Insurers battle over duty to defend Christian counseling clinic owned by representative's husband
Bachmann & Associates is a Christian counseling clinic run by the husband of House Rep. Michele Bachmann, R-Minnesota.
Mid-Century Insurance Co. brought a liability lawsuit against Owners Insurance Co. in the U.S. District Court for the District of Minnesota in connection with the companies’ shared insured, Bachmann & Associates Counseling Care, which was accused of violating state law on discrimination.
This case was first surfaced by Law.com Radar.
Mid-Century is seeking a declaratory judgment that Owners Insurance has a duty to defend the Bachmann company under their policy in an underlying action, yet refused to do and denied any obligation to indemnify, according to the complaint filed by O’Meara Wagner.
Bachmann & Associates is a Christian counseling clinic run by the husband of House Rep. Michele Bachmann, R-Minnesota, which has been accused of violating state laws on discrimination by offering “pray the gay away” conversion therapy. Bachmann ran as a presidential candidate in the 2012 election.
In the underlying lawsuit that serves as the basis for the dispute, Jane Doe 1 v. Olseth, filed in Hennepin County District Court of the state’s Fourth Judicial District, Owners Insurance refused to represent Bachmann & Associates, leading to Mid-Century agreeing to defend them instead.
However, Mid-Century argued that Owners owes it a contribution for all of the costs incurred while doing so. It allegedly covered a disproportionate bulk of time and expenses contractually owed to the clinic’s defense in litigation.
“Because of Mid-Century’s disproportionate payment of the fees, costs and expenses to defend the Common Insured in the Underlying Action, Mid-Century has a right of equitable contribution against Owners for reimbursement of the disproportionate amount of the fees, costs and expenses Mid-Century paid to defend [Bachmann & Associates],” the complaint stated.
In the underlying action, a Jane Doe plaintiff alleged that Bachmann & Associates was liable for injuries that began in June 2017 and continued for approximately two years, relating to statutes governing abortion in the state of Minnesota. In Owners’ denial-of-coverage letter from August 2021, the insurer communicated that it would pay the amounts legally obligated as a result of “‘bodily injury’” or “‘personal injury.’”
But, according to Mid-Century’s complaint, the Owners policy included additional language stating that it would cover Bachmann & Associates in any “‘suit’” seeking those same damages. However, Owners claimed that under their policy, bodily injury coverage did not apply to any injury “expected or intended from the standpoint of the insured.”
The denial-of-coverage letter also allegedly stated the Owners policy defined “’personal injury’” as arising out of one or more of the following offenses: “‘discrimination, humiliation, sexual harassment and any violation of any civil rights caused by such discrimination, humiliation or sexual harassment.’”
Therefore, the complaint alleged, the language of the Owners’ policy required it to defend Bachmann & Associates in the lawsuit challenging abortion statutes in the underlying action, as well as indemnify them for any judgment or settlement with regards to those claims. However, in November 2022, Owners again denied coverage for the clinic, compelling Mid-Century to fund a confidential settlement of the claims.
“Mid-Century has a right of equitable contribution in whole (indemnity) or in part from Owners for Mid-Century’s funding of the settlement of the claims asserted,” the complaint said.
Mid-Century’s attorneys, Dale O. Thornsjo and Lance D. Meyer of O’Meara Wagner, could not be reached for additional comment on the lawsuit.
Counsel has not yet appeared for the defendant.