Prof'l Solution Ins. Co. v. Giolas

Decision Date08 November 2017
Docket NumberCase No. 16 C 9868
Parties PROFESSIONAL SOLUTION INSURANCE COMPANY, Plaintiff, v. Dale GIOLAS, M.D. and Staci Ferguson, Defendants.
CourtU.S. District Court — Northern District of Illinois

Thomas Francis Lucas, Kelly Elizabeth Purkey, McKenna, Storer, Rowe, White & Farrug, Chicago, IL, for Plaintiff.

Richard David Grossman, Law Offices of Richard Grossman, Lawrence Peter Seiwert, Chicago, IL, for Defendants.


Harry D. Leinenweber, Judge

This is an insurance coverage dispute arising out of a psychiatrist's alleged sexual misconduct with a patient. Before the Court are Cross Motions for Summary Judgment [ECF Nos. 18–19, 22]. For the reasons stated herein, the Court grants Defendant Giolas' Motion and denies Plaintiff's Motion.


Plaintiff Professional Solutions Insurance Company ("PSIC") brought a declaratory action seeking a declaration that it does not have a duty to defend Defendant Dale Giolas, M.D. ("Giolas") in an Illinois state court lawsuit. For the purposes of the coverage dispute and the cross motions before the Court, the facts are undisputed. Both parties filed Rule 56.1(a)(3) statements, but neither filed a Local Rule 56.1(b) response. See , N.D. Ill. L.R. 56.1(a)(3)(C) ("All material facts set forth in the statement required of the moving party will be deemed to be admitted unless controverted by the [ L.R. 56.1(b) ] statement of the opposing party."). As such, the Court considers the facts contained in both parties' statements admitted. The Court does not deem any legal conclusions admitted. The facts of the underlying state court action are as follows.

Giolas, a licensed psychiatrist, treated Staci Ferguson ("Ferguson") as a patient from 2011 until early 2016. (See , PSIC's 56.1(a)(3) Statement, ECF No. 20 ("PSIC's Fact Statement") ¶ 4.) On August 25, 2016, Ferguson brought a lawsuit in Illinois state court alleging that Giolas repeatedly engaged in improper sexual activity with her while he was treating her. (See , Giolas' 56.1(a)(3) Statement, ECF No. 21 ("Giolas' Fact Statement") ¶¶ 1–2; PSIC's Fact Statement ¶¶ 3–4.) Ferguson alleged that Giolas' improper sexual activity violated the Sexual Exploitation in Psychotherapy, Professional Health Services, and Professional Mental Health Services Act, 740 ILCS 140/1 et seq. , the Gender Violence Act, 740 ILCS 82/1 et seq. , and constituted common law battery. (See , Complaint, Ex. A to "Complaint for Declaratory Judgment," ECF No. 1 (the "Underlying Complaint"); see also , Giolas' Fact Statement ¶ 1.) Both parties acknowledge that Giolas denies engaging in any sexual activity with Ferguson. (See , Giolas' Fact Statement ¶ 3; PSIC's Fact Statement ¶ 5.) After receiving notice of the Underlying Complaint, Giolas tendered it to PSIC, his professional liability insurer. The underlying state court case remains pending. (See , Giolas' Fact Statement ¶ 4.)

The insurance policy at issue, entitled Physician and Surgeon Medical Professional Liability Insurance Policy (the "Policy"), was issued by PSIC to Giolas and was in effect when Ferguson filed the Underlying Complaint. (See , Policy, Ex. B to Complaint, ECF No. 1 (the "Policy"); PSIC's Fact Statement ¶ 12; Giolas' Fact Statement ¶ 5.) The policy states, in relevant part:

Section II. Coverage Agreement
Within the limit of liability shown on the Declarations :
In return for payment of premium and subject to all the terms of this Policy and the exclusions stated in Section VIII. Exclusions , We will pay on behalf of an Insured all sums in excess of the Deductible to which this insurance applies and for which an Insured becomes legally obligated to pay as Damages because of an Injury caused by an Incident in the performance of Professional Services by You or someone for whom You are legally responsible as provided in this Policy . The Injury must occur on or after the Retroactive Date shown on the Declarations and before this Policy or coverage for an Insured terminates. Any Claim associated with an Injury caused by an Incident must be first reported to Us in writing during the Policy Period or the Automatic Extended Reporting Period . The Injury must also be caused by an Insured under this Policy . (See , Policy § II.)

The term "Injury" is defined as:

[B]odily injury, sickness, disease or death sustained by any one person. (Id. § I.14.)

The term "incident" is defined as:

[A]ny negligent omission, act or error in the providing of Professional Services . All such omissions, errors or acts causally related to the rendering of or failure to render Professional Services to one person shall be considered one Incident . Causally related acts, errors or omissions that have a common cause or form a causal chain of events shall be considered one Incident . An Incident shall be deemed to have occurred at the time of the earliest act, error or omission comprising that Incident . (Id. § I.13.)

The term "Professional Services" is defined as:

[T]he diagnosis of, treatment or medical care for or medical consultation regarding a patient's medical condition. (Id. § I.23.)

Relevant exclusions to coverage, as amended, are described as follows:

Sexual impropriety, sexual intimacy, sexual assault, sexual harassment or any other similarly defined act. However, notwithstanding the foregoing, the Insured shall be protected under the terms of this Policy as to any Claim and or allegation which may be covered by the Policy upon which any Claim or Suit may be brought against the Insured , for any such alleged behavior by an Insured unless a judgment or a final adjudication adverse to the Insured shall establish that such behavior occurred as an essential element of the cause of action so adjudicated. (Id. , Illinois Amendatory Endorsement at 1.)
* * *
The intentional infliction of Injury . (Id. § VIII.10.)
* * *
This Policy does not apply to punitive or exemplary Damages , fines, penalties imposed by law, or matters uninsurable under the law pursuant to which this Policy is construed, unless the law of the state in which the Insured is licensed to practice prohibits such an exclusion. (Id. § VIII.13.)
A. Legal Standard

Summary judgment is appropriate when there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. See , FED. R. CIV. P. 56(a). As both parties cite to Illinois law and the Court finds Illinois law proper, the Court dispenses with an extensive choice-of-law analysis and applies Illinois law.

To determine whether PSIC has a duty to defend Giolas in the Ferguson lawsuit, the Court compares the facts alleged in the Underlying Complaint with the provisions of the PSIC Policy and, if the facts alleged potentially fall within the Policy's coverage, the duty to defend is triggered. See, Amerisure Mut. Ins. Co. v. Microplastics, Inc. , 622 F.3d 806, 810 (7th Cir. 2010). "Refusal to defend is unjustifiable unless it is clear from the face of the underlying complaint that the facts alleged do not fall potentially within the policy's coverage." Outboard Marine Corp. v. Liberty Mut. Ins. Co. , 154 Ill.2d 90, 180 Ill.Dec. 691, 607 N.E.2d 1204, 1212 (1992). "In construing the language of the policy, the court's primary objective is to ascertain and give effect to the intent of the parties to the contract. In order to ascertain the meaning of the policy's language and the parties' intent, the court must construe the policy as a whole and take into account the type of insurance purchased, the nature of the risks involved, and the overall purpose of the contract." Traveler's Ins. Co. v. Eljer Mfg. , 197 Ill.2d 278, 258 Ill.Dec. 792, 757 N.E.2d 481, 491 (2001) (internal citations and quotations omitted). "Both the policy terms and the allegations in the underlying complaint are liberally construed in favor of the insured, and any doubts and ambiguities are resolved against the insurer." Microplastics , 622 F.3d at 811 (quoting State Farm Fire and Casualty Co. v. Perez , 387 Ill.App.3d 549, 326 Ill.Dec. 580, 899 N.E.2d 1231, 1235 (2008) ). However, the "general rules that favor the insured must yield to the paramount rule of reasonable construction which guides all contract interpretations." Ibid. (quoting Western States Ins. Co. v. Bobo , 268 Ill.App.3d 513, 205 Ill.Dec. 930, 644 N.E.2d 486, 488 (1994) ) (internal quotation omitted).

B. Insurance Coverage

Under this framework, the Court turns to the Policy at issue. The Policy provides coverage for "[bodily injury, sickness, disease or death sustained by any one person] caused by a[ ] [negligent omission, act or error] in the performance of [the diagnosis of, treatment or medical care for or medical consultation regarding a patient's medical condition] by [Giolas]." (See , Policy, §§ I–II, VIII (quoted policy definitions inserted).) PSIC argues that the Policy does not cover Giolas' alleged conduct for two reasons: (1) the Underlying Complaint does not allege negligence in the performance of professional services, and (2) the Underlying Complaint does not allege bodily injury.

Giolas contends that the sexual misconduct exception in the Policy provides coverage until a final adjudication in the underlying action establishes that sexual misconduct actually occurred in the underlying action. (See, supra , Policy, Illinois Amendatory Endorsement at 1.) PSIC is correct that an exception to an exclusion in an insurance policy does not create coverage. See , Cont'l Cas. Co. v. Donald T. Bertucci, Ltd. , 399 Ill.App.3d 775, 339 Ill.Dec. 358, 926 N.E.2d 833, 846 (2010) ("[A]n exception to an exclusion does not create coverage or provide an additional basis for coverage, it only preserves coverage granted in the insuring agreement."). The Court must first determine whether the factual allegations potentially fall within the Policy's coverage. If so, then the Court considers whether any exclusions bar coverage. Accordingly, the Court considers whether the factual...

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