Doctor’s Guilty Plea Establishes Basis for “Willful Violation” Exclusion from Coverage in Wrongful Death Case

Applying Nevada law, the Ninth Circuit has held that a professional liability insurer did not have a duty to defend or indemnify a doctor for a wrongful death action because the doctor’s guilty plea triggered an exclusion for willful violations of law.  National Fire & Marine Ins. Co. v. Hampton, 2020 WL 6158314 (9th Cir. Oct. 21, 2020).

After his patient died of a fentanyl overdose, the insured doctor was sued by the deceased’s estate and also criminally prosecuted for willful violation of federal controlled substances laws.  The doctor’s professional liability insurer agreed to defend under a reservation of rights.  After the doctor pled guilty to willfully violating the law, the insurer denied coverage, citing an exclusion for “[a]ny loss arising from, or in connection with . . . any event, health care event, or managed care event when intertwined with, or inseparable from . . . any willful violation of any law, statute, or regulation.”  After the insurer obtained summary judgment, the decedent’s estate appealed.

The Ninth Circuit held that the guilty plea established that the doctor’s violation was willful.  Accordingly, the insurer had no duty to defend or indemnify. The court further held that the exclusion did not render coverage illusory, since not all malpractice cases involve willful violations of law.  The court also rejected the doctor’s argument that the exclusion violated Nevada public policy.  Finally, the court held that the district court did not abuse its discretion when it denied leave to conduct discovery, as none of the requested discovery would have precluded entry of summary judgment.