Professional Association’s Investigation of Ethical Complaints and Credentialing of Members Constitute Professional Services
Applying Minnesota law, a federal district court in Minnesota has held that an association’s certification of one of its members as a radiologic technologist constitutes professional services. Assurance Co. of Am. V.A. Registry of Radiologic Techs., 2014 WL 6772742 (D. Minn. Dec. 1, 2014).
An association of radiologic technologists was sued in numerous lawsuits by plaintiffs alleging that one of the association’s members had caused them to contract Hepatitis C. The plaintiffs alleged that the association had previously received a complaint that the technologist, who had Hepatitis C, was using hospital syringes to inject himself with narcotics and then reusing those syringes on patients. The association had investigated the complaint and ultimately determined to take no action against the technologist and later re-certified him, which the plaintiffs contend was negligent.
The association sought coverage under its commercial general liability insurance policy, which precluded coverage for bodily injury or property damages arising out of the rendering or failure to render professional services. Although “professional services” was not defined in the policy, the exclusion provided certain examples of professional services. The insurer argued that the association’s credentialing of the technologist was a professional service. The association argued that credentialing was not a professional service because it was not one of the examples in the exclusion. The court rejected the association’s argument, holding that because the exclusion bars coverage for “any professional service, including but not limited to” the listed examples, other activities involving specialized knowledge or skill could constitute professional services. According to the court, the association’s investigation of the complaint and its decision to re-certify the technologist was an exercise of judgment guided by specialized training and experience. As such, it was a professional service excluded by the policy.
The association also sought coverage under an umbrella policy with a different professional services exclusion that barred coverage for “establishments engaged in promoting the business interests of their members.” The association contended that it was not formed for the purpose of promoting its members’ business interests but instead was formed to credential members based on their achievement of educational and ethical requirements. The court ruled for the umbrella insurer, holding that the exclusion does not turn on the purpose for which the association was formed but rather on what services it currently performs. The court held that the association regularly engages in activities that promote the business interests of its members, including market research and publication of information for members. The court also rejected the association’s argument that application of the exclusion would render coverage illusory, holding that the insurer had identified instances in which coverage would be available, and, in any event, the association could not identify any portion of the premium it paid for the umbrella policy specifically allocated to claims arising from its credentialing services. Thus, the court held, the exclusion bars coverage for the claims against the association.