Essex Ins. Co. v. Galilee Med. Ctr. S.C. — Mar. 2016 (Summary)

INSURANCE

Essex Ins. Co. v. Galilee Med. Ctr. S.C.
Nos. 14-1791, 14-1801 (7th Cir. Mar. 4, 2016)

An insurance provider brought suit against a medical clinic and a physician employed by that clinic seeking to rescind a professional liability policy due to material misrepresentations in the policy application.  The physician and the medical clinic, when filling out applications for insurance, had both indicated that they did not provide weight reduction drugs and did not perform experimental procedures.  Subsequently, in a malpractice claim brought by an injured patient, the physician admitted to treating more than 5,000 patients with mesotherapy to reduce fat areas and contour body shape. Mesotherapy had not been approved by the U.S. Food and Drug Administration for any purpose.

The insurance company denied coverage to both the medical clinic and the physician in this malpractice suit and sought to rescind the policy.  The court held in favor of the insurance company, finding that the clinic and the physician had made misrepresentations on the insurance application by not indicating the types of weight reduction techniques that would be used.  Specifically, the court noted that any reasonable person would have understood from the application that the insurance company wanted to know whether nontraditional weight loss medications and procedures were being used to assess whether to issue a policy or increase premiums.