The U.S. District Court for the District of Massachusetts recently held that an exclusion for liability arising out of the physical abuse of anyone in the “care” of the insured applied to claims against a clinic on behalf of a patient of the clinic who was beaten by her adoptive parents. See Valley Forge Ins. Co., et al. v. The Carson Center for Human Services, et al., No. 09-cv-30038 (D. Mass. Mar. 10, 2011).

The current legal guardian of the child brought suit against the insured clinic and an individual social worker for malpractice. The social worker saw the child in weekly sessions, with some interruptions, for a period of about two years. During that time, the child was being abused by her adoptive parents.

The clinic and social worker sought coverage under the Professional Liability coverage parts of the clinic’s policies covering those two years. The insurers denied coverage, citing an exclusion for “damages arising out of the actual or threatened sexual or physical abuse by anyone to any person while in the care, custody or control of any insured,” and filed the declaratory judgment suit.

The issue in dispute was whether the child was in the “care” of the clinic. The insureds argued, citing case law concerning property damage exclusions, that the child could only have been in the “care” of the clinic while physically present in the clinic’s facility. The court rejected this argument. The judge observed that the word is used differently with regard to a person than an inanimate object. He cited the dictionary definition of the word – “charge, supervision” – and found that there is “nothing inherent in this definition to suggest physical proximity.”

The court noted that the policies at issue did contain coverage parts specifically covering abuse or molestation liability, but did not give any further details. Based on a review of the briefing, the insurers had pointed out that these endorsements covered only “vicarious liability” for the abuse or the clinic’s liability for abuse by an employee. Here, the abuse was committed by the child’s adoptive parents, and thus liability fell outside the scope of the coverages. The insurers further argued that coverage was excluded because the abuse began prior to the policy periods. The insureds responded that they only contested the denial of coverage under the Professional Liability coverages, and the remaining counts were dismissed by agreement of the parties.