This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (1994).


Luverne Medical Center,


Midwest Medical Insurance Company,

Filed September 10, 1996
Amundson, Judge

Hennepin County District Court
File No. 959584

William J. Egan, Rider, Bennett, Egan & Arundel, LLP, 2000 Metropolitan Centre, 333 South Seventh Street, Minneapolis, MN 55402 (for appellant)

Donald F. Hunter, Anne T. Johnson, Gislason, Dosland, Hunter & Malecki, P.L.L.P., 9900 Bren Road East, Suite 215, Minnetonka, MN 55343 (for respondent)

Considered and decided by Huspeni, Presiding Judge, Randall, Judge, and Amundson, Judge.


Appellant Luverne Medical Center challenges the district court's grant of summary judgment in favor of respondent Midwest Medical Insurance Company, arguing that the underlying lawsuit arose out of a decision to withhold medical services and, as such, falls within the coverage provided by the liability insurance policy. We affirm.
In February 1993, Berniece Jansma was dismissed by appellant Luverne Medical Center (the Medical Center) for unsatisfactory performance. Jansma, who had been diagnosed with multiple sclerosis in 1988, filed a claim of disability discrimination with the EEOC. Throughout her 24 years of employment at the Medical Center, Jansma and her family had received medical care at the Medical Center. After her dismissal, the family continued to be patients at the Medical Center, but their relationships with the doctors deteriorated rapidly. Several doctors testified that they were concerned that this conflict would interfere with their ability to provide objective care to the family. The Medical Center concluded that it should discontinue medical services for the Jansma family. A letter was sent to each member of the Jansma family, notifying them of the Medical Center's decision.
In response to the Medical Center's decision to discontinue medical services, each member of the Jansma family filed charges of reprisal with the EEOC. After receiving a right to sue notice from the EEOC, the Jansmas filed a complaint in United States District Court.
The Medical Center tendered the claim to respondent Midwest Medical Insurance Center (the insurer), and the insurer denied the tender. The insurer also declined to participate in mediation or settlement negotiations with the Jansmas. The Medical Center settled the reprisal claims for $90,000.
Shortly before settling the action with the Jansmas, the Medical Center brought a declaratory judgment action against the insurer. The district court granted summary judgment in favor of the insurer, concluding that the termination of Berniece Jansma was an administrative act and specifically excluded from coverage under the liability policy. This appeal followed.
The Medical Center contends that the district court erred in granting summary judgment because the underlying lawsuit arose from a decision to withhold medical services, conduct specifically covered by the liability insurance policy issued by the insurer.
In reviewing a grant of summary judgment, we ask whether there are any genuine issues of material fact and whether the district court erred in applying the law. SeeState by Cooper v. French, 460 N.W.2d 2, 4 (Minn. 1990).
The interpretation of an insurance contract is a question of law that we review de novo. See Haarstad v. Graff, 517 N.W.2d 582, 584 (Minn. 1994). Typically, an insurer is obligated to indemnify an insured for claims covered by the policy and has a duty to defend if the claim is not clearly outside coverage. Id. An insurer's duty to defend is determined by considering the allegations of the complaint in light of the relevant policy provisions. Id. If an insurer denies coverage because of an exclusion, the insurer bears the burden of proving that the exclusion applies. Useldinger & Sons, Inc. v. Hangsleben, 505 N.W.2d 323, 327 (Minn. 1993).
The district court concluded that the termination of Berniece Jansma was an "administrative activity," and thus was excluded from coverage by the insurance policy.
The insurance policy provides that the insurer shall pay, on behalf of the Medical Center, all sums incurred as damages because of any claim made against the Medical Center "arising out of the performance of Professional Services rendered or which should have been rendered." However, that obligation does not apply to "liability arising out of any Administrative Activity of any insured." Under the policy, "Professional Services" means:
a) with regard to an insured physician, surgeon or dentist;
(1) medical treatment, which is the providing of direct patient
treatment, making diagnoses, rendering medical opinions and/or
providing medical advice in the practice of an Insured's
profession as a physician, * * * (b) With regard to the Named
Insured Entity, providing or withholding of services enumerated
in (1) or (2) above by anyone for whose acts it is legally

The policy defines "Administrative Activity" as:

Activity of any Insured as a proprietor, partner, shareholder, executive officer, administrator, committee member, director, or medical director of any hospital, sanitarium, clinic with bed and board facilities, nursing home, abortion clinic, drug abuse clinic, surgicenter, blood bank, commercial laboratory, health maintenance organization, preferred provider organization, or other professional or business enterprise, except where an Insured physician is providing medical treatment in a physician-patient relationship.

The record indicates that the relationship between the Jansmas and the doctors at the Medical Center began to deteriorate after Berniece Jansma was terminated. This deterioration led the physicians at the Medical Center to discuss their ability to provide objective care to the Jansmas. As a result of that discussion, the Medical Center decided to stop providing medical services to the Jansma family. That decision was not made known to the Jansmas while any of them were at the Medical Center seeking treatment. Rather, it was conveyed to them in a letter signed by the Medical Center administrator. We conclude that, in making the decision to stop providing treatment to the Jansmas, the physicians of the Medical Center were acting as administrators and not providing medical treatment in a physician-patient relationship. Thus, the Medical Center was not providing professional services as defined by the liability insurance policy, but was engaged in administrative activity, which is specifically excluded from coverage.