Taylor conducted counseling sessions with the Chapmans' son between January and May 1998.

In May 1998, the Chapmans' son committed suicide.

Taylor subsequently pleaded guilty in state court to four felony counts of organized fraud and 20 felony counts of grand theft. Taylor's offense conduct included, among other things, providing – and collecting payment for – unlicensed counseling services to patients, including the Chapmans' son.

Shortly thereafter, the Chapmans served Taylor with a notice of intent to initiate litigation. The Chapmans alleged that “Taylor was not a licensed drug abuse or mental health counselor for minors such as [their son].”

The Chapmans also alleged that their son “suffered from mental problems which were aggravated by the treatment provided by Robert Taylor” and that Taylor's treatment “played a substantial part” in their son's death.

The Chapmans sued Taylor and his business, Recovery Concepts, asserting claims for wrongful death, unjust enrichment, unfair and deceptive trade practices, and infliction of severe emotional distress. The Chapmans alleged that Taylor held himself out to the public as a licensed provider of mental health counseling and substance abuse services to minors, when he was neither licensed nor qualified by education and experience to provide such services. The Chapmans contended that Taylor's “counseling” contributed to their son's death and caused the Chapmans' emotional and financial injury.

ACE American Insurance Company, which had issued an Allied Health Care Provider Professional and Supplemental Policy to Taylor, refused to defend Taylor against the Chapmans' suit. ACE determined that no coverage existed under the policy because the Chapmans' alleged injuries did not arise from covered “professional services.”

Following mediation, the Chapmans and Taylor agreed to entry of a consent judgment in excess of $5 million against Taylor and Recovery Concepts, to be collected from available insurance proceeds.

Taylor also assigned to the Chapmans his rights under the ACE insurance policy.

The Chapmans then sued ACE.

The U.S. District Court for the Middle District of Florida concluded that ACE owed no duty to defend or to indemnify Taylor because the acts or omissions alleged by the Chapmans did not constitute “professional services” under the policy.

The Chapmans appealed to the Eleventh Circuit.

The Eleventh Circuit's Decision

The Eleventh Circuit affirmed.

In its decision, the circuit court explained that professional liability coverage was available under the ACE policy only if “injury or damage” was “caused by a medical incident arising out of professional services” by the insured. The circuit court added that the policy also provided that the term “professional services” meant “those services you are licensed, trained, or being trained to provide within the allied health field specified in your application and approved by us for coverage.” The policy, the circuit court noted, identified Taylor's professional occupation as “Drug & Alcohol Abuse Counselor.”

The Eleventh Circuit then pointed out that the Chapmans alleged that Taylor held himself out to the public as properly licensed to provide mental health consulting to minors and adults and family counseling but that he was not licensed to provide those services and that he concealed that he was “not competent or licensed to provide mental health counseling” to the Chapmans' son.

Accordingly, the circuit court ruled that the Chapmans' allegations that Taylor lacked the required licensure, education, or experience to provide mental health counseling to their son compelled the conclusion that Taylor's complained-of counseling services were not “professional services” under the ACE insurance policy.

Therefore, the Eleventh Circuit concluded, the district court had correctly decided as a matter of Florida law that ACE owed no duty to defend or to indemnify Taylor against the Chapmans' claims.

The case is Chapman v. ACE American Ins. Co., No. 18-12972 (11th Cir. May 21, 2019).