Ninth Circuit: Professional Services Exclusion Precludes D&O Insurance Coverage

A recurring issue under private company D&O insurance policies is the scope of the preclusive effect of the professional services exclusion. This question is particularly important for companies in professional services industries, as just about everything these kinds of companies do arises in some way out of their delivery professional services. In a June 4, 2018 decision in a case presenting these issues, the Ninth Circuit affirmed the district court’s holding that the professional services exclusion in an educational services company’s D&O insurance policy precluded coverage for a False Claims Act claim. As discussed below, the case raises questions about the purposes of the professional services exclusion and the way it operates to restrict available coverage. The Ninth Circuit’s June 4, 2018 opinion can be found here.   Background The insurance coverage dispute arises out of a False Claims Act lawsuit that was filed in April 2014 against…

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