Catch Me If You Can: Fake Doctor's Application Voids Coverage For Himself But Not For Innocent Co-Insureds
In life, sometimes even the law imitates art. As if copied straight out of the script of “Catch Me If You Can,” the U.S. District Court in South Carolina issued a ruling on October 21, 2014 in which it held that despite a false application for professional liability insurance submitted by an applicant pretending to be a doctor, the insurance afforded to the company and other doctors and nurses identified as named insureds under the policy remained in force and was not void ab initio as to the innocent co-insureds. Evanston Insurance Company v. Agape Senior Primary Care, et al., 2014 WL 5365679.
As Frank Abagnale Jr. said to Carl Hanratty, “people only know what you tell them.” Earnest Addo took that to heart and posed as Dr. Arthur Kennedy to obtain employment with Agape Senior Primary Care. Once employed, he filled out an application for professional liability insurance with Agape’s professional liability insurer, Evanston, warranting that he was a licensed medical doctor. Turns out Addo’s representations in his application to Evanston were false – he was in fact not a doctor. After discovering the fraud, Evanston sought to void the coverage it issued to Dr. Kennedy (a/k/a Addo) along with the coverage it issued to Agape and to every other doctor, nurse and health care professional employed by Agape.
In holding that Addo’s coverage should be voided but coverage for the innocent co-insureds should be upheld, the court relied on South Carolina law which stands for the proposition that where an insurance policy creates several, individual obligations among co-insureds, criminal acts or misrepresentations by one co-insured does not bar the innocent co-insureds from recovering under the policy. McCracken v. Government Employees, Ins. Co., 325 S.E.2d 62 (S.C. 1985).
The court’s ruling in Agape serves as a reminder to policyholders to review professional liability policies as well as directors & officers liability policies to ensure that the insurance coverage provided is properly protected from the wrongful conduct of a single individual insured.