Professional Services Exclusion Precludes Coverage For False Claims Act Suit

It is not unusual for a directors and officers liability policy to have an exclusion for professional services. As such, a question often arises regarding whether the claimed wrongful conduct involved the rendering or failure to render professional services in a particular context. In HotChalk, Inc. v. Scottsdale Ins. Co., No. 16-17287 (9^th Cir. June 4, 2018), the Ninth Circuit found that coverage was precluded for a False Claims Act suit because the insured's professional services had a direct relationship to its alleged liability.

HotChalk, Inc. ("HotChalk") is a company that provides technology and support services to universities for purposes of growing their online education programs. Specifically, HotChalk assists universities in publicizing these programs and encouraging students and faculty members to take advantage of them.