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Vol. 7 - Issue 8
November 7, 2018


Unique Case: Is It A “Professional Service” When Injury Is Caused By A Product?

Ordinarily, questions concerning the potential applicability of the “professional services” exclusion look at whether a certain, uh, service is of a professional nature. It’s a real “Who’s buried in Grant’s tomb” issue.

But in Employers Mutual Casualty Co. v. Brilsilco, Inc., No. 18-225 (C.D. Calif. Oct. 5, 2018), the court addressed whether a service is professional when an injury was caused by a product. The number of cases addressing the potential applicability of the “professional services” exclusion, and the related issue of whether a service is professional, for purposes of triggering coverage under a professional liability policy, are legion. But I can’t recall ever seeing one that involves a product as a potential professional service. I’m sure they exist, but there can’t be many.

The facts are described by the court as follows (lengthy verbatim facts from court (easier that way-for me)):

“Brill’s Shoes is a facility with pedorthic accreditation. Barry Silver has been the President and owner of Brill’s Shoes since it was incorporated in 1980. Brill’s Shoes operates a retail store in San Bernardino, California selling men’s, women’s, and children’s over-the-counter comfort footwear. Silver manages and supervises the retail operations, including pedorthic sales and services. Silver is a certified pedorthist. A pedorthist is considered a healthcare professional subject to a particular code of professional responsibility. Silver refers to [Bernardo] Vargas as his patient.

Brill’s Shoes had a ‘Professional Services Agreement with Beaver Medical Group, L.P. during 2015. In November 2015, Vargas was referred to Brill’s Shoes by his doctor to consult for diabetic shoes. On November 17, 2018 Vargas consulted with Silver at Brill’s Shoes. Vargas requested the particular brand of shoe he eventually received, manufactured by Apex Foot Health. Silver also took a mold of Vargas’s foot to make custom diabetic inserts. Brill’s Shoes did not itself manufacture the inserts, but contracted their manufacture to Aaron DeMarco. During the November 17, 2015 visit, Silver filled out ‘Patient Evaluation and Progress Notes’ for Vargas and provided him with a ‘Medical Follow Up Plan.’ On November 19, 2015 BMG authorized Vargas to obtain the diabetic shoes and custom diabetic inserts.

On December 8, 2015, Vargas picked up his orthotic shoes and orthotic inserts from Brill’s Shoes. Along with his shoes and inserts, Vargas received and signed ‘Instructions for Wearing New Pedorthic Devices.’ Brill's Shoes agreed to protect Vargas’s protected health information.

On November 16, 2016, counsel for Vargas sent a letter to Brill’s Shoes alleging that the improper fitting of the orthotic shoes and orthotic inserts caused lesions on Vargas’s foot. The letter alleges the lesions escalated into gangrene, requiring the amputation of Vargas’s toe, half of his foot, and ultimately a below-the-knee amputation of his right leg.”

Vargas filed suit against Brill’s, asserting a strict products liability cause of action, alleging that he suffered bodily injury from the orthotic shoe inserts based on their defective design and manufacture.

Brill’s was insured under a liability policy issued by Employer’s Mutual Casualty. EMC disclaimed coverage for a defense and any liability on the basis of the Professional Services exclusion. Coverage litigation arose. The competing arguments were as follows:

Brill’s asserted “that Vargas seeks damages within products-completed operations (PCO) coverage and that [EMC] did not show conclusively that the professional liability exclusion eliminates coverage for PCO claims.”

EMC contested that the policy even provided products-completed operations. However, the court did not reach that issue, stating: “Although the parties dispute whether Brill’s Shoes’ actually purchased PCO coverage, the Court does not need to determine whether the policy provides such coverage to reach its decision. Specifically, the Court finds that even if Brill’s Shoes did purchase PCO coverage through the policy, the products liability claim is inseparable from the professional services Brill’s Shoes provided.”

The court described the dispute in clear terms: “whether the alleged products liability injury Vargas sustained was caused by Brill’s Shoes’ rendering of professional services or whether Vargas’s products liability cause of action presents an independent cause of Vargas’s injuries outside the scope of the professional services exclusion.”

The court had little trouble concluding that the professional services exclusion precluded coverage: “Professional pedorthist services are precisely the services Brill’s Shoes provided to Vargas. After receiving a prescription from Vargas’s doctor, Brill’s Shoes took a mold of Vargas’s foot to have an insert made and provided him with diabetic shoes. Brill’s Shoes provided to Vargas written instructions concerning his devices and a ‘Medical Follow Up Plan.’ When Vargas returned and informed Brill’s Shoes of the rubbing, Brill’s Shoes stretched the shoes and thinned the inserts. Every part of Brill’s Shoes relationship with Vargas concerned providing medical treatment, advice, and instruction. Vargas presented a prescription for an orthotic shoe; he did not simply purchase a pair of non-prescription shoes that Brill’s Shoes sells in addition to orthotic devices. That Vargas requested the specific orthotic shoe he purchased does not change this analysis, as Brill’s Shoes was still required to exercise professional judgment in determining if the requested shoe would be proper for Vargas’s needs.”

Whether a service is professional when an injury was caused by a product is an interesting issue. Here, the answer seems simple. This does not look like it was a hard case. Presumably there could be closer calls under different scenarios.


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