The United States District Court for the Northern District of Alabama has held that alleged constitutional due process violations under 42 U.S.C. § 1983 do not constitute professional services “caused by the negligence” of an insured.  Madison County v. Evanston Ins. Co., 2018 WL 4680213 (N.D. Ala. Sept. 28, 2018).

A healthcare services company contracted with an Alabama county to provide health services to a correctional facility.  The company’s professional liability insurance policies included an additional insured endorsement providing coverage to the county and other officials as additional insureds “but only as respects liability in rendering Professional Services caused by the negligence of the [company].”  The company, county, and individuals affiliated with the company and the county were named as defendants in several actions brought by inmates and detainees alleging 42 U.S.C. § 1983 violations for failure to provide proper medical care, along with other allegations of negligence and violation of Alabama law.  After defending under a reservation of rights, the company’s professional liability insurer withdrew its defense of certain of the actions where only the § 1983 counts remained against the county and county officials.  The additional insureds sued the insurer for breach of contract and bad faith.

The court granted summary judgment to the insurer, concluding that because the additional insured endorsement limited coverage to the county and county officials for the company’s purported negligence, the endorsement did not cover claims for § 1983 liability.  The court reasoned that the substantive standards for the constitutional torts underlying § 1983 liability—the Eighth Amendment’s cruel and unusual punishment clause and the Fourteenth Amendment’s due process clause—did not sound in “mere negligence” and litigants cannot maintain a § 1983 claim based on a negligence theory of recovery.  The court also rejected the additional insureds’ argument that the insurer could not enforce the limitation in the endorsement because it had failed to deliver the policies to the additional insureds when the policies were issued.  The court held that the Alabama statute in question was inapplicable because it applied only to policies issued for delivery and delivered in Alabama, and the policies at issue were issued for delivery and delivered in Illinois.  In addition, the court found that the insurer had not acted in bad faith in denying coverage, including under Alabama’s “extraordinary” theory of bad faith, because the additional insureds could not show that the insurer did not have a legitimate reason to deny coverage.