Claim Against Physician Arising out of Criminal Misconduct in the Sexual Assault of a Patient Does Not Involve Covered “Professional Services”
An Illinois Appellate Court has ruled that an insurer had no duty to defend an insured in connection with a lawsuit arising out of criminal sexual misconduct charges even though the lawsuit contained negligence claims. Prof’l Solutions Ins. Co. v. Karuparthy, 2023 WL 3718565 (Ill. Ct. App. May 30, 2023). The court further held that an exclusion for criminal conduct provided an additional bar to coverage on separate grounds.
The insured, a physician, was named in a lawsuit alleging that he injected a patient with a “medical substance” that rendered her immobile and then sexually assaulted her, causing physical and emotional injuries. The lawsuit contained counts for battery, assault, intentional infliction of emotional distress, false imprisonment, and negligence. The insured notified its insurer of the lawsuit, and the insurer agreed to defend the suit under a reservation of rights. The insured later pled guilty to two criminal charges arising out of his conduct. The insurer filed a declaratory judgment complaint alleging that it had no duty to defend because the insured’s conduct did not constitute either an “incident” or “professional services” and because exclusions applied to bar coverage. The trial court ruled that the insurer had a duty to defend because the claim for negligence “potentially fell within the policy’s coverage.” The insurer appealed.
The appellate court reversed and remanded in favor of the insurer, holding that the “negligence counts amount to little more than a groundless attempt” to obtain insurance coverage. The court ruled that the conduct did not constitute either an “incident” or “professional services” because the insured “made no attempt to comply with the standard of care; he was intentionally violating it.” In so holding, the court reaffirmed that “[i]t is well settled that the substance of the factual allegations of the underlying complaint—not the legal labels attached thereto—determines whether a claim falls potentially within coverage.”
In addition to ruling that the allegations of the underlying lawsuit did not fall within coverage, the court also determined that the policy’s exclusions barred coverage. In particular, the court held that when the insured pled guilty to crimes arising out of the same conduct alleged in the underlying lawsuit, it was “conclusive evidence of intentional conduct,” and the criminal acts exclusion applied.