Court Opinion

ID: 9702523
Source: CourtListenerOpinion
Date Created: 2023-08-25 23:15:16.879594+00
Date Added: 2024-06-11T18:21:38.346220
License: Public Domain

HANDLER, J.,
dissenting.
The issue addressed by the Court in this case is whether a medical malpractice insurer can be held liable for sexual misconduct of its insured under a policy that provides insurance for injury “caused by a medical incident arising out of [the physician’s] supplying ... professional services,” and specifically excludes coverage for “injury resulting from [the physician’s] performance of a criminal act.”
*102The Court concludes that, although the language in the coverage section of the policy is sufficiently broad to provide coverage for the injuries sustained by this patient — injuries from sexual misconduct occurring in the course of a gynecological examination — she nevertheless cannot recover against the insurance carrier because of the policy’s exclusion for injuries resulting from criminal acts committed by the physician. The Court adds that the patient may attempt to recover for that portion of her damages that she can prove are derived from the insured’s failure to provide proper treatment for the condition for which she initially sought medical care.
On these facts, I believe that the insured’s sexual misconduct was so intertwined with his medical malpractice — both the mishandling of the examination and the failure properly to treat plaintiffs condition — that it is not realistically possible to identify, differentiate, and quantify the injuries occasioned by the malpractice apart from the injuries attributable to the sexual misconduct. Yet, the Court’s approach demands that analysis, and thereby inevitably assures a result that will be artificial and arbitrary, and one that will drastically reduce, or quite possibly eliminate, recovery.
The Court’s interpretation is not required by the language or essential meaning of the insurance policy; its result is patently unfair, if not unconscionable, to this injured patient. I dissent.
I
The facts in this case, largely undisputed at this juncture of the litigation, are extremely important. They are recapitulated by the Court. Ante at 82-85, 698 A.2d at 10-11. It warrants iteration, however, that when June Davis visited with Dr. Prasert Chunmuang in November 1992, she was extremely young and inexperienced, factors that lend greater significance to her state of dependence, helplessness, and passivity as a patient undergoing a gynecological examination. In addition, Davis’s attorney informed the Court that Chunmuang had been indicted based on complaints filed by several of his patients, including Davis, and that he pled *103guilty to several of the charges. Ante at 82, 698 A.2d at 10. Chunmuang’s plea bargain did not, however, include a conviction or acknowledgment of criminal guilt for the conduct stemming from Davis’s gynecological examination.
II
A.
The initial question posed is whether the misconduct of Dr. Chunmuang falls within the coverage of the insurance policy. The coverage provisions of the insurance policy state:
We will pay all amounts up to the limit of liability which you become legally obligated to pay as a result of injury to which this insurance applies. The injury must be caused by a “medical incident” arising out of your supplying or failure to supply professional services.
The policy defines “medical incident” as
any act or failure to act ... in the furnishing of the professional medical ... services by you____ Any such act or failure to act, together with all related acts or failures to act in the furnishing of such services to any one person shall be considered one “medical incident.”
The Appellate Division relied on St. Paul Fire & Marine Ins. Co. v. Asbury, 149 Ariz. 565, 720 P.2d 540 (App.1986), as support for its conclusion that the insured’s conduct constituted medical malpractice covered by the insurance policy. 292 N.J.Super. 349, 355, 678 A.2d 1143 (1996). In Asbury, as in this case, a gynecologist was accused of improperly manipulating his patients during gynecological examinations. Asbury, supra, 720 P.2d at 541. The policy at issue provided coverage for claims arising from “professional services,” and the Asbury court held that coverage was applicable to misconduct, such as sexual assault, that is “intertwined with and inseparable from the services provided.” Id. at 542.
In Records v. Aetna Life & Cas. Ins., 294 N.J.Super. 463, 683 A.2d 834 (App.Div.1996), the court adopted what has been characterized as the “substantial nexus” test, ante at 93, 698 A.2d at 16, ruling that “conduct which has a substantial nexus to an insured *104activity may be found to ‘arise out of that activity even if it is unlawful.” Id. at 469, 683 A.2d 834. Relying on that decision, the Court determines that “[w]e have no difficulty in concluding that [the insured’s actions] constituted a ‘medical incident’ as defined by Chunmuang’s malpractice policy.” Ante at 98, 698 A.2d at 18.
I agree with the Court that the language contained in the coverage clause of this policy is broad enough to encompass sexual misconduct occurring during the course of a medical examination. There can be no question of coverage where, as here, that sexual misconduct is virtually inseparable from and overlaps with the conduct entailed in providing the medical service itself.
B.
The Court’s result in this case is founded on its interpretation of the criminal-acts exclusion. That interpretation calls for a contrived application of the exclusionary clause to these facts. The Court’s analysis unfairly requires Davis to prove, and unrealistically asks the fact-finder to determine, those injuries that are attributable to the insured’s acts of omission (the failure to perform a proper gynecological examination, as well as the failure to treat the condition for which the patient sought treatment) and the injuries attributable solely to the insured’s acts of sexual misconduct. The Court fails to recognize that, essentially, Davis was injured by the insured’s failure to administer a proper gynecological examination — he performed the examination for purposes of sexual gratification. The gravamen of the malpractice was conduct that constituted criminal conduct.
The language of the policy’s exclusionary clause does not require the Court’s extremely literal interpretation. Under “Exclusions,” the policy reads:
This insurance does not apply for:
(a) injury resulting from your performance of a criminal act.
*105That language does not displace the natural and sensible meaning that it is only injury resulting solely, essentially, or primarily from a discrete and separately identifiable criminal act that is excluded from the coverage of the policy. Thus, the Appellate Division found that the “criminal acts” exclusion was reserved for situations where the criminal conduct has no relation to the professional services sought. 292 N.J.Super. at 360, 678 A.2d 1143.2
Support for that construction of the criminal-acts exclusion in the context of the facts of this case is supported by the analogy to alleged medical malpractice by a mental health care professional who mishandles “transference” resulting in sexual contact between himself and his patient. There are strong similarities between the psychotherapist-coverage/exclusion cases and the case presently before the Court. In fact, as noted by the Appellate Division, “the allowance of coverage for injuries suffered by a victim of a gynecologist’s excessive examination of sexual organs is on a firmer legal footing than the mental health professional coverage based on the psychiatric theory of transference....” Ibid. The Court is unpersuaded by the analogy to the psychiatric-malpractice cases. There are, to be sure, differences in the two situations, yet, in applying the exclusion in this case, the Court dramatically overstates those distinctions. See ante at 91, 698 A.2d at 14 (“[T]he factual basis in cases involving mental health care professionals differs significantly from cases involving other physicians ....”).
Care for the patient’s psychological and emotional well-being— central to the mission of the psychotherapist — is an important aspect of the task of the gynecologist. See ACOG Committee Opinion: Sexual Misconduct in the Practice of Obstetrics and *106Gynecology: Ethical Considerations, 48 Int’l. J. of Gynecology & Obstetrics, 239 (1995) (“the practice of obstetrics and gynecology includes interaction at times of intense emotion and vulnerability for the patient and involves both sensitive physical examinations and medically necessary disclosure of a specially private information about symptoms and experiences.”). In respect of a patient required to undergo a gynecological examination, her intimate privacy, bodily integrity, and personal dignity are involved and are at risk. Privacy, individual integrity, and personal dignity similarly are implicated in psychiatric treatment. In both situations, the patient is vulnerable, dependent, and essentially helpless, and it is the doctor’s clear professional responsibility and ethical duty to avoid taking advantage of that condition for purposes of sexual gratification.3 In neither case can the conduct be justified by implied consent. See ACOG Committee Opinion, supra, at 239-40 (rejecting contention that patient’s consent to sexual contact is “meaningful” because of “the disparity in power, status, vulnerability and need.”); see also ante at 91, 698 A.2d at 14 (recognizing *107that “in cases involving mental health care professionals ... consent [to sexual'conduct] may be considered coerced.”). Perhaps most significantly, the intentions and actions of the psychotherapist who “mishandles” transference for purposes of sexual gratification are precisely analogous to those of the gynecologist in the present case. It is unclear, therefore, why the victim of the psychotherapist’s malpractice should recover under a professional malpractice policy and the victim of the gynecologist’s malpractice should not.
Criminal-acts exclusions do not apply to claims based on the mishandling of transference resulting in sexual contact between the therapist and the patient. In L.L. v. Medical Protective Co., 122 Wis.2d 455, 362 N.W.2d 174 (App.1984), review denied, 122 Wis.2d 783, 367 N.W.2d 223 (1985), the court did not dispute the insurance company’s contention that the therapist’s actions were criminal. The court held, however, that:
L.L. does not merely allege ... that she was damaged by Siegel’s performance of criminal acts. She alleges that she was damaged by Siegel’s failure to exercise the degree of skill and care ordinarily exercised by other psychiatrists and by Siegel’s failure to provide appropriate forms of treatment. These are allegations of malpractice, not of criminality.
The insurance policy does not clearly indicate whether it is meant to cover acts by the insured psychiatrist which constitute or are evidence of malpractice but which also are defined as criminal. Where the meaning of an insurance policy is unclear, it must be construed against the insurer and in favor of coverage.
[Id., 362 N.W.2d at 178-79 (footnote omitted).]
Similarly, in Vigilant Ins. Co. v. Kambly, 114 Mich.App. 683, 319 N.W.2d 382, 385 (1982), the court held that a policy provision that “there is no coverage ... for legal expense incurred due to alleged criminal act” did not operate to exclude coverage for legal expenses arising from the defense of a malpractice action based on sexual contact between a psychiatrist and his patient. The court reasoned that “the expenses incurred by Dr. Kambly were, not incurred ‘due to alleged criminal act’ but due to alleged malpractice in a civil action.” Ibid; cf. Simmons v. United States, 805 F.2d 1363 (9th Cir.1986) (relying on psychotherapist-coverage cases for conclusion that federal government may be held vicari*108ously liable for mishandled transference by Indian health-care service counselor).
The crucial point eluding the Court is that “the gravamen of the [claim] is that [the insured] did not treat [Davis] properly and as a result she was injured.” St. Paul Fire & Marine Ins. Co. v. Mitchell, 164 Ga.App. 215, 296 S.E.2d 126, 128 (1982) (citing Zipkin v. Freeman, 436 S.W.2d 753, 761 (Mo.1968)). Although the sexual misconduct may be criminal, the injuries flowing from that behavior are part and parcel of the injuries flowing from the malpractice such that the patient’s claim is essentially a claim of malpractice. Cf. Sommer v. New Amsterdam Cas. Co., 171 F.Supp. 84, 86 (E.D.Mo.1959) (stating, in insurance-coverage case involving both malpractice and alleged criminal conduct by the insured, that “[t]he word ‘malpractice’ includes the performance of criminal acts”); Kambly, supra, 319 N.W.2d at 384 (providing that alleged criminal conduct on part of psychiatrist could constitute part of malpractice in transference-coverage case). The patient should not be penalized by the Court because the care provided by Dr. Chunmuang was so poor that it not only constituted grave malpractice, but also traversed into the realm of criminal and ethical offenses.
A finding of coverage despite the exclusionary clause would comport with the reasonable expectations of the insured. See Martusus v. Tartamosa, 150 N.J. 148, 159, 696 A.2d 1, 6 (1997) (“The insured’s reasonable expectations should govern ‘to the extent the policy’s language allows.’ ”) (citing The Salem Group v. Oliver, 128 N.J. 1, 4, 607 A.2d 138 (1992)). As with the psychotherapist who expects coverage when impermissible sexual contact results from transference, the gynecologist is engaged in a practice that is fraught with possible sexual implications and involves a high risk of actual or alleged sexual misconduct. Such a practitioner reasonably would expect to be covered under his professional-liability policy when claims arise that are based on conduct that is wholly part of a gynecological examination. Furthermore, it is extremely unlikely that the insured was induced to engage in this *109behavior in reliance on the expectation of insurance coverage for any claims that might have resulted from his conduct. See Kambly, supra, 319 N.W.2d at 385.
The criminal-acts exclusion should be interpreted narrowly as a matter of sound public policy. See Records, supra, 294 N.J.Super. at 468, 683 A.2d 834; see also Illinois State Medical Ins. Serv. v. Cichon, 258 Ill.App.3d 803, 196 Ill.Dec. 277, 281, 629 N.E.2d 822, 826 (1994) (rejecting the definition of sexual conduct in Illinois Criminal Code for purposes of defining the term as used in the policy exclusion). Indeed, the Court recognizes that well-settled principle of policy interpretation. See ante at 95, 698 A.2d at 16 (“In general, insurance policy exclusions must be narrowly construed. ... ”). Application of that principle is especially appropriate where, as here, the beneficiary of the coverage determination is not really the insured but rather is a third-party victim of the insured. Cf. Mitchell, supra, 296 S.E.2d at 128 (“No longer is it the law in this state ‘that the liability policy existed solely for the protection of the insured.’ The courts recognize that the injured person also is to be protected.”) (quoting Hartogs v. Employers Mut. Ins. Co., 89 Misc.2d 468, 391 N.Y.S.2d 962, 964 (Sup.Ct.1977)). The interpretation and application of the exclusionary clause must be influenced, if not mandated, by the strong public policy reflected in statutory and regulatory enactments (N.J.S.A. 45:1-21(c) and (e); N.J.A.C. 13:35—63(j)), that equate the kind of sexual misconduct that occurred in this case with “gross[ ] malpractice” and “professional misconduct.”
I am also persuaded that the Court’s application of the criminal-acts exclusion will discourage the proper reporting of sexual misconduct. A rule of exclusion that provides for less recovery whenever criminal sexual conduct is alleged will serve as a disincentive to the reporting of such conduct. See McConaghy v. RLI Ins. Co., 882 F.Supp. 540, 542-43 (E.D.Va.1995) (stating that the court was “deeply troubled by the apparent inequitable disparity in coverage — a person who has suffered more is able to recover less”); American Home Assurance Co. v. Cohen, 124 Wash.2d *110865, 881 P.2d 1001, 1009 (1994) (observing that denial of coverage for sexual misconduct that is attributable to medical malpractice violated public policy because it would discourage patients from reporting sexual misconduct).
Despite those strong policy justifications in favor of a finding of recovery, and despite the persuasive analogy to the psychotherapist-coverage cases, the Court forces an innocent victim — one who was especially inexperienced, dependent, and psychologically and emotionally fragile — to unravel her serious injuries; she is required to segregate that portion of her injuries attributable to her doctor’s failure to diagnose and treat her underlying condition from that portion attributable to the doctor’s sexual misconduct, which took place during and as part of the same examination. We have recognized that there are substantial and distinctive injuries associated with sexual assault. E.g. Collins v. Union Co. Jail, 150 N.J. 407, 696 A.2d 625 (1997) (recognizing claim for post-traumatic-stress disorder resulting from sexual assault of prisoner by prison guard). However, the Court’s contention that “[t]he damages caused by a physician’s criminal conduct, such as sexual assault, inevitably will be significantly distinct from damages occasioned by acts of medical malpractice not involving criminal conduct,” ante at 99-100, 698 A.2d at 19, is simply untenable on these facts. The damages occasioned by defendant’s malpractice are not “significantly distinct” from those occasioned by his sexual misconduct. I dissent not because I find the behavior of the gynecologist to be any less criminal because of the gynecologist’s “additional access,” ante at 100, 698 A.2d at 19, but rather because I find it too unrealistic to require the plaintiff to prove and the factfinder to determine the source and uniqueness of the injuries she suffered in this case.
III
The policy language here is amenable to a construction that would provide coverage for injuries attributable to sexual misconduct that arise from and are intertwined with medical malpractice. *111There is a strong, if not compelling, analogy to the psychoanalyst-coverage cases in which courts have found coverage even under policies that contain criminal-acts exclusions. Moreover, the insured reasonably would expect that medical malpractice that verges into sexual misconduct — particularly possible in the case of mental health care professionals and gynecologists — would be covered. Finally, exclusions for criminal acts should, on grounds of public policy and unconscionability, be applied narrowly and not remove from coverage sexual misconduct that is otherwise virtually inseparable from underlying medical malpractice.
I dissent.
Justice COLEMAN joins in this opinion.
O’HERN, J., concurs in result.
For reversal and remandment — Chief Justice PORITZ, and Justices POLLOCK, O’HERN, GARIBALDI and STEIN — 5.
For affirmance — Justices HANDLER and COLEMAN — 2.

 Relying on Ambassador Ins. Co. v. Montes, 76 N.J. 477, 388 A.2d 603 (1978), the court determined that on payment of claims of malpractice under the policy, including those involving sexual misconduct, the insurer's recourse was to seek indemnification from its insured, Chunmuang. 292 N.J.Super. at 361, 678 A.2d 1143.

 Regulations of the Board of Medical Examiners specifically identify certain kinds of sexual behaviors that the Board "deem[s] to be violative of law.”
N.J.A.C. 13:35-63 provides:
(c) A licensee shall not engage in sexual contact with a patient with whom he or she has a patient-physician relationship
....
(e) A licensee shall not engage in any discussion of an intimate nature with a patient, unless that discussion is related to legitimate patient needs____
(f) A licensee shall provide privacy and examination conditions which prevent the exposure of the unclothed body of the patient unless necessary to the professional services rendered.
....
(i) A licensee shall not engage in any other activity (such as, but not limited to, voyeurism or exposure of the genitalia of the licensee) which would lead a reasonable person to believe that the activity serves the licensee's personal prurient interest or is for the sexual arousal, the sexual gratification or the sexual abuse of the licensee or patient.
(j) Violation of any of the prohibitions or directives set forth at (c) through (i) above shall be deemed to constitute gross or repeated malpractice pursuant to N.J.S.A. 45:1-21(c) or (d) or professional misconduct pursuant to N.J.S.A. 45:1-21(e).