I addressed this issue in the 2016 “Top 10 Coverage Cases of the Year” article in the context of the Illinois Court of Appeals decision in Skolnik v. Allied Property and Casualty Ins. Co., where I made the following observation:
“There are a host of exclusions that preclude coverage for injury arising out of some specified conduct on the part of an insured: assault and battery, furnishing alcohol, criminal acts, etc. These exclusions are often interpreted broadly on account of being expressed in ‘arising out of’ language. Skolnik demonstrates that a plaintiff may be able to trigger a defense obligation, in a case that would otherwise be subject to a broad ‘specified conduct exclusion,’ by simply alleging (provable or not) that, after the insured committed the excluded conduct, it failed to summon help for the victim. And such failure was also a cause of the plaintiff’s injuries.”
In Skolnik, the court held that, at least for purposes of the duty to defend purposes, the “controlled substances exclusion” did not apply. The court reached this conclusion despite an autopsy notation describing cause of death as methadone intoxication. As the court saw it, a genuine issue of material fact existed as to whether the death was caused solely by methadone ingestion or the insured’s failure to seek assistance for the insured following such ingestion.
This same issue arose not long ago in Admiral Ins. Co. v. Anderson, No. 19C3468 (N.D. Ill. March 29, 2021). At issue was coverage, for two members of a sorority, under a policy issued to the sorority, for claims that, as a consequence of various acts of hazing of a sorority pledge, she committed suicide.
Specifically, the underlying complaint alleged that the pledge, Jordan Hankins, was subjected to several instances of severe hazing. The complaint alleged that Jordan communicated to sorority members, including the defendants seeking coverage from Admiral, that the hazing actions triggered her PTSD and caused her to have suicidal thoughts and develop a plan for suicide. Jordan died by suicide in her dorm room.
Admiral disclaimed coverage for a defense and filed the declaratory judgment action. Among other reasons for not owing coverage, Admiral pointed to the policy’s exclusion for “Hazing, Sexual of Physical Abuse (sic) or Molestation,” which provides:
“It is agreed this insurance does not apply to ‘bodily injury’, ‘property damage’ or ‘personal and advertising injury’ arising out of hazing, sexual abuse, physical abuse or molestation committed by any insured. This exclusion applies only to insureds who participate in or direct others to participate in the hazing, sexual abuse, physical abuse, or molestation.”
The court noted that, on its face, the exclusion applied – and the insured did not argue otherwise.
Yet, the court still concluded that the exclusion did not apply. The court noted that some courts have held that “claims asserting negligent conduct such as the failure to seek medical assistance are independent from — and thus not excluded by — policy provisions excluding coverage for the injuries that necessitated medical intervention.”
Guess what case the court cited for this proposition. Get ready. Skolnik v. Allied Property and Casualty Ins. Co.
The court held that the “hazing exclusion” did not preclude a duty to defend. As hazing was not defined in the policy, the court turned to its ordinary meaning. Then, based on that definition, the court reached the following conclusion:
“On its face, however, this definition [of hazing] does not include defendants’ alleged failure to seek medical help or to report hazing, both of which omissions are among the grounds the UC identifies as giving rise to defendants’ liability. For these reasons, it is not clear from the face of the underlying complaint that Jordan’s death was caused solely by a proximate cause excluded by the Admiral Policy's hazing exclusion.”
This is Skolnik II.
There is no doubt that the “controlled substances exclusion” was intended to apply in Skolnik to an insured’s involvement in someone’s death by methadone intoxication. Likewise, there is no doubt that the “hazing exclusion” was intended to apply here. But, by simply alleging (provable or not) that, after the insured committed the excluded conduct, it failed to get help for the victim, the exclusion is inapplicable. This, despite that, if not for the insured committing the excluded contact, there would have been no need to seek help for the victim.
Policy drafters take note. The lesson is there for the taking.
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