Prior Knowledge Exclusion Bars Coverage For Entire Lawsuit Alleging Multiple Instances Of Wrongdoing

The United States District Court for the District of Vermont has held that there is no coverage under a CGL and professional liability policy for all claims in an underlying suit brought against an insured residential care facility because all of the claims arose from professional services rendered by the facility that it knew or should have known could give rise to a claim. James River Ins. Co. v. Inn-One Home, LLC, 2021 WL 3619676 (D. Vt. Aug. 16, 2021).

The insured facility admitted a resident for care related to dementia.

While at the facility, the resident allegedly received improper medication resulting in her hospitalization; was injured when she escaped from the facility; and also was injured when a caregiver assaulted her.

The caregiver was later terminated by the facility and criminally prosecuted for the assault.

The resident died shortly thereafter, and her estate and family members subsequently filed a suit against the facility for negligence, breach of contract, wrongful death, negligent hiring, and violation of state laws arising from the facility’s negligent care of the resident and the assault.