The matter before the appellate court was that of Midwest’s appeal of the granted motion for judgment, which the appellate court reviewed de novo.

First, the appellate court grappled with the question of whether or not Midwest had properly pled an ‘occurrence’, ultimately reaching to the conclusion that it had not. The appellate court explained that, under the terms of the insurance policy, an ‘occurrence’ was a term that was defined as accidental conduct, and whether or not West American was acting wrongfully, it was certainly not acting accidentally when it allegedly fixed prices, conspired with physicians and attempted to form an illegal monopoly.

Second, the court turned to the issue of whether West American had a duty to defend Midwest Insurance. Under the policy, West American did have a duty to defend in cases involving discrimination, and Midwest argued that the claims filed against it by Advanced Physicians and the Vallindighams were claims of that nature. The court first quickly noted that Advanced Physicians, as a corporate entity, could not trigger the duty to defend, as the policy restricted these discrimination claims that were under the policy to those directed against natural persons. As for the Vallindighams, they had not alleged any discrimination, instead simply accusing Midwest of price-fixing, restraints on trade, and the like, and the court refused to accept Midwest’s interpretation that these allegation including an implicit accusation of discrimination.

Finally, the court tackled the question of whether or not West American’s filing for a declaratory judgment after the first Vallindigham case was decided estopped it from denying coverage later. The general rule is that an insurance company with an uncertain duty to defend must either defend the case under a reservation of rights, or else file for a declaratory judgment before the case is decided. If it fails to do so, it cannot later raise policy defense grounds in denying coverage. The court notes, however, that such estoppel only comes into play if there, in fact, is a duty to defend. Because there is no duty to defend in this case, this estoppel doctrine does not apply, and West American was entitled to raise policy defenses to coverage in this case.

As the Appellate Court found that there were no properly pled allegations made by Midwest capable of sustaining this action, the lower court’s granting of the motion for judgment was proper, and it affirmed that decision.