Keeping your client covered: insurance companies routinely deny coverage when an injury results from an apparently intentional act. If you plead the case carefully, your client can be compensated.

After law school, as a practicing attorney, you learned the real difference between negligence and intentional torts: Injuries caused by negligence are covered by insurance. Injuries caused by intentional torts are not. At least that's what most insurance policies' plain language says.

But an insurance policy's plain language is not necessarily the final word. Although appellate courts are supporting plaintiffs' efforts to overcome exclusionary clauses and other limitations on coverage that favor insurance companies, plaintiff lawyers should plead intentional-tort cases carefully. A claim that stems from negligence could be excluded from coverage simply because it was characterized as an intentional tort in pleadings.

The exclusion of intentional acts is but one of myriad coverage issues in intentional-tort cases. Plaintiff lawyers should also be wary of other policy terms, such as narrow general coverage language and specific exclusions for assault and battery, unlawful conduct, undue familiarity, sexual assault, and sexual harassment. The availability of coverage can rise or fall on whether the conduct of the insured party was an "occurrence" within the policy's definition or whether the conduct "arose out of" or "resulted from" foreseeable actions.

A typical intentional-acts exclusion states that no coverage exists for any bodily injury or property damage intended by, or which may reasonably be expected to result from, the intentional or criminal acts or omissions of any insured person.

In deciding how narrowly to interpret an exclusionary clause, courts may be influenced by internal memoranda between the insurance company and the insured that indicate what coverage the insured expected and what the insurance company intended to provide. While courts generally uphold properly bargained-for contract language, plaintiffs in some cases can argue that, for public-policy reasons, a court should not exclude coverage, regardless of the clarity, length, and force of the insurance policy's language.

In general, insurance policies are viewed as contracts, and the reasonable expectations of the contracting parties will be enforced where the coverage or exclusionary language is clear and explicit. But language that is unconscionably unfair to the insured could be held unenforceable. Where language is vague or ambiguous, coverage will usually be allowed because the overriding policy of most courts is to err on the side of providing compensation when there has been injury or damage. Likewise, given that exclusions are often cited by the insurer as a reason to deny coverage, exclusionary language is usually narrowly construed.

This complex area of law is always evolving. A single fact can affect the outcome of a case, court decisions vary from state to state, and insurance companies have expanded their exclusionary clauses with increasingly precise language. An attorney considering whether to challenge such a clause must carefully evaluate the facts of the case and the relevant court rulings in the jurisdiction.

What follows is a roundup of cases in which policyholders succeeded in circumventing intentional-acts exclusionary language, winning compensation for injuries caused by intentional torts.

Unintentional injuries

In some jurisdictions, injuries caused by intentional conduct are covered by insurance if they were not intended. For example, the Arkansas Supreme Court ruled that a jury, not the insurance company, should decide whether injuries sustained during a fistfight resulted from a punch or from a fall to the pavement. Coverage, the court ruled, could be denied under an intentional-acts exclusion if a punch was the cause. But if the pavement caused the injuries, the insurer had to provide coverage because the harm was an "unexpected or unintended result" of the intentional act. (1)

In another case, the Arizona Supreme Court held that the fact finder must determine whether gunshot injuries were the result of an "intentional act" within the meaning of a policy's exclusion. (2) The case involved the insured's shooting a gun. The court acknowledged that the shooting was an intentional act but had to decide a dispute related to whether the exclusion applied.

Professional services clauses

Liability coverage for professionals generally excludes intentional wrongdoing. If, for example, an attorney assaults or steals from a client, legal malpractice insurance probably will not cover the resulting damages.

Intentionally harmful conduct might be considered a covered activity when the line between professional services and the misconduct is unclear. Some courts have held that coverage applies in cases where a psychotherapist has engaged in a sexual relationship with a patient.

One court noted that professional therapy includes a technique that leads some patients to transfer their feelings about another person to the therapist. Because a therapist's exploitation of transference could lead to sexual relations between therapist and patient, the court reasoned, sexual misconduct falls within the definition of covered acts occurring within the scope of professional services. (3) The court added that it was the intertwining of intentional misconduct and professional services that created doubt about coverage. Where there is such intertwining, doubt about coverage should be resolved in favor of the therapist and the injured patient, not the insurance company. (4)

Another instance of such intertwining is a case of a physician's sexually assaulting several patients during routine gynecological examinations. (5) That case recognizes that certain medical professionals' work requires a highly intrusive examination of the patient. The same argument could be made when an emergency room doctor, pediatrician, internist, or general practitioner commits a sexual assault. But the court might reject such an argument in cases involving dentists or other medical professionals who have no reason to conduct such an intimate examination. (6)

Exclusions in policies covering other types of professional services might not apply when the intentional harm is an inherent risk related to the service. For example, the work of security guards, nightclub "bouncers," and other workers sometimes requires the use of force, and their insurers should be required to cover any resulting injuries.

Mental capacity

Harm caused by an intentional act might be covered if the insured, due to his or her mental state, could not form the intent to act. For example, courts have held that alcohol or drug use can impair the user's judgment to the point that he or she could not have acted intentionally; therefore, the exclusionary clause does not apply. (7)

The Talhouni case involved an indecent assault and battery committed by a teenager who was under the influence of LSD. On the issue of whether the intentional-acts exclusion applied, the court concluded that in light of Talhouni's age and intoxication, it was for the fact finder to determine Talhouni's capacity to form intent. (8) The court noted that for the purposes of exclusion, intoxication could destroy the capacity to form intent. (9)

Another court ruled that an intentional-acts exclusion did not apply when the insured's mental illness may have precluded him from controlling his actions. (10) A similar rationale has led other courts to uphold coverage for the acts of minors who, because of their age, might not have intended harm by their intentional acts. (11)

Underlying negligence

Even where there is no dispute that an intentional act caused a plaintiff's injuries, coverage may be available indirectly, through responsible third parties whose negligence allowed the intentional act to occur. For example, plaintiffs may have claims against employers related to the negligent hiring, selection, screening, and retention of employees who commit intentional torts. (12)

There might even be a negligence aspect to the tortfeasor's intentional act. For example, if an employee of an insured company is a convicted sex offender who commits a sexual assault while on duty, a negligence claim is worth exploring. Such a claim could be based on the theory that the assault would not have occurred if the perpetrator had not negligently failed to seek treatment for his uncontrollable behavior.

One court, despite a policy's enforceable exclusionary clause for intentional acts, upheld coverage for damages resulting from sexual abuse based on claims that the insureds, owners of a day care center, had a duty to protect the children from abuse. The court reasoned that the owners' negligent failure to supervise certain employees allowed those employees to abuse children. It upheld coverage even though the employees who had failed to supervise the children were, on other occasions, committing sexual assaults themselves. The court ruled that the claims could be separated so that coverage would be provided only for injuries that resulted from the owners' negligent supervision. (13)

Another court used similar reasoning to uphold coverage for a mentally retarded sexual assault victim. (14) In Doe v. Shaffer, the court ruled that an exclusionary clause did not prohibit coverage for negligence claims against the residential facility where the victim lived and where the abuse occurred. The court reasoned that the facility's negligence allowed the abuse to occur.

In another successful claim for coverage in a sexual assault case, the court reasoned that a church's negligent training, supervision, placement, and monitoring of the assailant allowed the harm to occur. Therefore, the victim's injuries were covered under the general terms of the church's insurance policy. (15)

Claims related to sexual abuse may be severable. Bohrer v. Church Mutual Insurance Co. stemmed from sexual misconduct committed during religious counseling. The court apportioned coverage, allowing the victim to recover from the insurance policy for the harm caused during the time before the sexual assault, but excluding coverage for the assault itself. (16)

Some courts will allow an innocent insured to recover where it is clear the wrongdoer acted without the knowledge of the one seeking coverage. In Maravich v. Aetna Life and Casualty Co., the court allowed a wife to collect under a homeowners' policy even though the damage resulted from arson committed by her husband, who was also insured by the policy. The court ruled that the exclusionary clause voided coverage only for the insured who had caused the loss. (17)

Careful pleading of intentional-tort cases is important. A claim that is based in negligence could be excluded from coverage simply because it was characterized as an intentional tort. When properly pleaded, as the cases discussed above illustrate, not all intentional-tort claims are hopeless because of superficial exclusionary clauses.

A slight twist on perspective or a creative view of the facts might help a plaintiff find compensation for injuries that, in many cases, are devastating and, without coverage, would never be addressed.

Notes

(1.) Norris v. State Farm Fire & Cas. Co., 16 S.W.3d 242, 244-46 (Ark. 2000).

(2.) Fire Ins. Exch. v. Berray, 694 P.2d 191, 193-94 (Ariz. 1984).

(3.) St. Paul Fire & Marine Ins. Co. v. Mitchell, 296 S.E.2d 126 (Ga. Ct. App. 1982).

(4.) Vigilant Ins. Co. v. Kambly, 319 N.W.2d 382 (Mich. Ct. App. 1982); L.L. v. Med. Protective Co., 362 N.W.2d 174 (Wis. Ct. App. 1984); St. Paul Fire & Marine Ins. Co. v. Love, 459 N.W.2d 698 (Minn. 1990).

(5.) St. Paul Fire & Marine Ins. Co. v. Asbury, 720 P.2d 540 (Ariz. Ct. App. 1986).

(6.) Roe v. Fed. Ins. Co., 587 N.E.2d 214 (Mass. 1992).

(7.) Hanover Ins. Co. v. Talhouni, 604 N.E.2d 689 (Mass. 1992).

(8.) Id. at 785.

(9.) Id. at 786.

(10.) See, e.g., State Farm Fire & Cas. Co. v. Wicka, 474 N.W. 2d 324, 331 (Minn. 1991).

(11.) Allstate Ins. Co. v. Patterson, 904 F. Supp. 1270, 1284 (D. Utah 1995); Fire Ins. Exch. v. Diehl, 545 N.W.2d 602 (Mich. 1996); Catherine A. Salton, Comment: Mental Incapacity and Liability Insurance Exclusionary Clauses: The Effect of Insanity upon Intent, 78 CAL. L. REV. 1027 (1990).

(12.) Evangelical Lutheran Church v. Atl. Mut. Ins. Co., 169 F.3d 947 (5th Cir. 1999).

(13.) Worcester Ins. Co. v. Fells Acres Day Sch., Inc., 558 N.E.2d 958, 970-71 (Mass. 1990).

(14.) Doe v. Shaffer, 738 N.E.2d 1243 (Ohio 2000).

(15.) Evangelical Lutheran Church, 169 F.3d 947.

(16.) 965 P.2d 1258 (Colo. 1998).

(17.) 504 A.2d 896, 906 (Pa. Super. Ct. 1986).

Wendy J. Murphy is of counsel at the firm of Brody, Hardoon, Perkins & Kesten in Boston. She is a visiting professor at the New England School of Law.