Duty to Defend Triggered for Judicial Sanctions on Attorney who Lied About COVID Vaccination Status

The United States District Court for the Southern District of Mississippi, applying Mississippi law, has held that a federal employee professional liability policy insurer’s duty to defend was unambiguously triggered by judicial sanctions imposed on an insured for misrepresenting his COVID-19 vaccination status. Cooperstein v. Scottsdale Ins. Co., 2023 WL 2392730 (S.D. Miss. Mar. 7, 2023). In addition, the court separately held that the policy’s Intentional Acts Exclusion did not bar coverage for judicial sanctions.

The sanctioned attorney was a former Assistant United States Attorney in the Southern District of Mississippi who, during his employment, was insured under a federal employee professional liability policy. The insured attorney appeared before a federal district court four times during the COVID-19 pandemic. On the first three occasions, the attorney stated that he was vaccinated against COVID-19 when asked by the court. On the fourth occasion, he admitted that he was not vaccinated and stated that he had applied for an exemption to vaccination. 

The federal district court issued a show cause order directing the attorney to explain why he should not be sanctioned. The attorney notified his insurer. The insurer denied coverage on the basis that the attorney “was not engaged in furthering the affairs or services of his employer when he allegedly misrepresented his personal medical status.” The attorney commenced coverage litigation. 

In the coverage action, the court sided with the insured attorney. The court reasoned that, because the attorney was appearing for the United States and responding to questions posed by the presiding judge, “the misrepresentations were clearly made while the [insured] was furthering the affairs or services of the United States,” thus triggering the policy’s duty to defend. The court also rejected the insurer’s argument that an Intentional Acts Exclusion applicable to “willful violation of penal statute or penal ordinance, fraud, and intentional misconduct, barred coverage. The court held that the exclusion applied solely to “criminal proceedings” and “disciplinary proceedings,” not to judicial sanctions proceedings, which constituted a separate category of defined proceedings covered by the policy distinct from the other two.