Business Insurance
Insurer must cover defense of psychiatrist accused of sexual misconduct
By Judy Greenwald
November 9, 2017

Psychiatrist Dale Giolas

Psychiatrist Dale Giolas

A federal court has ruled a medical malpractice insurer has a duty to defend a psychiatrist accused of inappropriate sexual activity with a patient, while also holding he is entitled to obtain independent counsel in the underlying litigation.

Dr. Dale Giolas treated Staci Ferguson as a patient from 2011 until early 2016, according to Wednesday’s ruling by the U.S. District Court in Chicago in Professional Solution Insurance Co. v. Dale Giolas M.D. and Staci Ferguson.

In August 2016, Ms. Ferguson filed suit in Illinois state court alleging Dr. Giolas had repeatedly engaged in improper sexual activity with her while treating her. Dr. Giolas denies engaging in any sexual activity with Ms. Ferguson. That court case remains pending, according to the ruling.

Med mal insurer Professional Solutions, based in Clive, Iowa, said it did not have a duty to defend Dr. Giolas under its physician and surgeon medical professional liability insurance policy in the case, and Dr. Giolas filed suit against the insurer.

“The crux of this coverage dispute is whether improper sexual activity with a patient can constitute medical negligence in the field of psychiatry,” said the ruling.

The ruling discusses the phenomenon of transference, in which the “patient transfers feelings toward everyone else to the doctor.”

“The mishandling of this phenomenon, which generally results in sexual relations or involvement between the psychiatrist or therapist and the patient, has uniformly been considered as malpractice or gross negligence in other jurisdictions, whether the sexual relations were prescribed by the doctor as part of the therapy, or occurred outside the scope of treatment” said the ruling.

“An insurance company is free to limit coverage for a psychiatrist’s sexually inappropriate behavior in a professional liability policy … However, the policy must do so clearly and explicitly.

“Accordingly, construing the policy and facts liberally, the court finds that the facts alleged suggest an error in Giolas’ professional treatment and thus fall potentially with the policy’s coverage.”

The court also held that Ms. Ferguson’s “allegations of sexual misconduct suffice to allege bodily injury” under the policy.

The insurer must also provide Dr. Giolas with independent counsel in the case, said the ruling. “Where there is an ‘insurmountable conflict’ between the insured and insurer, the insurer does not have a right to control the insured’s defense,” said the ruling, in citing an earlier case.

Dale Giolas

File a complaint against a psychiatrist – PsychSearch