Clarifying Professional Services Exclusions and Natural-Person Endorsements in Commercial Insurance Coverage

Introduction

This commentary examines the Sixth Circuit’s unpublished decision in Singh, RX, PLLC v. Selective Insurance Co. of S.C. et al., No. 24-1678 (6th Cir. Apr. 14, 2025). Plaintiffs–appellants Aman Deep Singh and his Michigan pharmacy, SRX Specialty Care (“SRX”), purchased two liability policies—one from Selective Insurance Company and the other from American Casualty Company—to protect against business and professional liability. After Janssen Sciences (a Johnson & Johnson subsidiary) sued SRX in New York federal court for selling counterfeit HIV medication, both insurers denied defense and indemnity based on policy exclusions. The district court granted summary judgment to the insurers, and SRX appealed. The Sixth Circuit affirmed, clarifying (1) the scope of “professional services” exclusions under Michigan law and (2) the effect of endorsements that limit “claims” to those brought by natural persons.

Summary of the Judgment

The Sixth Circuit, applying Michigan contract and insurance law, affirmed the district court’s entry of summary judgment for both Selective and American Casualty. Key holdings:

• Selective’s policies contained a broad professional-services exclusion. Under Michigan law, acts requiring specialized intellectual skill—such as purchasing and dispensing prescription drugs—are “professional services.” Janssen’s claims arose directly from those services, so Selective had no duty to defend or indemnify.
• American Casualty’s policy definitions were amended by endorsement to require that any “claim” be brought by a natural person. Janssen is a corporate entity, not a natural person. Therefore American Casualty also had no duty to defend or indemnify.

Analysis

1. Precedents Cited

• Michigan’s Duty to Defend (Am. Bumper & Mfg. Co. v. Hartford Fire Ins. Co., 550 N.W.2d 475 (Mich. 1996)): The duty to defend arises if the underlying allegations “even arguably” fall within coverage.
• Contract Interpretation Principles (Wasik v. Auto Club Ins. Ass’n, 992 N.W.2d 332 (Mich. Ct. App. 2022)): Defined terms are given their plain meaning; unambiguous language is enforced as written; ambiguities are construed against the insurer.
• Professional Services Exclusion (Orchard, Hiltz & McCliment, Inc. v. Phoenix Ins. Co., 676 F. App’x 515 (6th Cir. 2017)): Exclusions for professional services encompass acts requiring specialized, predominantly intellectual skill and related clerical or business tasks.
• White v. Auto-Owners Ins. Co., Nos. 265380/265389, 2006 WL 664206 (Mich. Ct. App. Mar. 16, 2006): A doctor’s failure to perform follow-up duties—including clerical components—was deemed a professional service and excluded from coverage.
• Endorsement Supremacy (Besic v. Citizens Ins. Co. of the Midwest, 800 N.W.2d 93 (Mich. Ct. App. 2010)): Endorsements that explicitly amend policy terms supersede conflicting provisions in the original policy.
• Specific vs. General Terms (DeFrain v. State Farm Mut. Auto. Ins. Co., 817 N.W.2d 504 (Mich. 2012)): When contract terms conflict, the more specific definition controls.

2. Legal Reasoning

The court’s reasoning unfolded in two parallel tracks—Selective’s businessowner policy and American Casualty’s professional liability/personal injury policy—under a de novo review of summary judgment:

1. Selective Policy—Professional Services Exclusion
   • Michigan law treats insurance policies as contracts; exclusions are strictly construed against the insurer.
   • The court assumed coverage under the general policy but held that the “professional services” exclusion applied.
   • Dispensing and procuring HIV medication involve specialized pharmaceutical knowledge and are core functions of pharmacy practice. Thus, Janssen’s claims “arise out of” professional services and are excluded.
2. American Casualty Policy—Natural Person Endorsement
   • The policy’s endorsement deleted the general definition of “claim” and replaced it with one limited to demands “brought by a natural person.”
   • Janssen, a corporate entity, does not qualify as a “natural person.”
   • Because the endorsement expressly supersedes the original policy language, no conflict exists, and coverage is barred.

3. Impact on Future Cases

This decision carries significant implications for insurers, policyholders, and practitioners:

• Insurers can rely on broad professional-services exclusions to deny coverage for specialized intellectual activities—even when those activities have administrative dimensions.
• Endorsements that restrict coverage to claims by natural persons will likely be upheld if they clearly supplant the base policy definitions.
• Policy drafters must ensure that endorsements are explicit and avoid internal conflicts; insureds must carefully review endorsements for unexpected limitations.
• Future coverage disputes will hinge on finely calibrated contract interpretation rules under Michigan law, particularly around what constitutes “professional services.”

Complex Concepts Simplified

• Duty to Defend vs. Duty to Indemnify: Insurers must defend insureds against claims that arguably fall within policy coverage. If there is no duty to defend, there is also no duty to pay (indemnify) the resulting judgment.
• Professional Services Exclusion: A contract clause that removes coverage for liability arising from activities requiring specialized intellectual skill (e.g., medical or pharmaceutical tasks).
• Endorsement: A written amendment to an insurance policy that can add, delete, or change policy provisions. Endorsements generally override the original policy language if there is a direct conflict.
• Natural Person: A human being as opposed to a legal or corporate entity. In this case, only claims brought by humans qualify under the amended definition.
• Illusory Contract: A contract that appears to create obligations but, in fact, imposes none. Courts avoid interpreting insurance language in a way that renders coverage meaningless.

Conclusion

The Sixth Circuit’s decision in Singh v. Selective Ins. Co. reinforces two critical principles in Michigan insurance law. First, professional-services exclusions are interpreted broadly to encompass all facets—administrative and substantive—of a licensed professional’s specialized work. Second, clear endorsements that limit “claims” to those filed by natural persons will effectively bar corporate plaintiffs from coverage. Together, these holdings underscore the necessity for insureds to scrutinize policy exclusions and endorsements and for insurers to draft precise, unequivocal contract language. This precedent will guide future disputes over the scope of professional exclusions and the validity of natural-person limitations.