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Professional liability exclusion does not apply in suit

wrongful convictions

The Nebraska Supreme Court overturned a lower court ruling Friday and held that a professional liability exclusion in a county’s insurance coverage did not apply, in a case involving litigation filed by six wrongfully convicted individuals.

Helen Wilson was raped and murdered in Beatrice, Nebraska, on Feb. 5, 1985, according to Friday’s ruling by the Nebraska Supreme Court in Gage County, Nebraska v. Employers Mutual Casualty Co.

Six individuals were charged with crimes related to her death, but nearly 20 years later were exonerated after DNA evidence showed they were not present at the crime scene, and in 2009 they were all granted pardons.

The six filed suit against the county, the county’s sheriff’s office, the county attorney’s office and associated individuals, charging they had manufactured and coerced false or misleading evidence in the case. A jury entered judgments against Gage County for more than $28 million in damages, which was upheld on appeal.

In February 1989, Gage County had  purchased three insurance policies from Des Moines, Iowa-based Employers Mutual: a commercial general liability policy; a “linebacker” policy, which is a claims-made policy covering losses from errors or omissions in the discharge of organizational duties; and an umbrella policy. The policies, which were effective from Feb. 2, 1989, to Feb. 2, 1990, included exclusions for “professional services.”

In January 2017, Gage County filed suit in state court seeking a declaratory judgment against EMC, alleging it had a duty to defend Gage County in the litigation and to indemnify it for up to the $2 million aggregate policy limit. The complaint also alleged there may be additional limits under the linebacker or umbrella policy.

The district court ruled the CGL policy’s professional service exclusion barred coverage, and that there was no coverage under either the linebacker policy or the umbrella policy.

That ruling was unanimously overturned by the Nebraska Supreme Court. “When the CGL policy, linebacker policy, and the umbrella policy are analyzed as a whole, we are persuaded that an ordinary and reasonable person would understand the professional services exclusion to be inapplicable to the acts of law enforcement,” said the ruling.

“The CGL policy does not define the term ‘professional services’ as used in the professional services exclusion,” said the ruling. “However, the linebacker policy expressly defines ‘professional services’ to mean anyone employed in an exclusive list of professions, including the practice of medicine, the practice of law, the practice of accounting, architects, engineers, surveyors or draftsmen.

“Similarly, the umbrella policy provides an exhaustive list of professional services which are included within the professional liability exclusion.”

“Law enforcement does not appear within the list of professions, but instead appears as one of five specified categories of occupations under the occupation liability exclusions,” the ruling said. 

“The fact that the umbrella policy lists law enforcement as an occupation rather than a profession is a particularly compelling indication of the parties’ understanding…And while the umbrella policy contains an ‘occupation liability…exclusion’…there is no similar exclusion in the CGL policy that would lead a reasonable person to understand that the CGL policy excludes coverage for law enforcement services,” said the court in overturning the lower court ruling and remanding the case for further proceedings.

Gage County attorney Joel D. Nelson, a partner with Keating, O’Gara, Medved & Peter P.C., LLO In Lincoln, Nebraska, said, “This decision was on a very important issue in the case, but the case is not over and Employers Mutual Casualty may raise other issues when the case is back” with the district court.

“Overall, we think the Supreme Court did a really good job of being guided by the language of the policies themselves.”

EMC’s attorneys did not respond to a request for comment.

In June, the Montana Supreme Court ruled an oil exploration company insured by Employers Mutual cannot be considered an additional insured in litigation filed over a worker’s death.






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