Executive Summary Blog

Legal developments affecting professional liability insurers

An Ohio federal court has held that attorneys’ fees awarded under a fee-shifting provision contained in the Individuals with Disabilities Education Act (IDEA) do not constitute covered “damages” under an insurance policy.  Wesco Ins. Co. v. Roderick Linton Belfance LLP, 2018 WL 4510093 (N.D. Ohio Sept. 19, 2018).…
In a win for an insurer represented by Wiley Rein, the United States Court of Appeals for the Fourth Circuit, applying North Carolina law, affirmed that all claims against an engineering firm for the negligent design of two bridges constituted “related claims,” subject to a single limit of liability.  Stewart Eng’g, Inc. v. Continental Cas. Co., No. 18-1386 (4th Cir. Nov. 7, 2018).  A summary of the district court’s opinion can be found here
Applying California and Virginia law, a federal district court has held that two class action lawsuits alleging similar wrongful conduct, but brought by different classes for different class periods, were nonetheless related and constituted a single claim.  Northrop Grumman Corp. v. AXIS Reinsurance Co., 2018 WL 5314918 (D. Del. Oct. 26, 2018).…
A Texas federal district court, applying Texas law, has held that a contract exclusion in an errors and omissions policy precluded coverage for a suit alleging that the insured breached a contract and committed related misconduct in connection with a contract for providing health management services to a client.  Conifer Health Solutions, LLC v. QBE Specialty Ins. Co., 2018 WL 4620613 (E.D. Texas Sept. 26, 2018).…
A Nebraska state trial court, applying Nebraska law, has held that law enforcement liability coverage for malicious prosecution claims is triggered solely when an individual is charged, rejecting several alternate trigger theories put forward by the insured county.  Gage Cty., Neb. v. Neb. Intergovernmental Risk Mgmt. Ass’n, No. CI 17-0339 (Neb. Dist. Ct. Oct. 10, 2018).  In so holding, the court joined a majority of jurisdictions that have considered the issue.…
A Montana federal district court has ruled that a false pretense exclusion did not preclude coverage under a crime policy for monetary losses resulting from a fraudulent email scheme, reasoning that the exclusion was ambiguous.  Ad Advert. Design, Inc. v. Sentinel Ins. Co., 2018 WL 4621744 (D. Mont. Sept. 26, 2018).  The court also held that further briefing was necessary to determine the amount recoverable under the policy.…
The United States District Court for the Eastern District of Virginia, applying Virginia law, has held that a professional liability policy’s exclusion for “negligent supervision” of funds applied to bar coverage for damages resulting from an insured attorney’s reckless investment of trust assets.  ALPS Prop. & Cas. Ins. Co. v. Farthing, 2018 WL 4927366 (E.D. Va. Sept. 26, 2018).  The court also held that the insurer was entitled to recoup defense costs paid…
Applying North Carolina law, the United States District Court for the Middle District of North Carolina has held that an insurer had no duty to defend or indemnify an insured for a qui tam action alleging false Medicaid reimbursement submissions because the suit failed to allege a claim arising out of the rendering of or failure to render medical professional services.  Affinity Living Grp., LLC v. StarStone Specialty Ins. Co., 2018 WL 4854650 (M.D.N.C. Oct.