2013).

                                               12
implications for the insurance carriers.19         Specifically, on June 30, 2010, the

Louisiana Court of Appeals for the Third Circuit affirmed a ruling by the trial court,

in which the trial court stated the following:

              This Court notes from a very basic standpoint that [the
              Louisiana statute § 40:2203.1(G)] makes no mentions of
              fines or penalties . . . I believe from a very basic standpoint
              that damages are covered by the Columbia policy. No one
              is arguing that point.

              Now, as to whether or not the quote, “damages” being
              sought by the plaintiffs are in fact civil fines and penalties
              this Court is of the position that they are not.20

Thus, the more compelling conclusion is that the Appellees filed in Delaware when

they saw the handwriting on the wall in Louisiana.

       Moreover, there is very little connection to the State of Delaware in this

litigation.   The only nexus with the State of Delaware is CorVel’s situs of

incorporation. CorVel is a Delaware corporation, with its principal place of business

in California. Homeland is a New York corporation, with its principal place of

business in Massachusetts. Executive Risk is a Connecticut corporation, with its

principal place of business in New Jersey.



19
   Gunderson v. F.A. Richard & Associates, Inc., No. 2004-2417 (14th Jud. Dist. Ct., Parish of
Calcasieu, La. Jul. 20, 2007), aff’d, 44 So.3d 779 (La. App. 2010); Appellant’s Op. Br. App. at
A987.
20
   Appellant’s Op. Br. App. at A987.

                                              13
       The connection this litigation has with the State of Louisiana is much stronger.

Although CorVel is incorporated in Delaware and maintains its headquarters in

California, the company owns and operates PPO networks throughout the United

States. One of the entities with which CorVel had a PPO agreement was Lake

Charles Memorial Hospital in Louisiana. This litigation first began about a decade

ago when LCMH brought suit against CorVel in Louisiana,21 alleging a violation of

Louisiana law, which by its own terms has no application outside that state’s

boundaries.22       Moreover, the parties agree that there is no difference between

Delaware and Louisiana regarding construing contracts. For example, they agree that

all potentially applicable state laws provide that coverage provisions should be

construed broadly and exclusions should be construed narrowly.

       The Dissent maintains that Delaware law applies notwithstanding the absence

of a choice of law provision in the insurance policy. While the parties may have

agreed for purposes of this appeal that Delaware law applies to the construction of the



21
    See CorVel Corp. v. Sw. La. Hosp. Ass’n, 2007 WL 594904 (W.D. La. Feb. 21, 2007) (ordering
the parties to enter arbitration for statutory claims under La. R.S. § 40:2203.1, and discussing the
filing of Sw. La. Hosp. Ass’n. d/b/a Lake Charles Mem’l Hosp. v. CorVel).
22
    La. R.S. § 40:2203.1(A) (“Except as otherwise provided in this Subsection, the requirements of
this Section shall apply to all preferred provider organization agreements that are applicable to
medical services rendered in this state and to group purchasers as defined in this Part. The provisions
of this Section shall not apply to a group purchaser when providing health benefits through its own
network or direct provider agreements or to such agreements of a group purchaser.”).


                                                  14
policy, they disagree on which state’s law controls the central question of how to

characterize the judgment obtained in the Louisiana Litigation.

       The Appellants contend that the Louisiana statute controls how the judgment

is characterized. The Delaware Superior Court agreed as evidenced by its statement

that “while the Court will apply Delaware law to interpret the insurance contracts,

Louisiana law will be applied regarding the penalty issue, as this Court must examine

a Louisiana Statute.”23      However, the Superior Court erred when it then applied

common law principles in answering this question, rather than Louisiana’s civil law

approach that was foreshadowed in the Gunderson decision. Under civil law, priority

is given to statutes and codes over common law jurisprudence.24 “Civil law codes

provide the core of the law-general principles[, which] are systematically and

exhaustively exposed in codes[,] and particular statutes complete them.”25 Quite

simply, in Louisiana, if the statute does not characterize the damage award entered

as a “penalty,” then it is not a “penalty” under Louisiana law.26

       The Dissent refuses to accept the Louisiana court’s construction of its own


23
   Homeland Ins. Co. v. CorVel Corp., 2013 WL 3937022, at *10 (Del. Super. Jun. 13, 2013).
24
   See generally William Tetley, Mixed Jurisdictions: Common Law v. Civil Law (Codified and
Uncodified), 60 La. L. Rev. 677, 701-05 (2000).
25
   Id. at 703 (internal citations omitted).
26
   See Williams v. SIF Consultants of Louisiana, Inc., 133 So.3d 707, 714 (La. Ct. App. 2014)
(explaining how “[t]he language of La. R.S. § 40:2203.01 denotes that a violator is subject to pay
‘damages’ and includes no language regarding penalties”).

                                               15
statute. It rejects Louisiana’s civil law approach as tautological, and instead, applies

common law interpretation to the Louisiana statute to determine whether damages

under La. R.S. § 40:2203.1(G) constitute “penalties.” We submit that we should defer

to the Louisiana court’s civil law approach in the construction of its own statute.

      Finally, we acknowledge that the Superior Court did not have the benefit of the

Louisiana trial and appellate court’s decisions in the Williams Litigation when it

rendered its June 13, 2013, opinion and order. But given our de novo review, we will

exercise comity in favor of our sister state, Louisiana, and, accordingly, hold that

Louisiana’s interpretation of its own statute is the correct interpretation.

                                III. CONCLUSION

      Accordingly, the matter is REVERSED and REMANDED for further

proceedings consistent with this Opinion.




                                          16
STRINE, Chief Justice, dissenting, with BOUCHARD, Chancellor, joining:

       We share the Majority Opinion’s desire to respect principles of comity and to

avoid conflicting rulings. We respectfully dissent, however, from the Majority

Opinion’s view that by reversing the Superior Court’s careful determination of the

insurance coverage issues properly before it, our Court would be failing to accord

comity to our esteemed judicial colleagues in Louisiana. The record is clear that the

Superior Court rendered its decision on coverage well before the Louisiana trial court

issued its ruling on that same issue.27 And unlike the Louisiana Court or the Majority

Opinion, the Superior Court recognized that the proper analysis to determine

coverage under a contract starts with the language of the contract itself. This case

thus does not depend principally on the interpretation of a Louisiana statute, but

instead turns on the meaning of a contract that the parties to this appeal do not dispute

should be interpreted based on Delaware contract law principles.

       The issues at stake in this case and its companion, First Health v. Chartis,

make little sense without understanding the full context behind this appeal. The

underlying claims for which insurance coverage was sought arise of the so-called


27
  Indeed, the Louisiana trial court’s ruling referenced the earlier Delaware decision. Compare
Homeland Ins. Co. and Executive Risk Specialty Ins. Co. v. CorVel Corp., 2013 WL 3937022 (Del.
Super. June 13, 2013) [hereinafter Superior Court Opinion], with Williams v. SIF Consultants of
Louisiana, Inc., 2013 WL 7330225 (La. Dist. Ct. July 29, 2013).


                                              17
PPO industry. A PPO, short for Preferred Provider Organization, essentially acts as

an intermediary between health insurance companies and medical providers,

including hospitals and individual doctors. The PPO creates a network of providers

who agree to receive a reduced payment for treating patients covered by the insurers.

         This case and First Health’s arose from litigation brought by multiple groups

of medical providers in Louisiana alleging that a number of PPO owners and

operators, including CorVel and First Health, were violating La. R.S. § 40:2203.1, the

“PPO Act,” by improperly discounting payments for medical services without

providing adequate notice to providers. The Act requires that before PPOs can

discount payments to health care providers, either the patient must present a benefit

card identifying the PPO at the time of service or the provider must agree in writing

to receive the discounted rate.28 The provider plaintiffs alleged that the PPOs had

failed to provide the required notice for services provided to workers’ compensation

patients. The plaintiffs sought the remedies established in Section G of the Act:

“damages payable to the provider of double the fair market value of the medical

services provided, but in no event less than the greater of fifty dollars per day of

noncompliance or two thousand dollars, together with attorney fees to be determined



28
     La. R.S. § 40:2203.1(B)-(C).


                                           18
by the court.”29

       The cases now before us are one step removed from those underlying claims.

They focus on a different but related issue; namely, whether the PPOs’ insurers owe

the PPOs reimbursement for the medical providers’ claims.

       CorVel faced legal action for allegedly discounting payments in violation of

the PPO Act from two sets of providers. First, Lake Charles Memorial Hospital

brought a class arbitration against CorVel in 2006.30 While that case was pending,

another plaintiff, George Raymond Williams, M.D., sued PPO owners and operators

on behalf of the same class of providers in a Louisiana trial court (the “Williams

litigation”).31    CorVel was eventually added as a defendant to that suit. Under

Louisiana law, plaintiffs can pursue claims directly against insurers in certain

circumstances.32 Accordingly, CorVel’s two insurers, Homeland and Executive Risk,

were also named as defendants. Because the Lake Charles arbitration and the

Williams litigation involved identical claims on behalf of the same class of providers


29
   La. R.S. § 40:2203.1(G).
30
   Lake Charles Memorial Hospital initially filed claims with the Louisiana Department of Labor
Department of Workers’ Compensation, but CorVel filed suit in Louisiana federal district court to
compel arbitration in accordance with the parties’ contract.
31
   George Raymond Williams, MD. v. SIF Consultants of Louisiana, Inc., Dkt. No. 09-C-5244-C,
27th Judicial District Court, Parish of St. Landry.
32
   See La. R.S. § 22:1269(B)(1). That is, Louisiana law subjects an insurer who has no contractual
relationship with the tort plaintiffs to a lawsuit based on the insurance company’s policy with the tort
defendant.


                                                  19
(the “Provider Plaintiff Class”), CorVel was able to resolve both actions with a global

settlement for $9 million and an assignment of its insurance rights, which the

Louisiana District Court approved in November 2011. But both Homeland and

Executive Risk remained parties to the litigation. Put plainly, what CorVel did was

to pay $9 million and then unleash the Provider Plaintiff Class to proceed directly

against its insurers, Homeland and Executive Risk, as if the Provider Plaintiff Class

had the same contractual rights as an insured as CorVel.

       A separate set of providers brought suit against another group of PPO owners

and operators, including First Health, in 2004.33 First Health eventually settled with

that plaintiff class (the “Settlement Class”) for $150.5 million and an assignment of

its insurance rights.34 That is, yet another PPO defendant paid money and then gave

the medical provider plaintiffs the right to go directly against their insurers as an

assignee.

       Both CorVel and First Health had multiple layers of insurance coverage under

Errors & Omissions policies at the time of the alleged wrongdoing that they contend

should cover the underlying claims. As noted, CorVel’s coverage was provided by

Executive Risk and Homeland; First Health’s by four different companies, including


33
  Gunderson v. F.A. Richard & Assoc., 2005 WL 5468586 (La. Dist. Ct., June 23, 2005).
34
  See Gunderson v. F.A. Richard & Assoc., No. 2004-2417 (14th Jud. D.C., Parish of Calcasieu,
State of La., May 27, 2011).

                                             20
Chartis. In September 2009, one of First Health’s insurers filed suit in the Delaware

Superior Court, seeking a declaration that it had no duty to indemnify First Health

under its policy for any claims related to the Louisiana litigation. After First Health

settled that litigation, in part by unleashing the plaintiff class to sue its insurers under

an assignment, the Settlement Class was added to the Delaware action against First

Health as the real party in interest.

       The Settlement Class moved for partial summary judgment on the issue of

coverage on April 3, 2012, contending that the underlying claims constituted

damages, which were covered under the contract. Chartis agreed that there were no

material issues of fact to be decided, and cross-moved for partial summary judgment,

contending that the claims were instead for penalties, which were excluded.35 The

Superior Court held a hearing on the motions on June 13, 2012, and issued an opinion

denying the Settlement Class’ motion and granting Chartis’ motion for partial

summary judgment on May 7, 2013. After conducting a thorough analysis of the

insurance contract at issue, the Superior Court found that the policies were

unambiguous, and the providers’ claims under the PPO Act constituted penalties, not




35
  At that point, Chartis was one of three defendant insurance companies, but the other two
eventually settled with the Settlement Class.

                                            21
damages, and were therefore not covered.36

       Litigation between CorVel and its insurers moved along a parallel track. In

January 2011, Homeland brought a claim in the Delaware Superior Court seeking a

declaration that the underlying claims for violations of the PPO Act were not

insurable losses under its policy because they were penalties, not damages. Executive

Risk was granted leave to intervene. Both insurers moved for partial summary

judgment, arguing that there were no material facts in dispute.37               Unlike in First

Health’s case, CorVel opposed both motions and argued that there were material facts

remaining to be decided. Focusing on the terms used by the PPO Act rather than the

language of the policies at issue, CorVel argued that under Louisiana law, the medical

providers’ claimed remedies were damages, not penalties. But CorVel claimed that,

at a minimum, the policy exclusions were ambiguous, and thus summary judgment

was inappropriate. The Superior Court heard arguments on January 31, 2013, and

issued its opinion granting the insurance companies’ motions on June 13. Just as in

First Health’s case, the court carefully analyzed the relevant insurance policies and

determined they were unambiguous in excluding the underlying claims as penalties.38

36
   Executive Risk Specialty Ins. Co. v. First Health Group Corp., 2013 WL 1908664 (Del. Super.
May 7, 2013).
37
   Executive Risk moved for summary judgment “on the issues of penalty, restitution, and contract”
on Aug. 29, 2012; Homeland moved for partial summary judgment in the same action on the same
day.
38
   See Superior Court Opinion.

                                               22
The Settlement Class and CorVel then both appealed to this Court.

       Back in Louisiana, on May 24, 2014, after the Delaware Superior Court had

issued its decision in First Health’s case, but while the decision in CorVel’s case was

pending, the Provider Plaintiff Class moved for partial summary judgment against

Executive Risk in the Williams litigation. Although technically the Provider Plaintiff

Class is a separate party from CorVel, they share at least some of the same attorneys,

and there is no question that they have acted in coordination throughout this

litigation. Likewise, CorVel and the First Health Settlement Class have the same

attorneys and their briefing on appeal to this Court was substantively identical.

       After the Delaware Superior Court issued its June 13 decision in CorVel’s case,

granting summary judgment to Executive Risk and Homeland, the Louisiana trial

court in Williams held a hearing on the Provider Plaintiff Class’ motion on June 28.

Rather than defer to the Delaware Superior Court’s well-reasoned rulings on the

identical coverage issues, the Louisiana court granted the motion for summary

judgment on July 29, holding that under the PPO Act, the remedies available to

providers were damages, not penalties. The Louisiana Third Circuit Court of Appeal

affirmed the trial court’s ruling on February 26, 2014.39 At that point, Executive


39
 Williams v. SIF Consultants of Louisiana, Inc., 133 So.3d 707 (La. Ct. App. 2014). The Louisiana
Appeals Court’s decision references the earlier Delaware ruling as evidence that the plaintiff class’
motion for partial summary judgment was ripe for adjudication, but does not otherwise address

                                                 23
Risk settled with the Provider Plaintiff Class and was dismissed from CorVel’s appeal

then pending before this Court.

       Without quibbling in any way with the Louisiana Court’s description of the

Louisiana statute that apparently motivated its decision on the relevant coverage

issues, we still find it impossible to reverse the Delaware Superior Court in the appeal

pending before this Court. The reasons for that are simple: the Superior Court did not

ignore principles of comity or commit any error of contract law. As to the first

issue—comity—the Superior Court considered an issue properly put to it in advance

of any requested ruling on that issue by the Louisiana trial court. As to the second,

the Superior Court did not understand the Louisiana statute to operate any differently

than the Williams court did. But the Superior Court, unlike the Williams court or the

Majority Opinion, gave meaning and effect to the core contractual terms the parties

had agreed to.        The Superior Court’s legal conclusions on that score were

well-supported by respected authority,40 applying relevant principles of contract




Executive Risk’s claim that the Louisiana trial court’s ruling directly contradicted a previous
judgment that should have had preclusive effect. See id.
40
   See, e.g., Katz v. Oak Industries, 508 A.2d 873, 880 (Del. Ch. 1986) (quoting Corbin on Contracts
(Kaufman Supp. 1984), § 570) (“If the purpose of contract law is to enforce the reasonable
expectations of parties induced by promises, then at some point it becomes necessary for courts to
look to the substance rather than to the form of the agreement, and to hold that substance controls
over form.”).

                                                24
interpretation that are embraced by our courts and by most jurisdictions.41

       The Superior Court’s analysis was faithful to the text of La. R.S. § 40:2203.1,

but properly recognized that the label the Louisiana statute used did not determine

whether the substance of what the underlying medical provider claimants obtained

were “damages” within the terms of the insurance contract-which would be

covered—or “penalties”—which would not. The meaning of terms in insurance

policies like the one involved here have to govern the operation of companies doing

business in many jurisdictions. As a result, the claims that arise under various

jurisdictions must be analyzed to determine whether they fall within the insurance

contract’s coverage or within excluded categories. That requirement of proper

contract analysis does not change, regardless of whether the jurisdiction takes a

common law or civil law approach in interpreting its statutes.

       In conducting the appropriate contractual analysis, it is important that the

nature of the underlying claim and the law governing it be understood. But the

dispositive question of law is what the contractual terms mean, which here the parties

do not dispute is governed by Delaware, not Louisiana, law.42 In other words, the

41
   See, e.g., ConAgra Foods, Inc. v. Lexington Ins. Co., 21 A.3d 62, 68 (Del. 2011) (“This Court has
adopted traditional principles of contract interpretation.”).
42
   The insurance contract at issue did not include a choice of law clause. Although there were several
plausible contenders for which state’s law should govern the interpretation of the contract, the
Superior Court found that there was no conflict between any of the possible state laws and therefore
applied the law of the forum state, Delaware. CorVel did not challenge that determination on appeal.

                                                 25
issue is not what a state’s particular statute calls the remedy, or how that state’s courts

would interpret the statute; the question is whether the remedy afforded by the statute

in fact amounts to covered damages or excluded penalties as those terms are used in

the parties’ contract. In all controversies arising under the policy, regardless of the

location of the underlying claim, the contract definition governs. The Williams

decision ignored that reality and made no attempt to give any weight to the contract

or even consider the Superior Court’s careful ruling on that subject. In doing so, the

Louisiana Court failed to give comity to our state.43

       The Majority Opinion, like the Williams court’s decision, does not point to any

errors in the Superior Court’s analysis of the contract at issue. That is because, as the

Superior Court found, the plain language in the contract is unambiguous. CorVel’s

policy with Homeland defines “loss” as:

               any monetary amount which an Insured is legally obligated
               to pay as a result of a Claim. Loss shall include . . .
               punitive, exemplary or multiplied damages where insurable
               by law; provided, that the law of the jurisdiction most
               favorable to the insurability of punitive damages shall
               control the insurability of such punitive damages . . . .


We note that it would aid in our resolution of coverage issues, which are frequently before this
Court, if insurance contracts more routinely included choice of law provisions so that the contracting
parties themselves could decide upfront whose law should govern.
43
   See, e.g., Majority Opinion at 9 (quoting Columbia Cas. Co. v. Playtex FP, Inc., 584 A.2d 1214
(Del. 1991) (“Comity permits one state to give effect to the laws of a sister state, not out of
obligation, but out of respect and deference.”).


                                                 26
               Loss shall not include: (i) fines, penalties or taxes;
               provided that (A) punitive damages shall not be deemed to
               constitute fines, penalties or taxes for any purpose herein,
               and (B) Loss shall include fines and penalties imposed
               under the Health Insurance Portability and Accountability
               Act or in Claims for Antitrust Activity. . . . 44

       The policy thus makes clear that penalties are not covered, unless they are

penalties related to “Antitrust Activity.”45 CorVel’s arguments about the proper way

to interpret insurance coverage or exclusions of coverage are therefore irrelevant; the

only relevant question is whether the underlying claims are for penalties.

       As the Superior Court properly determined, when the language in a contract is

“clear and unambiguous,” we should give it “its ordinary and usual meaning.”46

Black’s Law Dictionary47 defines penalty as “a sum of money exacted as punishment

for either a wrong to the state or a civil wrong (as distinguished from compensation

for the injured party’s loss). Though [usually] for crimes, penalties are also

sometimes imposed for civil wrongs.”48 A civil penalty is defined as a “fine assessed


44
   App. to CorVel Opening Br. at 486-87 (emphasis added).
45
   If the underlying claims were for antitrust-related penalties, they could also be covered under the
unambiguous terms of the policy. But CorVel did not challenge the Superior Court’s finding that
the claims asserted in the underlying litigation did not constitute antitrust activity.
46
   See O’Brien v. Progressive N. Ins. Co., 785 A.2d 281, 288 (Del. 2001).
47
   As the Superior Court noted, dictionaries are an appropriate aid in discerning ordinary meaning.
See Superior Court Opinion at *13 (citing Lorillard Tobacco Co. v. Am. Legacy Found., 903 A.2d
728, 738 (Del. 2006)) (“It is well-settled in Delaware that, in ascertaining the meaning of words not
defined in a contract, courts ‘look to dictionaries for assistance in determining the plain meaning of
terms which are not defined in a contract.’”).
48
   Black’s Law Dictionary 562 (4th Pocket Ed. 2011).

                                                 27
for a violation of a statute or regulation.” A statutory penalty is a “penalty imposed

for a statutory violation; [especially], a penalty imposing automatic liability on a

wrongdoer for violation of a statute’s terms without reference to any actual damages

suffered.”49 By contrast, damages are defined as “money claimed by, or ordered to

be paid to, a person as compensation for loss or injury.”50 In the analogous contract

law context, this Court has defined “penalty” as “a sum . . . that serves as a

punishment for default, rather than a measure of compensation for its breach. In other

words, it is an agreement to pay a stipulated sum upon breach, irrespective of the

damage sustained.”51

       Here, it is not disputed that the remedy scheme under the PPO Act bears no

relationship to any actual damages suffered by the medical provider plaintiffs.

Indeed, the Act itself makes no effort to tie the remedy to actual losses; the “damages

payable to the provider” are “double the fair market value of the medical services

provided,”52 not, for example, double the sum of the improper discount. The statute

unambiguously imposes “automatic liability on a wrongdoer for violation of a

statute’s terms without reference to any actual damages suffered,”53 or the dictionary

49
   Id.
50
   Id. at 195.
51
   Delaware Bay Surgical Services, P.C. v. Swier, 900 A.2d 646, 650 (Del. 2006) (quoting S.H.
Deliveries v. TriState Courier & Carriage, 1997 WL 817883, at *2 (Del. May 21, 1997)).
52
   La. R.S. 40:2203.1(G) (emphasis added).
53
   Id.

                                             28
definition of a statutory penalty.

       In making its determination of coverage based on the contract at issue in this

case, the Superior Court was respectful of Louisiana authority, including the

Louisiana Supreme Court and the U.S. Court of Appeals for the Fifth Circuit,54 and

its understanding of the statute accords with how other courts in Louisiana have

viewed the remedies available.55 But contrary to the Majority Opinion, the Superior

Court did not rely on these cases to interpret the statute as a matter of common law;

rather, it cited Louisiana precedent as evidence to support its understanding of how

the statute operated and whether the statute imposed penalties within the meaning of

the term used in the parties’ contract. That is, what the Superior Court properly did

was to interpret an insurance contract’s language, using traditional tools of contract

interpretation. That was the judicial task the case assigned it. As the Superior Court

found by reference to established authority,56 the amount of damages set forth in the


54
   See, e.g., Superior Court Opinion at *18 (citing previous Louisiana decisions referring to the
remedies under the statute as penalties).
55
   See, e.g., Gunderson v. F.A. Richard & Assoc., 44 So.3d 779 (La. Ct. App. 2010); Gunderson v.
F.A. Richard & Assoc., 40 So.3d 418 (La. Ct. App. 2010) (characterizing the remedies under the
PPO Act as “penalties”); see also Cent. La. Ambulatory Surgical Ctr., Inv. v. Rapides Parish Sch.
Bd., 68 So.3d 1041 (La. Ct. App. 2010) (same); Touro Infirmary v. Am. Maritime Officer, 24 So.3d
948 (La. Ct. App. 2009) (same); see also Indian Harbor Ins. Co. v. Bestcomp, Inc., 2010 WL
5471005 (E.D. La. Nov. 12, 2010), aff’d, 452 F. App’x 560 (5th Cir. 2011) (“damages under section
40.2203.1(G) are excluded from the definition of damages under the policy . . . because the damages
more than compensate an injured party for losses incurred due to lack of notice.”).
56
   See Superior Court Opinion at *14 (citing Black’s Law Dictionary 1247 (9th Ed. 2009), and
Landis v. Marc Realty, 919 N.E.2d 300, 307 (Ill. 2009)).

                                                29
statute bears no relationship to the harm suffered by any provider and thus was not

of the kind considered “remedies” in the normal sense in which parties use term in

contracts.57 Thus, the Superior Court did not rely on the fact that the Act awards

remedies in a manner consistent with what other Louisiana courts have historically

termed to be penalties, including in an important Louisiana Supreme Court case cited

by the Williams court,58 but instead noted that reality to corroborate its own correct

reading of the Louisiana statute in relation to the parties’ contract.

       Had the Louisiana trial court itself showed comity by staying its hand after the

Delaware Superior Court made the first ruling on the coverage issue and letting this

case run its course to finality, the conflict the Majority Opinion is trying to avoid

would not have arisen in the first instance. Because the jurisdiction of our Superior

Court was properly invoked, and the Superior Court issued its ruling first, the

Provider Plaintiff Class’ decision to pursue a new ruling on that same issue in another

forum and the decision of the Louisiana courts to issue that ruling has caused the

current logjam and any awkward comity issue that has arisen as a result. The party

57
   Homeland Ins. Co. and Executive Risk Specialty Ins. Co. v. CorVel Corp., C.A. No. 11C-01-089
(June 13, 2013), at 33.
58
   See Williams v. SIF Consultants of Louisiana, Inc., 2013 WL 7330225 (La. Dist. Ct. July 29, 2013)
(citing International Harvester Credit Corporation v. Seale, 518 So.2d 1039, 1042 (La. 1988)
(describing legislative intent to award penalty or punitive damages “by either denoting the award a
‘penalty,’ modifying the term ‘damages’ with such language as ‘punitive’ or ‘exemplary,’ or
specifically awarding an amount in excess of the claimant’s losses”) (emphasis added)).


                                                30
that fairly prevailed on its motion for summary judgment has now lost all benefit from

its trial court victory, and will receive no recompense from the defendant for its costs

in obtaining that victory or for litigating this appeal. Those costs have been sunk for

no purpose.

       Moreover, by reversing on the grounds of comity to the Louisiana court’s

decision as to Executive Risk, we are subjecting Homeland to the additional costs of

litigating the issues anew in Louisiana. When Executive Risk lost at the trial court

and at the first appellate level in Louisiana, it settled with the Provider Plaintiff Class

and left the decision in Williams unappealable.59 But the ruling that the Provider

Plaintiff Class obtained in that action should not run against Homeland, because the

Class did not seek summary judgment against—and therefore did not obtain a

judgment against—Homeland.60

       Attempting to justify the Louisiana trial court’s decision to render a ruling on

the coverage issues more than six weeks after the Superior Court, the Majority

Opinion asserts that litigation against CorVel had been in progress in Louisiana many

years before the Delaware suit was filed against it. The fact of the matter, however,

59
   See Joint Motion and Order of Dismissal, Williams v. SIF Consultants of Louisiana, Inc., No. 09-
C-5244-C, 27th Jud. District Court, Parish of St. Landry, La. (July 22, 2014).
60
   See Charles Alan Wright, et al., 18 Fed. Prac. & Proc. Juris. § 4402 (2d ed.) (a non-party who was
not fairly represented in a proceeding cannot justly be bound by principles of claim or issue
preclusion).


                                                 31
is that Homeland was not named as a party in the Williams litigation in Louisiana

until March 24, 2011—more than two months after it filed suit in the Superior Court

on January 10, 2011. The principals may have been embroiled in litigation in

Louisiana many years earlier, but the record plainly shows that the coverage issues

under Homeland’s policy were first put in issue in Delaware.

      Although we respect and share the desire expressed in the Majority Opinion to

avoid inconsistent rulings, we cannot embrace its solution. In our view, this is a

situation in which our Superior Court did nothing wrong, but another state’s courts’

failure to show comity to our courts has unnecessarily caused the potential for

inconsistent rulings and inefficiency. That might be a rational reason to stand down,

as the Majority Opinion has concluded, but it is demonstrably unfair to Homeland.

At a minimum, Homeland, as the party who has been victimized by its adversary’s

gamesmanship, should be reimbursed for its attorneys’ fees and costs in obtaining a

fair victory in our Superior Court and then having its victory taken away, not by a

traditional reversal on the merits on appeal, but because this litigation had been

rendered useless by collateral litigation to which this Court has now decided to defer.

That compensation should include Homeland’s fees and costs spent arguing this

appeal. We also hope for the sake of Homeland that our judicial colleagues in

Louisiana will look favorably upon Homeland’s right to have the important coverage

                                          32
issues it raised decided on the merits based on what its contract states.

      For all these reasons, we respectfully dissent.




                                          33
