No Coverage for Wrongful Death Suit after a Doctor’s Guilty Plea in Criminal Action

The United States District Court for Nevada, applying Nevada law, has held that an insurer had no duty to defend or indemnify in a wrongful death suit where a plea agreement in a related criminal action satisfied the willful violation of statute exclusion in a doctor’s professional liability policy.  Nat’l Fire & Marine Ins. Co. v. Holper, 2019 WL 4979717 (D. Nev. Oct. 8, 2019).

The insured’s patient was found dead following an overdose, and her estate brought a wrongful death suit against the insured doctor.  The insurer agreed to provide a defense subject to a reservation of rights and conducted its own investigation; however, the insured failed to attend the examination under oath (EUO), requesting it be continued until after resolution of the criminal action.  The insured subsequently pled guilty to intentionally distributing fentanyl “outside the usual course of his professional practice and without a legitimate medical purpose” in violation of 21 U.S.C. § 841 (a)(1) and (b)(1)(C).

Following resolution of the criminal action, the insurer initiated coverage litigation.  The relevant exclusionary language provided that the policy did not apply to: “Any loss arising from, or in connection with . . . any willful violation of any law, statute or regulation.”  The court held that the exclusion was triggered by the plea agreement, which provided that the doctor violated the law by intentionally distributing a controlled substance.  Because the court held that coverage was barred, it also dismissed the insured’s counterclaims.