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Third Circuit Affirms Doctor’s Sexual Misconduct Is Not Within the Scope of His Employment, and Thus Not Covered Under Professional Liability Policy

September 9, 2020

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<p style="text-align: justify;">The Third Circuit affirmed a New Jersey District Court’s ruling that there is no coverage for a doctor’s claim for coverage in an underlying sexual misconduct and medical malpractice lawsuit, affirming the well-established principle that an employee’s conduct outside the scope of employment prevents them from being an insured under the employer’s policy.</p>
<p style="text-align: justify;">Dr. Jonathan <a href="https://www.wcmlaw.com/wp-content/uploads/2020/09/Fellus.pdf">Fellus</a> was employed as a neurologist at Kessler Institute Rehabilitation Center (“Kessler”).<span>  </span>Kessler’s professional liability policy with Columbia Casualty included coverage for Kessler’s “employees,” but applied “only for acts within the scope of their employment” at Kessler.<span>  </span>In 2008, Lorette Schroth (“Schroth”) sought treatment from Dr. Fellus for a head injury and the two began a sexual relationship which lasted approximately a year.  In 2010, Schroth sued Dr. Fellus in New Jersey state court, alleging sexual misconduct, intentional infliction of emotional distress, negligent infliction of emotional distress, and medical malpractice.<span>  </span>After a trial and appeal, Schroth obtained a verdict totaling $1.5 million in compensatory damages, $1 million in punitive damages, and close to $500,000 in interest.  Dr. Fellus sought coverage from Columbia.</p>
<p style="text-align: justify;">The District Court dismissed Dr. Fellus’s claim, finding that there was no coverage because coverage was limited to “acts within the scope of their employment” with Kessler, and the sexual relationship with Schroth plainly did not constitute such conduct<span>. </span><span> On appeal, the Third Circuit affirmed, bluntly holding that “[i]</span>nterpreting the policy to allow for coverage would defy both governing law and common sense” and finding that Dr. Fellus’s actions were not of the kind he was employed to perform.</p>
<p style="text-align: justify;">Finally, the Court flatly rejected Dr. Fellus’s argument that the conduct was within the scope of his employment because, “but for” his employment, their relationship would have been permissible.  The Court noted that “[u]nder his rationale, any interaction between doctor and patient, not matter how abusive or predatory, would be deemed within the scope of employment and covered by Columbia’s policy.”  The Decision thus articulates the limits of a Professional Liability Policy, and represents a straightforward and common sense application of the relevant law.</p>
Thanks to Douglas Giombarrese for his contribution to this post.  Please email <a href="mailto:gcoats@wcmlaw.com">Georgia Coats</a> with any questions.

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