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Improper sexual contact is outside the scope of a general liability insurance policy exclusion for injuries arising out of the rendering or failure to render medical service or treatment, according to the Minnesota Court of Appeals.

Several former patients of an allergist employed by the Mork Clinic claimed the physician had sexually abused them during medical examinations. The patients sued both the physician and Mork. Mork gave notice of the claims to its general liability insurer, Fireman's Fund Insurance Co. The insurance policy provided indemnity and defense coverage against claims of bodily injuries caused by an occurrence. The policy contained an endorsement excluding from coverage bodily injury arising out of the rendering or failure to render medical services or treatment. Fireman's denied coverage. Mork settled with the claimants and brought this suit to obtain a declaration of Fireman's responsibility for indemnity. The trial court held Fireman's liable.

On appeal, Fireman's argued, in part, that the claims against Mork were defeated by the exclusion in the policy for injuries arising out of the rendering of medical services. But the court pointed out that the sexual contact of the allergist here was not required for the medical services he was rendering. Thus, the court said, the claims against Mork did not fall within the medical services exclusion of its commercial general liability policy. The trial court decision was affirmed.

Mork Clinic vs. Fireman's Fund Insurance Co., Minnesota Court of Appeals, March 17, 1998 (BI/03/N.-$10).

Employer can't count Social Security

An employer could not offset against workers' compensation benefits the Social Security benefits an employee received on account of her husband's payment into the system, according to a Louisiana appellate court.

Marie Thompson was injured in the course and scope of her employment. She received workers compensation benefits until she failed to attend a scheduled independent medical examination. At that time, benefits were terminated. Ms. Thompson filed to force restitution of benefits. The employer and its insurer demanded to offset Social Security benefits received by Ms. Thompson against their liability for payment of benefits. Ms. Thompson was receiving $425.40 per month in retirement benefits through her husband's Social Security records. The workers comp judge denied the offset.

The appellate court said Ms. Thompson's Social Security benefits here represented payment made on behalf of her spouse. These payments are not retirement benefits paid because of her own payment into Social Security nor do they represent Social Security benefits received because of her own disability, the court said. To allow an offset here, the court noted, would give a windfall to the employer. The court agreed that it was not in error to have denied the offset.

Big Star of Many vs. Thompson, Court of Appeal of Louisiana, March 6, 1998 (BI/04/N.-$10).

These abstracts were prepared by Mayo H. Stiegler. Copies of these decisions are available by sending a $10 check payable to Mayo H. Stiegler, to Business Insurance, 740 N. Rush St., Chicago, Ill. 60611-2590. List the number for each opinion.

Counting Social Security disallowed

Idaho's workers compensation statute, which denies paying death benefits to independent adult children of a deceased worker while providing benefits for dependent children, does not violate the equal protection clauses of the federal or state constitutions, according to the Supreme Court of Idaho.

In July 1994, Howard Weatherly was killed while at work. At his death, he was unmarried and survived by three adult children and nine grandchildren, none of whom were dependent on him for support. The Idaho workers comp laws provide a death benefit for named, dependent family members of workers killed on the job. Because none of his heirs was eligible to receive a death benefit, the employer's surety deposited $10,000 in the state's Industrial Special Indemnity Account, pursuant to state law. Vicki Meisner, Mr. Weatherly's daughter, brought this suit, claiming that the state law providing death benefits for dependent children but not independent children violated the equal protection clauses of the federal and state constitutions. The trial court upheld the constitutionality of the statute.

The Supreme Court of Idaho said the classification in the state statute here based on dependency was rationally related to a legitimate governmental purpose -- to provide for the loss of monetary support. The court said it was both rational and reasonable for the legislature to limit benefits to those individuals who were truly dependent on the deceased worker. The trial court decision was affirmed.

Meisner vs. Potlatch Corp., Supreme Court of Idaho, Feb. 27, 1998 (BI/01/O.-$10).