Date: Sep 12, 2026

Kentucky “Professional Services” Exclusion: Focus on the Act, Not Licensure—Regulated Behavioral Restraints Are Professional Services for Indemnity

Case: Scottsdale Ins. Co. v. Seven Cntys. Servs., Inc. (6th Cir. Sept. 9, 2026)

1. Introduction

This Sixth Circuit decision addresses liability insurance coverage for a tragic fatality at a Kentucky behavioral care center. After seven-year-old J.T. died during a physical restraint (a “kneeling cradle” hold), his estate sued the care center operator(s) and management company Seven Counties Services, Inc. Seven Counties sought defense and indemnity from its insurers under a Commercial General Liability (“CGL”) coverage part; the insurers denied coverage, relying primarily on a “professional services” exclusion and, secondarily, “other insurance” arguments related to an additional insured dispute under a separate Hanover policy.

The district court ruled the insurers owed a duty to defend Seven Counties in the wrongful death action but owed no duty to indemnify because the restraint fell within the CGL’s professional services exclusion. On appeal, Seven Counties challenged only the indemnity ruling, arguing (i) an emergency services intervention (“ESI”) restraint by low-wage, minimally trained staff is not “professional,” and (ii) the conduct was not ESI at all, but assault, making the exclusion inapplicable.

The Sixth Circuit affirmed, clarifying how Kentucky law defines “professional services” in insurance exclusions and emphasizing that the analysis turns on the nature of the act, not the actor’s status, pay, or licensure.

2. Summary of the Opinion

The court held that the physical restraint at issue constituted an excluded “professional service” under Kentucky insurance law as applied to the CGL policy.
It articulated an operative framework (derived from Kentucky authority) focusing on whether the act: (1) requires specialized learning beyond a layperson, (2) requires judgment rather than rote mechanics (manual character not dispositive), and (3) is subject to meaningful state regulation.
It rejected Seven Counties’ attempt to redefine “professional services” by importing Kentucky malpractice statute-of-limitations concepts tied to licensure (Ky. Rev. Stat. Ann. § 413.243).
It rejected the “assault-not-ESI” reframing, holding the dispositive question for the exclusion was whether the act drew upon professional training/knowledge, not whether it met the regulatory definition of ESI or was properly performed.
Because indemnity was barred by the professional services exclusion, the court declined to reach the insurers’ alternative “other insurance/excess” theory.

3. Analysis

3.1. Precedents Cited

Foundational Kentucky “professional services” definition

Ratliff v. Employers' Liability Assurance Corp. is treated as the cornerstone. There, Kentucky’s then-highest court held a nurse’s failure to escort a medicated patient back to bed involved professional services because deciding whether the patient could return safely required “expert professional ability.” The Sixth Circuit reads Ratliff for two central propositions: (i) when an act does not involve professional training/experience, it is not professional; and (ii) borderline scenarios must be resolved by examining the nature of the act rather than job title.

The opinion also uses Ratliff’s cross-jurisdiction survey to illustrate the lay/professional divide via: Keepes v. Drs. Convalescent Ctr., Inc. (bathing a child deemed lay, not professional) and D'Antoni v. Sara Mayo Hosp. (raising bed rails as a “purely mechanical” act, not professional). These cases inform the Sixth Circuit’s emphasis that “mechanical” tasks that a layperson can perform do not become “professional” merely because a trained person performed them.

DiBeneditto v. Medical Protective Co. is the Sixth Circuit’s key application of Ratliff. Though unpublished, it supplies operative language the court adopts here: the inquiry looks “not to the title or character of the party performing the act, but to the act itself,” and Kentucky’s definition turns on whether the act requires the exercise of judgment or training. The court uses DiBeneditto to reject Seven Counties’ attempts to make “professional” hinge on licensure, pay, or professional identity.

The opinion relies on Marx v. Hartford Accident & Indem. Co. for the widely cited formulation that professional acts require “special learning or attainment,” while also declining to import any bright-line rule that professional services must be “predominantly mental or intellectual.” Here, the Sixth Circuit treats manual character as relevant but not controlling.

Insurance interpretation principles and indemnity vs. defense

The court situates its analysis within Kentucky insurance construction principles: exclusions are construed narrowly and in favor of the insured under St. Paul Fire & Marine Ins. Co. v. Powell-Walton-Milward, Inc., and undefined terms take their ordinary meaning under Cincinnati Ins. Co. v. Motorists Mut. Ins. Co.. It also notes contra proferentem for ambiguity under Bituminous Cas. Corp. v. Kenway Contracting, Inc..

The indemnity inquiry is framed by KSPED LLC v. Va. Sur. Co., which the court quotes for two critical propositions: (i) indemnity exists only if liability is actually covered; and (ii) unlike the duty-to-defend analysis, courts may consider all record facts relevant to coverage, even if the insurer lacked them at the time it declined to defend. The district court’s duty-to-defend standard is tied to Kentucky’s articulation in Aetna Cas. & Sur. Co. v. Commonwealth (defense owed if any allegation potentially might come within coverage).

Other cited authorities informing method (but not the merits)

Choice-of-law and Erie prediction framing: Bituminous Cas. Corp. v. J & L Lumber Co. and In re Dow Corning Corp..
Summary judgment review standards: Kubala v. Smith and Barton v. Martin.
Waiver on appeal principles: Kitchen v. Whitmer.
“Don’t ignore unfavorable evidence” at summary judgment: Dehning v. Globe Life Am. Income Div..
Judicial notice of related proceedings: Chase Bank USA, N.A. v. City of Cleveland.
Policy-definition context: Sutton v. Shelter Mut. Ins. Co. (terms may differ across policy parts).
The opinion references a district court decision rejecting licensure-based importing of Ky. Rev. Stat. Ann. § 413.243 into insurance interpretation: Mass. Bay Ins. Co. v. Preferred Safety, LLC, and also cites Orchard, Hiltz & McCliment, Inc. v. Phoenix Ins..
It discusses (and limits) reliance on Md. Cas. Co. v. Crazy Water Co., treating “pay” as a weak/inauthoritative factor.
Seven Counties’ licensure/status-based argument drew from malpractice/“profession” discussions in Plaza Bottle Shop, Inc. v. Al Torstrick Ins. Agency, Inc. and a federal case, Monroe Guar. Ins. Co. v. TEE Eng'g Co., but the Sixth Circuit rejects that approach as inconsistent with Ratliff/DiBeneditto.
The court notes the policy term “professional services” is undefined, referencing Auto-Owners Ins. Co. v. Veterans of Foreign Wars Post 5906 for that interpretive posture.

3.2. Legal Reasoning

(a) The controlling inquiry: the act itself

The court’s reasoning turns on an explicit methodological choice: the Kentucky rule (as synthesized from Ratliff and DiBeneditto) requires looking to “the act itself,” not the employee’s title, pay, licensure, or generalized occupational category. That is why the court disavows the district court’s partial reliance on “how much the employee was paid,” describing that factor as at most minimal and not grounded in Kentucky’s core guidance.

(b) The Sixth Circuit’s operational framework for Kentucky “professional services” exclusions

The opinion crystallizes three practical factors:

Lay capability vs. specialized learning: whether the act can be performed by a layperson or requires specialized learning/attainment, including on-the-job training (not necessarily licensure or a degree).
Judgment vs. rote mechanics: whether the act requires real-time judgment and assessment rather than a routine, purely mechanical task; the act’s manual nature is relevant but not dispositive.
Regulation of the act: whether the act is substantially regulated, supporting the inference it requires specialized training/judgment.

(c) Application to the “kneeling cradle” hold

On factor (1), the court emphasizes that Kentucky requires extensive staff training for such interventions and that the record showed a 40-hour curriculum under 902 Ky. Admin. Regs. 20:320 § 7(4)(b)(2), including emergency/safety procedures and restraint protocols. The court treats this as the kind of specialized learning that distinguishes a professional service from ordinary custodial tasks.

On factor (2), the court rejects a bright-line “manual acts are not professional” approach. Although the hold is physical, it is presented as a response to an unfolding behavioral incident requiring assessment and selection of intervention. The court treats it as unlike “raising bed rails” or similar mechanical tasks in D'Antoni v. Sara Mayo Hosp..

On factor (3), the court points to Kentucky’s granular ESI rules (902 Ky. Admin. Regs. 20:320 § 15(1)-(20)), including limits on time, manner, authorization, and explicit prohibitions against punitive/retaliatory use. For the Sixth Circuit, this level of regulation is evidence that the act requires trained judgment and is therefore “professional” in the insurance-exclusion sense.

(d) Rejection of the “assault, not ESI” escape hatch

Seven Counties’ alternative theory attempted to defeat the exclusion by relabeling the act as assault rather than ESI. The court treats this as misdirected: indemnity turns on whether the injury arose from a professional service, not on whether the staff met regulatory ESI requirements or executed the hold correctly. Even “performed incorrectly,” the restraint was still an act that drew upon (or should have drawn upon) specialized training.

The Sixth Circuit also highlights that indemnity analysis may consider record facts beyond the underlying complaint (per KSPED LLC v. Va. Sur. Co.), undermining Seven Counties’ reliance on the complaint’s failure to use the term “ESI.”

3.3. Impact

Clarification of Kentucky “professional services” exclusions in the behavioral-health context

The decision supplies a concrete, citation-anchored framework for evaluating “professional services” exclusions under Kentucky law, particularly for regulated behavioral interventions. Future litigants should expect courts to treat certain hands-on, physical interventions as professional services when they require specialized training and regulated judgment—even if performed by staff without professional licensure.

Reduced efficacy of “status-based” arguments

By deemphasizing job title, pay, and licensure, the court strengthens insurers’ ability to invoke professional services exclusions for operational acts that are training-intensive and regulated, even when performed by entry-level employees. Conversely, insureds may need to focus less on the worker’s “non-professional” status and more on whether the particular task is truly lay and mechanical.

Reinforcement of defense vs. indemnity separation

The case underscores the practical reality that insureds can win a duty-to-defend ruling yet lose indemnity once the record establishes facts triggering an exclusion. This dynamic can meaningfully affect settlement leverage and mediation strategy in underlying tort cases.

Operational and compliance implications for facilities

Although formally an insurance-coverage case, the opinion’s heavy reliance on training protocols and Kentucky’s ESI regulatory scheme incentivizes facilities to document training, authorization procedures, and restraint governance. Ironically, stronger training documentation may support insurers’ arguments that the act is “professional” (and therefore excluded under some CGL forms), pushing insureds toward specialized professional liability products or endorsements.

4. Complex Concepts Simplified

Duty to defend vs. duty to indemnify: The duty to defend is broad: if allegations might fall within coverage, the insurer must defend (as framed by Aetna Cas. & Sur. Co. v. Commonwealth). The duty to indemnify is narrower: the insurer pays only if the insured’s liability is actually covered after facts are established (as emphasized by KSPED LLC v. Va. Sur. Co.).
“Professional services” exclusion: A policy clause removing coverage for injuries arising from professional services. Under this opinion’s Kentucky-law approach, an act can be “professional” even if it is physical/manual and performed by non-licensed staff, so long as it requires specialized training and judgment and is the kind of act the state regulates closely.
“Look to the act itself”: A rule drawn from DiBeneditto v. Medical Protective Co. and rooted in Ratliff v. Employers' Liability Assurance Corp.: the legal characterization depends on what was done (the restraint technique and judgment it required), not who did it (job title, pay, credentials).
Summary judgment: A procedure where the court rules without trial because there is no genuine dispute of material fact and the moving party is entitled to judgment as a matter of law (reviewed de novo under Kubala v. Smith).
Judicial notice: A court’s recognition of certain facts (like developments in related court proceedings) without requiring proof, here granted under the principle cited from Chase Bank USA, N.A. v. City of Cleveland.

5. Conclusion

Scottsdale Ins. Co. v. Seven Cntys. Servs., Inc. meaningfully clarifies how federal courts applying Kentucky law should evaluate “professional services” exclusions in liability policies. The Sixth Circuit reaffirmed that the inquiry focuses on the nature of the act—not the worker’s licensure, title, or pay—and held that a regulated, training-intensive physical restraint of a child in a behavioral facility is a professional service for indemnity purposes, even when allegedly misused or incorrectly performed. The decision strengthens the distinction between defense and indemnity in Kentucky coverage disputes and offers a structured, pragmatic test likely to influence future cases involving hands-on but specialized and regulated services.