The Supreme Court of Washington has held that an insurer had a duty to defend a dentist under a professional liability insuring agreement for taking inappropriate photographs of an employee as a "practical joke" while the employee was under anesthesia during a dental procedure. Woo v. Fireman's Fund Ins. Co., 2007 WL 2129357 (Wash. July 26, 2007). The court also held that the insurer did not have a duty to defend under an employment practices insuring agreement.
The case arose from what the oral surgeon characterized as a "practical joke" played on an employee. The oral surgeon had agreed to replace two of the employee's teeth with implants. Once he had the employee under general anesthesia, unconscious, and prepared for her tooth implants, the oral surgeon inserted, purportedly as a "joke," two temporary spacers that were shaped like boar tusks into the spaces where the regular-shaped spacers were to be inserted. The oral surgeon and his staff then photographed the employee with the boar tusks in her mouth and in some instances also with her eyes pried open. Thereafter, the surgeon removed the boar tusks and completed the procedure. Upon later seeing the photographs, the employee quit her job and filed suit, alleging a host of intentional and negligence-based torts, including battery, invasion of privacy and negligent infliction of emotional distress.
The insurer refused to defend, asserting that there was no coverage under the professional liability coverage part because the acts alleged in the complaint did not arise out of the provision of "dental services." The insurer denied overage under the employment liability coverage provision because the complaint did not allege sexual harassment, discrimination or wrongful discharge as defined in the policy. The insurer also refused to defend under the general liability section on the grounds that the alleged conduct was intentional and not considered a business activity. The oral surgeon eventually settled the action for $250,000 and then sued the insurer for breach of contract, bad faith and breach of the Consumer Protection Act.
With respect to the professional liability coverage provision, the court concluded that the "insertion of boar tusk flippers in [the former employee's] mouth conceivably fell within the policy's broad definition of practice of dentistry." In so ruling, the court rejected the argument that "an insurer has no duty to defend when the insured can have no reasonable expectation of coverage." Rather, the court reasoned that "whether the complaint alleged facts that were conceivably covered under the insurance policy" determined whether the insurer had a duty to defend.
The court distinguished the decision in Standard Fire Insurance v. Blakeslee, 771 P.2d 1172 (Wash. App. 1989), which held that a dentist accused of sexual assault of a patient under the influence of nitrous oxide was not entitled to insurance coverage. The court reasoned that the application of Blakeslee, which "was based on the duty to indemnify, and not the duty to defend," to contexts other than sexual contact could "inappropriately narrow the duty to defend." The court also agreed with the dentist that "application of Blakeslee to the facts of this case was uncertain at best and [the insurer] had a duty to defend until and unless application of the rule in this particular context was clarified by the court."
The court then addressed whether the allegations were sufficient to create a duty to defend under the policy's employment practices liability provision. The policy provided that it would "pay all sums which you . . . are legally required to pay as damages as a result of sexual harassment, discrimination, or wrongful discharge that arise out of a wrongful employment practice." "Wrongful discharge" was defined as "the unfair or unjust termination of an employment relationship which . . . inflicts emotional distress upon the employee, defames the employee, [or] invades the employee's privacy." A "wrongful employment practice" under the policy was "any negligent act, error, omission, or breach of duty committed in the course of . . . relations with employees." The court reasoned that the facts in the complaint indicated that the employee's emotional distress resulted from taunting and the practical joke rather than from a wrongful discharge as defined in the policy. Accordingly, the court ruled that the insurer had no duty to defend under the employment practices liability provision.