/>iIn the home health care business? Whether a franchisor, franchisee, or independent agency, beware of bodily injury exclusions in professional liability policies that could eliminate coverage for otherwise covered claims.
Home healthcare agencies often operate as franchisees, relying on the franchisor for development of the franchise, and once up and running, utilizing the franchisors’ advertising, marketing, operating and training manuals for general operations. Both franchisors and franchisees frequently face claims from patients and their families after patients sustain injuries that could be connected to their services. Home healthcare franchisees and independent operators should procure professional liability insurance policies that cover those injury claims. For example, ISO Policy Form PR 00 05 12 97 encompasses coverage for bodily injury arising out of home healthcare services. But what about franchisors? Do their professional liability insurance policies provide coverage for claims involving bodily injury? For at least one home healthcare franchisor, the answer is no. Although the franchisor’s policy covered allegations in the family’s complaint against it, the policy’s bodily injury and abuse of the elderly exclusions eliminated that coverage, leaving the franchisor without a defense or indemnity coverage.
In HomeWell Franchising, Inc., v. Evanston Insurance Co., 2025 WL 2223004 (N.D. Tex. Aug. 5, 2025), HomeWell Franchising, Inc. granted franchisees licenses to independently own and operate their businesses providing home healthcare to seniors (2025 WL 2223004 at *1). HomeWell purchased a professional liability policy from Evanston Insurance Company that insured HomeWell’s franchising activities. The family of a home healthcare patient sued HomeWell for injuries sustained by an 82-year-old patient while in a HomeWell franchisee’s care resulting in her death. HomeWell sought coverage under its professional liability policy with Evanston, but Evanston denied coverage, citing the “Bodily Injury” and “Vulnerable Adult Abuse” exclusions. The complaint alleged that HomeWell misrepresented its services on its website, and in so doing engaged in misrepresentation, fiduciary and constructive fraud, and unfair and deceptive business practices. The complaint also alleged violations of the California Business and Professions Code and California’s Consumer Legal Remedies Act. Evanston policy’s coverage grant extended to allegations such as “Defendants’ website intentionally misleads clients and potential clients to believe that Defendants are capable of providing a higher level of care than they can in truth provide” and “Defendants’ representations on their website were false and were intended to induce elderly consumers such as Ms. EGELAND to purchase Defendants’ services.”
Although the policy’s insuring agreement provided coverage, the policy’s exclusions eliminated that coverage. The Bodily Injury exclusion eliminated coverage for any claim “[b]ased upon or arising out of any actual or alleged ‘bodily injury, sickness, or disease sustained by a person, including death.’” The Vulnerable Adult Abuse exclusion eliminated coverage for any claim “[b]ased upon, arising out of, or in any way involving any actual or alleged Vulnerable Adult Abuse.” Vulnerable Adult meant “any act, error, or omission which actually or allegedly results in Bodily Injury or Personal Injury to any Vulnerable Adult.” Because the underlying lawsuit connected the patient’s fall, resulting in a fractured spine and emotional distress (among other injuries), to the allegations against HomeWell, Evanston demonstrated at least an incidental relationship between the allegations and the patient’s injuries:
Indeed, but for Ms. Egeland falling due to not receiving the proper level of supervised care HomeWell represented would be provided, there would be no legally viable underlying claims because Egeland would not have sustained any injuries or incurred any damages. Said simply, Ms. Egeland would not have sustained any ‘Personal Injury’ or ‘Bodily Injury’ as defined by the Policy and used in both the Bodily Injury and Vulnerable Adult Abuse exclusions had she been given the care represented by HomeWell.
The court concluded that the case against HomeWell fell within both exclusions, resulting in a loss of both defense and indemnity coverage.
This case emphasizes the importance of carefully reviewing both the definition of covered professional services and exclusions that could eliminate coverage for otherwise covered claims. Because many claims against home healthcare franchisors could involve bodily injury in some way, franchisors should either reject broad policy exclusions for bodily and personal injury or procure additional coverage for those claims. Franchisors, franchisees, and independent agencies should confirm that their insurance programs (and any corresponding contractual obligations, such as hold harmless or indemnification requirements) provide adequate protection against these claims.
