The courts frequently apply insuring agreements broadly. However, in a recent decision, a court narrowly applied the definition of “professional services” to restrict coverage. Specifically, in Chapman v. Ace American Insurance Company, the Eleventh Circuit determined the services provided by an individual holding himself out as a counselor did not constitute “professional services.”
The underlying lawsuit concerned Mark and Barbara Chapman’s ten-year old son who was diagnosed with ADHD and had a history of behavioral problems. The Chapman family engaged the services of Robert Taylor to provide mental health counseling to their child. After months of mental health counseling provided by Taylor, the child committed suicide in 1998.
In 1999, Taylor pled guilty to four counts of organized fraud and 20 counts of grand theft stemming from, among other things, providing unlicensed counseling services to patients. Shortly thereafter, the Chapman family filed suit against Taylor asserting claims for wrongful death, unjust enrichment, unfair and deceptive trade, and infliction of severe emotional distress. The Chapman’s complaint alleged that Taylor erroneously held himself out as a licensed provider of mental health counseling and substance abuse services to minors.
Taylor had an insurance policy covering claims arising out of “professional services.” But the insurer denied coverage for the Chapman’s lawsuit on grounds that the alleged injuries did not arise from covered “professional services.” The Chapman family and Taylor then entered into a consent judgment in excess of $5 million whereby the Chapman family was assigned the right to collect under Taylor’s insurance policy. The Chapman family then filed a declaratory judgment action against the insurer to recover the judgment amount.
At summary judgment, the Florida Federal District Court sided with the insurer in holding that the allegations against Taylor did not involve “professional services.” On appeal, the Eleventh Circuit agreed. The court reviewed the definition of “professional services” in the policy, which included “those services you are licensed, trained, or being trained to provide within the allied health field specified in your application and approved by us for coverage.” The policy identified Taylor’s professional occupation as a drug and alcohol abuse counselor. As a result, since the complaint did not contain allegations stating that Taylor provided the Chapmans’ child with substance abuse counseling, the conduct fell outside of the policy’s definition of “professional services.” The court also found noteworthy that Taylor lacked the required licensure, education, or experience to provide mental health counseling.
The Eleventh Circuit’s decision is notable in that it closely scrutinized the policy’s definition of “professional services” and also focused on the insured’s lack of licensure. This is significant because courts often emphasize the nature of the service provided, regardless of whether an individual is actually licensed or not. As a result, it remains to be seen whether other courts will adopt the strict analysis of the Eleventh Circuit in similar circumstances involving providers of “professional services.”