(Article from Insurance Law Alert, September 2021)
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A Georgia district court granted an insurer’s motion to dismiss, ruling that claims alleging that the policyholder engaged in false and deceptive marking in connection with its medical products did not fall within the scope of professional liability coverage. Elite Integrated Medical, LLC v. Hiscox, Inc., No. 1:20-cv-3948 (N.D. Ga. Aug. 10, 2021).
The state of Georgia initiated an investigation of Elite for alleged violations of statutory and common law based on its marketing of certain medical products and services. The state’s notice included a series of alleged unfair and deceptive business practices, including making false or misleading representations regarding Elite’s stem therapy and regenerative products. Hiscox denied coverage, arguing that the claims did not fall within the policy’s professional services coverage. The court agreed and ruled that the insurer had no duty to defend or indemnify the claims.
The policy covered claims alleging negligence in “professional services,” defined as “[s]olely in the performance of services as a physical medicine clinic including chiropractic, hormone therapy, neuropathy, medical and non-medical weight loss, allergy testing, durable medical equipment therapy and/or instruction, PRP, and amniotic human tissue injections and naltrexone implants.” The court concluded that deceptive marketing claims did not fall within the scope of this language, explaining that making false or misleading statements was “incidental to” Elite’s performance of services as a medical clinic. The court further reasoned that misleading advertising activities do not involve use or application of specialized learning unique to Elite’s profession.