An Illinois federal district court has held that a claim alleging that a dentist overstated the value of his dental practice to increase the practice’s sale price is not a claim for “professional services” under the dentist’s professional liability policy. Medical Protective Co. v. Fabricius, 2018 WL 2561009 (N.D. Ill. June 4, 2018).
The buyer of the insured’s dental practice filed suit alleging that the insured dentist had misrepresented key facts about the practice to induce the sale at an inflated price. The buyer alleged that the insured dentist had fabricated dental procedure codes to make the practice appear more high-end and had inflated revenue by performing treatments that were not medically necessary. The buyer’s complaint asserted counts for rescission, fraud, and breach of contract.
The insured’s professional liability insurer denied coverage for the claim because it was not based on “professional services,” defined as “the rendering of . . . dental . . . services to a patient and the provision of medical examinations, opinions, or consultations regarding a person’s medical condition within the Insured’s practice as a licensed health care provider.” In the later coverage litigation, the court agreed with the insurer, holding that the buyer’s claim was a contract dispute that did not trigger coverage under the professional liability policy. The court reasoned that the buyer’s claims for rescission, fraud, and breach of contract did not require proving that damages resulted from injuries to the insured’s patients, and instead centered only on the buyer’s alleged overpayment for the practice.