good morning may it please the court my name is peter old and i'm appearing on behalf of the plaintiff appellant shocking threesome harris to urge the court to reverse the district court's ruling in this case which  stands means that any company that's in the business of providing professional services to its clients will simply find that their d l coverage is obliterated harvest's rated another malpractise coverage no no  services was not the in the case of the case the term professional services in california is very broad broadly interpreted to mean any specialized skills or knowledge and in this case i don't think i can make an argument in good faith that these weren't professional services but it needs to be policy only excludes claims that arise out of rendering of professional services in this case the act that created the potential liability for hotsho was a business matter it was a matter of compensation this is much different you were using it in eligible employees to render professional services the the employee would be paid compensation on a contingency basis for signing up students well what this is what the compensation doesn't change the fact of what services were being rendered doesn't know the services or the mean plies that means that somebody is providing something to someone in this case a compensation was not being provided one step removed is that too far removed for the phrase are rising under i arising out of his is construed very broadly but again we can we can still find coverage for this claim even under that rule and yet arising out of it has to have a factual connection to the liability but there is a factual connection you're going to have is being sued for submitting false claims to the deal we that's what they're being sued for and that's what i am for submitting the false claims to the dio we thereby defrauding the government and one of the reason they're fraudulent is because there's a false certification that you don't pay your employees the way you should and then you say yeah i'm giving professional services when i provide the services i do just submit these claims and to get these students and yet outward here and then the client was accused of making false claims which of course they denied and the underlying action was settled after after the first offense second amended complaint was dismissed but i think we need to go beyond that specific instance and just look exactly at what the implications of the court's ruling would be not just in this case but for dno policies in general the court and the district court essentially applied but for cause ation standard it found that  absent hotshots professional services there would have been no liability and if you were to take that to its logical conclusion any company that provides some type of professional services is going to find that the law anything that there are potentially found liable for rises out of those professional services whether it's the outward facing services or whether it's their internal management activity well but it seems to me that if in fact the activity the undertake is undertaken in providing the professional services that's the very type of activity if you will which ought not get coverage under this policy of question is where do you draw the line well i draw the line especially when we're saying a rising out of or rising from very widely as did the district court which we got the words we we can't get around what california says about what the words say and and then i say ok you concede you provided services including recruitment services the universities this service was professional at these professional services they're the ones that violated the law and injured their students and the government i guess i'm trying to figure out how it doesn't rely o how the cupola see can apply let's think if i mean i get if if we were to take the court's ruling to its logical conclusion almost nothing would be covered under the policy and that that can't be all right i believe i think that i mean first of all there's no question that you got a good settlement with your employee praxis liability insurer they looked at what was going on here and they said yeah we better do something about this under the side see coverage which is very broad coverage provides coverage for any wrongful acts that the company itself is alleged to have entered into and again  that suggests that there are arising out of or arising from are involved in those cases i'm having a tough time understanding why this district court's bro interpretation of this language is any different from those cases what's now i know you pick some out of circuit cases but these are right in california right under acceptance insurance so i'm saying what part of those cases does not say how i should deal with this policy what i did submit to the court that none of these cases actually involve these more and salary activities almost every case in which the professional exclusion was applied involve outpacing services that were provided to an insurance client not inward facing management decisions so what you're saying is because we did all these things in management to provide the services then therefore the services of exclusion should not apply yet the services exclusion is meant to cover claims arising out of the services provided to the clients if a client were to sue because it was not this is the very thing you were doing this is compensation your honor this would be like saying that your employees aren't aren't suing you for improperly compensating it's i mean it's basically were there's nothing wrong with your compensation plan except that it violates your obligations in the kind of recruitment you are doing every company is is obligated to follow the  kickbacks weren't related to the services being provided which was a real estate listing services even though they did serve sensually disks with that secure the price competition which  the purpose of the court found that that did not implicate the company's professional service to understand you'd be saying that the that there is the only exclusion would be if the universities were to under it says alleging based upon arising out of attributable to directly or indirectly resulting from in consequence oh or in any way involving the rendering or failing to render professional services i can't imagine a broader clause and i gree it's a very broad clause but it only applies to the outward facing us services that are being rendered back at the purposes of all says when looking at contracts you need to look at what the intent of the party was right in this case the scot still sold a very broad side see coverage to hot shots which expected some coverage under that side's  its briefing concentrated its arguments on the law and did not really address the underlying allegations in the key tam complaint against it or seek to show why those allegations would fall outside of the exclusion the key tam complaint as your honour's has observed is not an employment case it's not concerned with how chalks internal compensation practices it's brought by employees but the real party in interest is the united states government and in this case the u s attorney in arizona got involved after the second amended complaint was filed initiated this summer a process that led to the resolution of this case and hot chocolate rain five hundred thousand dollars to the u s government this case is about ho and services you know about it sort of occasions to the government that students are eligible for for financial aid and a claim brought on behalf of the government though not by the government that those sort of occasions  falls there's a sample agreement that was attached to the key tam complaint it's at page one twelve of the record it's captioned on line degree granting program i ministry of services agreement it's a services agreement and the exhibits of that agreement describes how trucks and roman services as well as the other services they provide but those services include lily there's a there's an admission here that there's rain or professional services as i see visceral duns point he says yes there were professional services but that they were not caus the services were not causative it was a violation of the low your honor i would respond in this way the agreement and perhaps i did not need to address that point what it provided  to services the agreement provides that hot trog will out of the concern the incentive compensation bad is a specific undertaking in section eleven in addition to a general promise to comply with the law and in this case not only was hot chalk sued but it's in roman but it's customer universities were sued so this had an impact you don't directly on hot shots customers and universities that were  events of its in roman services and the the key to him complain contains a number of allegations as to why those in the roman services were really nothing more than a boiler room sales environment financial aid plan the enrollment specialist would continue to work with the student and try to persuade the student to enroll anyway and that enroll in specialists were instructed to offer scholarships and to merely mislead students that this was  off or they had to act out immediately or it would be lost so when we look at the type of allegations in the key tam complaint the undertaking truck made to its university clients to comply with the incentive compensation we think this case does squarely involve the rendering a professional services and we think the district court in its decision i was very mindful of this the district court went through the legislative history of the incentive compensation band and explained why the incentive compensation band protected both the government interest in the in protecting the you know the assets of the us tragedy treasury as well as a public interest in that student shouldn't be enrolled in programs they weren't qualified for or undertake that that they want to be able to repay so she viewed the complaint as well as hot chocs as well as well as the allegations concerning hot shots activities as squarely in implicating what mr rodin refers to as their outward facing activities and that's my understanding that you're really only suggesting that the only way the insurance company gets out of paying this is because of the professional services exclusion correct i mean i didn't see any place in there where you can test at the claims are claims arising out of the error omissions of the directors or officers who didn't contest we did not your honor so if it isn't professional services exclusion the company must pay if it is not the professional services exclusion there is coverage there might be an issue as to whether the payment to the fees that would be subject to coverage under the policy as well as the defense fees they incurred ok with me remember that truck there e p l carrier did appoint defense counsel because of the retaliation claim are reimbursed by lawyers so those aspects of the claim the attorneys fees for the relator and the defense fees may be subject to coverage but there's an issue as to coverage for the five hundred thousand dollars paid to the government whether it's the fin decisions that the case we submitted the energy insurance case with our rule twenty a j letter which was a two thousand and seventeen decision handed down after the briefing reviewed the decisions that have both applied the professional services exclusion or found that on the particular allegations before the court it didn't apply we believe the trial court's decision just judge will consider in this wearily within those precedents and for