Horsing Around With Coverage
There is a quaint notion in northern New England that insurance policies exist to pay claims. This is abundantly true in the State of Maine, where courts have been remarkably liberal over the years in finding coverage for liability claims.
In the most recent case of this sort, the First Circuit ruled last week in Centennial Ins. Co. v. Patterson, 08-1521 (1st Cir. April 23, 2009) that a professional liability insurer had a duty to defend a veterinarian for allegedly giving false testimony at a public hearing involving the plaintiff.
The coverage dispute arose out of a pro se law suit brought by Carol Murphy, a local farmer who alleged that dozens of state officials and other defendants (80 in all) had conspired to take away her animals by pursuing animal cruelty charges against her for failing to provide them with proper food, care and shelter. Among the defendants was Dr. Robert Patterson, who had examined the animals and testified about their condition at an Animal Possession hearing.
Patterson tendered the defense of Murphy's suit to Centennial, which had insured him under a Veterinarian's Professional Liability policy. Centennial denied that testifying at a public hearing involved rendering "veterinary professional services" and commenced an action for declaratory relief in federal court. Although Murphy's suit was soon thereafter dismissed with prejudice, Centennial's efforts to withdraw its coverage litigation as moot were denied by the U.S. District Court were denied owing to the fact that Dr. Patterson had incurred the cost of engaging his own defense counsel. In 2006, the District Court ruled that Centennial owed coverage for the insured's defense costs ($121--hey, this is Maine) and DJ fees ($3036). Centennial appealed.
On April 23, 2009, the First Circuit issued its opinion, affirming the lower court's finding of coverage. Crucially, the court found that the conduct giving rise to Patterson's claimed liability was not just his public testimony but the examination and care for Murphy's animals that formed the basis for his testimony. As a result, the court found that these actions involved his special training as a veterinarian and were properly the subject of coverage for "professional veterinary services” within the policy’s definition of a covered “veterinary incident.”
The court also observed that the policy would be triggered by the underlying complaint’s allegation that Dr. Patterson had committed libel and slander despite the fact that such allegations were apparently limited to various media outlets that were named as co-defendants in the Complaint. Furthermore, despite the fact that Centennial suggested that any covered libel or slander must occur in connection with the furnishing of professional veterinary services, the First Circuit observed that such events were unlikely to occur in the course of treating an animal and must therefore reasonably be given broader applicability to testimony that the insured was giving in the course of his special expertise and training as a veterinarian.
Finally, despite the fact that the underlying suit alleged that the statements were made with fraudulent intent, the First Circuit held that an exclusion to the policy for making knowingly false statements did not apply since allegations in a pro se Complaint characterizing Dr. Patterson’s actions as “criminal” for which he was “guilty” did not necessarily mean what they stated and might result in an ultimate determination that the insured was merely negligent.
