Professional Solutions Insurance Company v. Giolas et al

Filing 29

MEMORANDUM OPINION AND ORDER Signed by the Honorable Harry D. Leinenweber on 11/8/2017:Mailed notice(wp, )

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IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION PROFESSIONAL SOLUTION INSURANCE COMPANY, Plaintiff, Case No. 16 C 9868 v. Judge Harry D. Leinenweber DALE GIOLAS, M.D. and STACI FERGUSON, Defendants. MEMORANDUM OPINION AND ORDER This is an insurance coverage dispute arising out of a psychiatrist’s alleged sexual misconduct with a patient. Before the Court are Cross Motions for Summary Judgment [ECF Nos. 18-19, 22]. For the reasons stated herein, the Court grants Defendant Giolas’ Motion and denies Plaintiff’s Motion. I. FACTUAL BACKGROUND Plaintiff Professional Solutions Insurance Company (“PSIC”) brought a declaratory action seeking a declaration that it does not have a duty to defend Defendant Dale Giolas, M.D. (“Giolas”) in an Illinois state court lawsuit. For the purposes of the coverage dispute and the cross motions before the Court, the facts are undisputed. Both parties filed Rule 56.1(a)(3) statements, but neither filed a Local Rule 56.1(b) response. See, N.D. Ill. L.R. 56.1(a)(3)(C) (“All material facts set forth in the statement required of the moving party will be deemed to be admitted unless controverted by the [L.R. 56.1(b)] statement of the opposing party.”). As such, the Court considers the facts contained in both parties’ statements admitted. does not deem any legal conclusions admitted. The Court The facts of the underlying state court action are as follows. Giolas, a (“Ferguson”) PSIC’s licensed as a patient 56.1(a)(3) Statement”) ¶ psychiatrist, 4.) from Statement, On August treated 2011 until ECF No. 25, 2016, Staci early Ferguson (See, (“PSIC’s 20 2016. Fact Ferguson brought a lawsuit in Illinois state court alleging that Giolas repeatedly engaged in improper treating her. sexual activity with her while he was (See, Giolas’ 56.1(a)(3) Statement, ECF No. 21 (“Giolas’ Fact Statement”) ¶¶ 1-2; PSIC’s Fact Statement ¶¶ 34.) Ferguson alleged that Giolas’ improper sexual activity violated the Sexual Exploitation in Psychotherapy, Professional Health Services, and Professional Mental Health Services Act, 740 ILCS 140/1 et seq., the Gender Violence Act, 740 ILCS 82/1 et seq., and constituted common law battery. (See, Complaint, Ex. A to “Complaint for Declaratory Judgment,” ECF No. 1 (the “Underlying Complaint”); see also, Giolas’ Fact Statement ¶ 1.) Both parties acknowledge that Giolas sexual activity with Ferguson. - 2 - denies engaging in any (See, Giolas’ Fact Statement ¶ 3; PSIC’s Fact Statement ¶ 5.) Underlying Complaint, Giolas professional liability insurer. remains pending. The Surgeon tendered it to PSIC, his The underlying state court case (See, Giolas’ Fact Statement ¶ 4.) insurance Medical After receiving notice of the policy at Professional issue, entitled Liability Physician Insurance Policy and (the “Policy”), was issued by PSIC to Giolas and was in effect when Ferguson filed the Underlying Complaint. (See, Policy, Ex. B to Complaint, ECF No. 1 (the “Policy”); PSIC’s Fact Statement ¶ 12; Giolas’ Fact Statement ¶ 5.) The policy states, in relevant part: Section II. Coverage Agreement Within the Declarations: limit of liability shown on the In return for payment of premium and subject to all the terms of this Policy and the exclusions stated in Section VIII. Exclusions, We will pay on behalf of an Insured all sums in excess of the Deductible to which this insurance applies and for which an Insured becomes legally obligated to pay as Damages because of an Injury caused by an Incident in the performance of Professional Services by You or someone for whom You are legally responsible as provided in this Policy. The Injury must occur on or after the Retroactive Date shown on the Declarations and before this Policy or coverage for an Insured terminates. Any Claim associated with an Injury caused by an Incident must be first reported to Us in writing during the Policy Period or the Automatic Extended Reporting Period. The Injury must also be caused by an Insured under this Policy. (See, Policy § II.) - 3 - The term “Injury” is defined as: [B]odily injury, sickness, disease or death sustained by any one person. (Id. § I.14.) The term “incident” is defined as: [A]ny negligent omission, act or error in the providing of Professional Services. All such omissions, errors or acts causally related to the rendering of or failure to render Professional Services to one person shall be considered one Incident. Causally related acts, errors or omissions that have a common cause or form a causal chain of events shall be considered one Incident. An Incident shall be deemed to have occurred at the time of the earliest act, error or omission comprising that Incident. (Id. § I.13.) The term “Professional Services” is defined as: [T]he diagnosis of, treatment or medical care for or medical consultation regarding a patient’s medical condition. (Id. § I.23.) Relevant exclusions to coverage, as amended, are described as follows: Sexual impropriety, sexual intimacy, sexual assault, sexual harassment or any other similarly defined act. However, notwithstanding the foregoing, the Insured shall be protected under the terms of this Policy as to any Claim and or allegation which may be covered by the Policy upon which any Claim or Suit may be brought against the Insured, for any such alleged behavior by an Insured unless a judgment or a final adjudication adverse to the Insured shall establish that such behavior occurred as an essential element of the cause of action so adjudicated. (Id., Illinois Amendatory Endorsement at 1.) * * * The intentional infliction of Injury. (Id. § VIII.10.) - 4 - * * * This Policy does not apply to punitive or exemplary Damages, fines, penalties imposed by law, or matters uninsurable under the law pursuant to which this Policy is construed, unless the law of the state in which the Insured is licensed to practice prohibits such an exclusion. (Id. § VIII.13.) II. A. DISCUSSION Legal Standard Summary judgment is appropriate when there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. See, FED. R. CIV. P. 56(a). As both parties cite to Illinois law and the Court finds Illinois law proper, the Court dispenses with an extensive choice-of-law analysis and applies Illinois law. To determine whether PSIC has a duty to defend Giolas in the Ferguson lawsuit, the Court compares the facts alleged in the Underlying Complaint with the provisions of the PSIC Policy and, if the facts alleged potentially fall within the Policy’s coverage, the duty to defend is triggered. See, Amerisure Mut. Ins. Co. v. Microplastics, Inc., 622 F.3d 806, 810 (7th Cir. 2010). “Refusal to defend is unjustifiable unless it is clear from the face of the underlying complaint that the facts alleged do not fall potentially within the policy’s coverage.” Outboard Marine Corp. v. Liberty Mut. Ins. Co., 607 N.E.2d 1204, 1212 - 5 - (Ill. 1992). “In construing the language of the policy, the court’s primary objective is to ascertain and give effect to the intent of the parties to the contract. In order to ascertain the meaning of the policy’s language and the parties’ intent, the court must construe the policy as a whole and take into account the type of insurance purchased, the nature of the risks involved, and the overall purpose of the contract.” Ins. Co. v. Eljer Mfg., 757 N.E.2d 481, 491 (internal citations and quotations omitted). terms and the allegations in the Traveler’s (Ill. 2001) “Both the policy underlying complaint are liberally construed in favor of the insured, and any doubts and ambiguities are resolved against the insurer.” Microplastics, 622 F.3d at 811 (quoting State Farm Fire and Casualty Co. v. Perez, 899 N.E.2d 1231, 1235 (Ill. App. Ct. 2008)). However, the “general rules that favor the insured must yield to the paramount rule of reasonable contract interpretations.” construction which guides all Ibid. (quoting Western States Ins. Co. v. Bobo, 644 N.E.2d 486, 488 (Ill. App. Ct. 1994)) (internal quotation omitted). B. Under issue. this The Insurance Coverage framework, Policy the provides Court turns coverage for to the Policy “[bodily at injury, sickness, disease or death sustained by any one person] caused - 6 - by a[] [negligent omission, act or error] in the performance of [the diagnosis of, treatment consultation regarding [Giolas].” (See, a Giolas’ Complaint performance of §§ care for medical I-II, or medical condition] VIII (quoted by policy PSIC argues that the Policy does not alleged Underlying medical patient’s Policy, definitions inserted).) cover or conduct does for not professional two reasons: allege services, (1) in negligence and (2) the the the Underlying Complaint does not allege bodily injury. Giolas contends that the sexual misconduct exception in the Policy provides underlying occurred coverage action in the until establishes underlying a that final adjudication sexual action. misconduct (See, Illinois Amendatory Endorsement at 1.) supra, in the actually Policy, PSIC is correct that an exception to an exclusion in an insurance policy does not create coverage. See, Cont’l Cas. Co. v. Donald T. Bertucci, Ltd., 926 N.E.2d 833, 846 (Ill. App. Ct. 2010) (“[A]n exception to an exclusion does not create coverage or provide an additional basis for coverage, it only preserves coverage granted in the insuring agreement.”). the factual coverage. exclusions The Court must first determine whether allegations If bar so, potentially then coverage. the fall Court considers Accordingly, - 7 - within the the Policy’s whether Court any considers whether the factual allegations recited in the Underlying Complaint potentially fall within coverage by turning to the first of PSIC’s arguments. 1. PSIC because argues the Professional Malpractice that the Underlying Policy does not provide Complaint does not allege performance of professional services. coverage negligent PSIC correctly notes that the Underlying Complaint does not assert a negligence claim. However, when considering whether an insurance company has a duty to defend, particular legal a court “should theories pursued not by simply the look to [in claimant the the underlying action], but must focus on the allegedly tortious conduct on which the lawsuit is based.” Medmarc Cas. Ins. Co. v. 613 Avent America, Inc., 612 F.3d 607, (7th Cir. 2010) (applying Illinois law) (internal quotations omitted); see also, Health Care Indus. Liab. Ins. Program v. Momence Meadows Nursing Ctr., Inc., 566 F.3d 689, 696 (7th Cir. 2009) (“[T]he factual allegations in the complaint, and not the legal labels a plaintiff uses, control.”) (citation omitted) (applying Illinois law). the This is because the duty to defend “should not hinge on draftsmanship underlying skills action.” or Int’l whims Ins. of Co. the v. plaintiff Rollprint the Packaging Prods., Inc., 728 N.E.2d 680, 688 (Ill. App. Ct. 2000). - 8 - in Thus, Ferguson’s failure to assert a separate count for negligence is not dispositive. Giolas argues that Ferguson’s allegations of improper drug treatment and poor recordkeeping bring the Underlying Complaint within potential Specifically, coverage Giolas for points to professional Ferguson’s negligence. allegation that “medical records were not carefully kept and that the mixture of drugs [Giolas] had prescribed for [Ferguson] dangerous.” (Underlying Complaint, ¶ 14.) allegations could potentially could be Though these factual constitute medical malpractice, “factual allegations are only important insofar as they point to a theory Ferguson of does prescription failure recovery recovery.” to in of not keep the a Momence seek to potentially proper recover for dangerous records. Underlying Meadows, all sexual misconduct while treating Ferguson. F.3d at Giolas’ mixture Rather, Complaint 566 the 696. alleged of drugs or theories of relate to Giolas’ The duty to defend is not triggered by “a free-standing reference to a fact … not attached to any particular theory of recovery. . . .” Westfield Ins. Co. v. W. Van Buren, LLC, 59 N.E.3d 877, 885 (Ill. App. Ct. 2016); see also, Ill. Emcasco Ins. Co. v. Northwestern Nat’l Cas. Co., 785 N.E.2d 905, 908 (Ill. App. Ct. 2003) (noting that a duty to defend arises “if the insurance covers the liability - 9 - on any set of facts consistent with the allegations needed to support recovery on any theory raised in the complaint”). Accordingly, tangential allegations of fact regarding drugs and records do not potentially bring the Underlying Complaint within the Policy’s coverage. The crux of this coverage dispute is whether improper sexual activity with a patient can constitute medical negligence in the field of psychiatry. Generally, improper sexual activity between a medical doctor and his or her patient does not fall within “professional services” because improper sexual activity does not experience. involve professional medical training, skill, or See, e.g., B.A. v. Bohlmann, No. 09 C 346, 2010 U.S. Dist. LEXIS 13284, at *8 (W.D. Wis. Feb. 16, 2010) (finding no professional liability coverage for medical doctor’s alleged sexual assault of patients). However, there is a distinction between medical doctors and psychiatrists. “The fiduciary duty owed by a psychotherapist exists due to the very nature of the therapist-patient relationship which gives rise to a clear duty on the therapist’s part to engage only in activity or conduct which is calculated to improve the patient’s mental or emotional well-being, and to refrain from any activity or conduct which carries with it a foreseeable and unreasonable risk of mental or emotional harm to the patient.” St. Paul Fire & Marine Ins. Co. - 10 - v. Downs, 617 N.E.2d 338, 344 (Ill. App. Ct. 1993) (alterations and quotation doctor and omitted). a The patient is relationship different between from that a medical between a psychiatrist and a patient due to the recognized phenomenon of transference. See, 9A, § 131:12 (3d ed. 2017). Steven Plitt et al., Couch on Ins. The Illinois Supreme Court discussed transference as follows: The “transference phenomenon” . . . has been defined in psychiatric practice as a phenomenon . . . by which the patient transfers feelings toward everyone else to the doctor, who then must react with a proper response, the countertransference, in order to avoid emotional involvement and assist the patient in overcoming problems. The mishandling of this phenomenon, which generally results in sexual relations or involvement between the psychiatrist or therapist and the patient, has uniformly been considered as malpractice or gross negligence in other jurisdictions, whether the sexual relations were prescribed by the doctor as part of the therapy, or occurred outside the scope of treatment. Corgan v. Muehling, 574 N.E.2d 602, 607 (Ill. 1991) (internal quotations and citations omitted). The Corgan Court went on to hold that a former patient did state a cause of action where she alleged, among other things, “that the defendant [psychologist] was . . . negligent by having sexual relations with her during the course of her treatment; and that the defendant [psychologist] failed to recognize or properly deal with the psychotherapeutic phenomenon - 11 - of transference and countertransference.” dealt with phenomenon Id. at 606-07. therapists’ and the “Indeed, courts that have mishandling concomitant of the transference therapist-patient sexual relationship have recognized that the sexual relationship simply cannot be viewed therapist’s separately malpractice developed between the Assurance Co. or Stone, v. from the therapist 61 aspects therapeutic and F.3d other the 1321, the relationship patient.” 1330 of (7th Am. Cir. Home 1995) (citations omitted); see also, St. Paul Fire & Marine Ins. Co. v. Love, 459 N.W.2d 698, 702 (Minn. 1990) (“When . . . the transference phenomenon pervades the therapeutic alliance, we believe the sexual conduct between therapist and patient arising from the phenomenon may be viewed as the consequence of a failure to provide proper treatment of the transference.”); L.L. v. Med. Protective Co., 362 N.W.2d 174, 178 (Wis. Ct. App. 1984) (“[A] sexual relationship between therapist and patient cannot be viewed separately from the therapeutic relationship that has developed between them”). The Underlying Complaint alleges that Giolas was treating Ferguson for depression posttraumatic “attention disorder, stress deficit generalized disorder.” disorder, recurrent anxiety (Underlying major disorder Complaint, ¶ and 10.) Further, it states that “[Giolas] repeatedly touched and invaded - 12 - [Ferguson] sexually. The conditions under which he did so were coercive because he was treating and medicating her for various psychiatric conditions at the time, giving him undue influence over her.” (Id. at ¶ 25.) Complaint constitute The facts alleged in the Underlying improper patient by a psychiatrist. sexual activity with a current As noted by the Illinois Supreme Court, the mishandling of transference and countertransference has “uniformly been negligence. . . .” considered as malpractice or gross Corgan, 574 N.E.2d at 607 (quoting Horak v. Biris, 474 N.E.2d 13, 18 (Ill. App. Ct. 1985)); see also, L.L., 362 N.W.2d at 176 (“Medical authorities are nearly unanimous in considering sexual contact between therapist and patient to be malpractice.”). Giolas’ failure to handle the phenomenon properly may constitute an error of professional skill in the treatment of Ferguson’s psychiatric conditions. Accordingly, based on the facts here, the sexual misconduct alleged in the Underlying Complaint potentially falls within the Policy’s coverage. Due to the recognized distinction between psychiatrists and other medical professionals, the case involving sexual misconduct relied on by PSIC, American Family Insurance Co. v. Enright, 781 N.E.2d 394 (Ill. App. Ct 2002), is inapplicable because it involved an ultrasound - 13 - technician rather than a psychiatrist. Three additional cases cited by Plaintiff are inapposite because they hinge on errors that did not arise from a lack of professional skill. Donald T. Bertucci, 926 In Continental Casualty Co. v. N.E.2d 833 (Ill. App. Ct. 2010), a lawyer was not covered under his legal malpractice insurance for a billing dispute because billing practices are contingent to any business and do not involve any special legal skill. Similarly, in Illinois State Bar Association Mutual Insurance Co. v. Mondo, 911 N.E.2d 1144 (Ill. App. Ct. 2009), a lawyer was accused of impropriety based on his insurance recommendations. He was not covered under his legal malpractice policy because the omission was not related in any way to his legal skill. Finally, in ISMIE Mutual Insurance Co. v. Michaelis Jackson & Associates, LLC, 921 N.E.2d 1156, 1165 (Ill. App. Ct. 2009), a False Claims Act case, the court held that the misconduct at issue related to inaccuracies in Medicare claims, not improper treatment. relate to Conversely, the sexual misconduct alleged here may Giolas’ professional misconduct as a psychiatrist, and, as such, these cases do not apply. This is not to say that a psychiatrist’s sexual misconduct must be covered by insurance. limit coverage for a An insurance company is free to psychiatrist’s sexually behavior in a professional liability policy. - 14 - inappropriate See, Stone, 61 F.3d at 1330 (upholding limit on insurance coverage allegations involved counselor’s sexual misconduct). where However, the Policy must do so clearly and explicitly. Accordingly, construing the Policy and facts liberally, the Court finds that the facts alleged suggest an error in Giolas’ professional treatment Policy’s coverage. and thus fall potentially within the See, Microplastics, 622 F.3d at 811 (“Both the policy terms and the allegations in the underlying complaint are liberally construed in favor of the insured.”). 2. Bodily Injury PSIC also argues that the Policy does not provide coverage because the Underlying Complaint does not allege an injury as defined by the Policy. The Policy defines “Injury” as “bodily injury, sickness, disease or death sustained by any one person.” PSIC contends that the Underlying Complaint complains only of emotional distress, disease or death.” which is not “bodily injury, sickness, The dispute thus centers on whether claims for bodily injury are alleged in the Underlying Complaint. Claims of emotional distress are not claims for “bodily injury” under Illinois law. See, Momence Meadows, 566 F.3d at 697 noting n. 10. It is worth that injuries caused by malpractice in the field of psychiatry would intuitively include claims of emotional distress as opposed to physical injuries - 15 - anticipated in the case of malpractice in a traditional doctor’s office. The liability insurance cover Court emotional notes the incongruity policy for a distress, which of psychiatrist seems the a professional that not likely and most does anticipated form of damages in the event of such a doctor’s malpractice. “Judges need not check their common sense at the door when interpreting insurance policies and the plain language within them. Relevant terms and provisions are not to be construed in a vacuum, and terms must be read in conjunction with the insured’s reasonable expectations, the public policy behind the provisions.” provisions, and the intended coverage of those Frendreis v. Blue Cross Blue Shield of Michigan, 873 F.Supp. 1153, 1157 (N.D. Ill. 1995); cf. State Farm Mut. Auto. Ins. Co. v. Progressive N. Ins. Co., 30 N.E.3d 440, 457 n. 7 (Ill. App. Ct. 2015) (describing applicability of reasonable expectations doctrine under Illinois law); but, cf. Landmark Am. Ins. Co. v. NIP Grp., Inc., 962 N.E.2d 562, 571 (Ill. App. Ct. 2011) (noting disagreement in Illinois case law regarding reasonable expectations doctrine). However, the Court need not address this incongruity here, because the Underlying Complaint alleges more than emotional injury. The Underlying Complaint does not solely allege injuries of emotional distress, but also asserts that Giolas committed a - 16 - common law battery against Ferguson to the tune of $750,000 in actual damages. (See, Underlying Complaint, ¶¶ 36-39.) An allegation of battery is sufficient to allege “bodily injury.” Further, in Count II, Ferguson pleads actual damages of $750,000 separate from the $750,000 damages. (Id. at ¶ 35.) she claims in emotional distress Thus, the Underlying Complaint does not solely allege emotional injuries, distinguishing this case from the cases cited by PSIC. 97 (allegations injury by of former insufficient to See, Momence Meadows. 566 F.3d at 696- emotional employees allege distress in bodily without False Claims injury under any Act physical case Illinois were law); Commercial Union Ins. Co. v. Image Control Prop. Mgmt., Inc. 918 F.Supp. 1165, 1170-71 (N.D. Ill. 1996) (allegations of mental anguish and distress without physical injury in housing discrimination case were insufficient to allege bodily injury under Illinois law); Univ. of Ill. v. Cont’l Cas. Co., 599 N.E.2d 1338, 1353 (Ill. App. Ct. 1992) (holding that coverage exists and finding the bodily injury exclusion inapplicable where no physical injury was present); see also, United States Liab. Ins. Co. v. Sigmatek, Inc., No. 14 C 1747, 2015 U.S. Dist. LEXIS 21925, at *20-22 (N.D. Ill. Feb. 20, 2015) (distinguishing Momence Meadows). The facts alleged - 17 - here are sufficient to allege bodily injury and thus bring the allegations of the Underlying Complaint potentially within the Policy’s coverage. Furthermore, the term “bodily injury” does include injuries from rape and sexual abuse. See, 9, Steven Plitt et al., Couch on Ins. § 126:33 (3d ed. 2017). The very nature of a sexual violation requires bodily contact that is injurious, even if it is not as apparent as a wound or laceration. Illinois State Medical Insurance Services v. Cichon, 629 N.E.2d 822 (Ill. App. Ct. 1994), is illustrative. There, a doctor was accused of sexually assaulting minors and adults during medical exams. Id. at 824-25. doctor’s In a declaratory judgment action brought by the malpractice coverage existed insurer, because the the insurer argued claimants only that no alleged psychological injuries and did not allege any bodily injuries. Id. at 829. The Illinois Appellate Court affirmed the district court’s denial of summary judgment to the insurer on the issue, holding that “[g]iven the physical nature of this alleged malpractice, the trial court could not rule, as a matter of law, that no bodily injury or invasion of privacy occurred within the meaning of the policy.” Ibid. of a similar explaining that New Jersey “the The court followed the reasoning case emotional involving and sexual psychological harassment, effects of repeated acts of sexual harassment by offensively touching an - 18 - employee’s injury] breasts even and though ‘rear the end’ were complaint covered alleged [as only bodily ‘serious emotional distress and disruption of her personal life.’” Ibid. (quoting NPS Corp. v. Insurance Co. of North America, 517 A.2d 1211, 1212 (N.J. 1986)). The Seventh Circuit applying Indiana law. Through Norris, 107 has held similarly, albeit when See, Nat’l Fire & Cas. Co. v. West By & F.3d 531, 535 (7th Cir. 1997)(finding allegations of child molestation sufficient to constitute bodily injury, although the court found no coverage for other reasons); see also, Gen. Acc. Ins. Co. of Am. v. Gastineau, 990 F.Supp. 631, 633-35 (S.D. Ind. 1998) (allegations of sexual harassment which included physical contact were sufficient to allege “bodily injury”); Wayne Twp. Bd. of Sch. Comm’rs v. Ind. Ins. Co., 650 touching N.E.2d is 1205, inherent 1210 to child (Ind. Ct. App. molestation and 1995) (“Bodily the resulting emotional injury suffered by the victim of child molestation is bodily injury.”). Additionally, the physical nature of sexual misconduct has been recognized to constitute bodily injury in other jurisdictions. See, e.g., E.E.O.C. v. S. Pub. Co., 894 F.2d Cir. 785, 789 (5th 1990) (affirming district court’s determination that allegations stemming from assault and battery in sexual harassment case were sufficient to constitute “bodily - 19 - injury” under Mississippi law); Allstate Ins. Co. v. McCranie, 716 F.Supp. 1440, 1443 (S.D. Fla. 1989)(finding that sexual molestation constitutes bodily injury, although the court denied coverage on other grounds), aff’d sub nom. Allstate Ins. Co. v. Manning, 904 F.2d 713 (11th Cir. 1990). SCR Medical Transportation Services, Inc. v. Browne, 781 N.E.2d 564, 571 (Ill. App. outcome of this case. Ct. 2002), does not dictate the Browne involved application of an auto insurance policy to a driver who sexually assaulted a passenger. First, the court found that allegations of negligent driving were tangential to the heart of the complaint, which centered on the sexual assault rather than the driver’s method of driving. Id. at 569. Second, it found that the auto insurance policy did not provide coverage because no physical injuries, only fear and anxiety, were caused by the allegedly negligent driving. 570. Id. at Browne does not run parallel to this case because the sexual misconduct is at the heart of the Underlying Complaint and the injuries were allegedly caused by that misconduct. Further, Browne’s discussion of bodily injury was dicta. The Appellate Court had already held that the victim’s “injuries from the sexual assaults did not arise out of the use, operation, or maintenance of the vehicle,” precluding automobile insurance coverage. Id. at 568. - 20 - To the extent Browne is relevant, the Court finds that Cichon, supra, is more factually analogous to the case at hand, as it involved a professional liability policy and a doctor-patient relationship. Following Cichon’s reasoning, the Court finds that the facts alleged in the Underlying reading both Complaint liberally required to do. to activity of the within the insured, as Policy, we are bodily allegations injury. of The sexual misconduct Underlying Complaint Giolas “repeatedly engaged in improper sexual with including favor Ferguson’s allege alleges that: in fall See, id.; Microplastics, 622 F.3d at 811. Accordingly, suffice potentially [Ferguson]” “sexual (see, intercourse,” Underlying “oral sex” Complaint and ¶ “kissing 8), or intentional touching” of private areas (id. ¶ 20); “[Giolas] repeatedly touched and invaded [Ferguson] sexually” (id. ¶ 25); “[Giolas] subjected [Ferguson] to frequent, regular and varied sexual contact,” [Ferguson] (id. sexually, ¶ 30); [and] “[Giolas] encouraged repeatedly others to touched touch her sexually,” (id. ¶ 33); and Giolas “coerced [Ferguson] into … sexual acts conditions,” Complaint while (id. alleges she ¶ was 33). facts under As that treatment such, we for find potentially the fall psychiatric Underlying within the Policy’s coverage, imposing on PSIC a duty to defend Giolas in - 21 - the underlying action. See, Corgan, 574 N.E.2d at 607; Cichon, 629 N.E.2d at 829. 3. Giolas argues Sexual Conduct Exclusion that an exclusion is applicable. exception to the sexual conduct “Insurers have the burden of proving that an exclusion applies. Insureds, in turn, have the burden to prove that an exception to an exclusion restores coverage.” Santa’s Best Craft, LLC v. St. Paul Fire & Marine Ins. Co., 611 F.3d 339, 347 (7th Cir. 2010) (citations omitted). As PSIC has not argued that the sexual misconduct exception applies, the Court does not reach the question and expresses no opinion on the application to the Underlying Complaint of exclusions, or exceptions to exclusions, in the Policy. 4. Independent Counsel Giolas contends in his Motion for Summary Judgment that PSIC has an irreparable conflict, requiring it to provide him with independent counsel. Where there is an “insurmountable conflict” between insured and insurer, the insurer does not have a right to control the insured’s defense. Illinois Mun. League Risk Mgmt. Ass’n v. Siebert, 585 N.E.2d 1130, 1135 (Ill. App. Ct. 1992). It is true that the Policy excludes coverage for punitive damages and the Underlying Complaint requests punitive damages. (See, Policy, § VIII.13; Underlying Complaint, ¶¶ 26, - 22 - 35.) Additionally, the sexual misconduct exception may place the insured and the insurer in conflict where a factual finding of sexual misconduct may relieve the insurer of its duty to indemnify. PSIC fails (See, Policy, Illinois Amendatory Endorsement at 1.) to address the merits of Giolas’ argument for independent counsel. (See, PSIC’s Resp. to Mot. Summ. J., ECF No. 24, at 4 n. 1.) By doing so, PSIC waives any argument in opposition. See, C & N Corp. v. Kane, 756 F.3d 1024, 1026 (7th Cir. 2014) (finding failure to make an argument in response to a summary judgment motion constituted a waiver of that argument); Bonte v. U.S. Bank, N.A., 624 F.3d 461, 466 (7th Cir. 2010) (“Failure to respond to an argument . . . results in waiver.”). Accordingly, the Court finds that Giolas is entitled to independent counsel. III. CONCLUSION For the reasons stated herein, Defendant Giolas’ Motion for Summary Judgment [ECF No. 22] is granted and Plaintiff’s Motion for Summary Judgment [ECF No. 18] is denied. IT IS SO ORDERED. Harry D. Leinenweber, Judge United States District Court Dated: November 8, 2017 - 23 -

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