In a case in which Wiley Rein represented the insurer, a federal district court in Maine has held that an insurer had no duty to defend an enforcement action brought by the Securities and Exchange Commission (SEC) under a lawyers’ professional liability policy because none of the relief sought constituted “damages” as defined in the policy.  Marcus v. Allied World Ins. Co., No. 2:18-cv-253-DBH, 2019 WL 1810954, (D. Me. Apr. 23, 2019).  The court held that when sought by the SEC, disgorgement is properly characterized for insurance purposes as a penalty.  The court also held, however, that the policy’s investment advice exclusion did not apply to negate the insurer’s duty to defend a related securities fraud class action, but it rejected the insured’s argument that because the actions were “related claims,” the insurer’s duty to defend the securities lawsuit also obligated it to defend the SEC enforcement action.

Continue Reading Maine District Court Holds Insurer Has No Duty to Defend SEC Enforcement Action Because Disgorgement Constitutes a Penalty

Applying Maine law, a federal district court has held that an insurer did not have a duty to defend an insured mental health agency in a billing fraud investigation by the state health department because the sanctions sought by the department did not constitute “damages” within the meaning of the insured’s professional liability policy.  Oceanway Mental Health Agency, Inc. v. Philadelphia Indem. Ins. Co., 2019 WL 302486 (D. Maine Jan. 23, 2019).

Continue Reading Billing Fraud Penalties Do Not Constitute “Damages” Under Professional Liability Policy

Applying Maine law, the United States Court of Appeals for the First Circuit has held that a professional liability insurer had no duty to defend a physician for claims arising out of his alleged improper accessing of his ex-wife’s medical records on the basis that such action did not constitute the rendering of professional services.  Med. Mut. Ins. Co. of Me. v. Burka, 2018 WL 3805909 (1st Cir. Aug. 10, 2018).

Continue Reading First Circuit Holds Physician’s Accessing of Ex-Wife’s Medical Records Allegedly to Harass Does Not Constitute “Professional Services”