Illinois Federal Court Finds No Duty to Defend or Indemnify False Advertising Claims

In Landmark American Insurance Co. v. Reproductive Genetics Institute Inc., the U.S. District Court for the Northern District of Illinois granted judgment on the pleadings in favor of Landmark American Insurance Co., holding there was no duty to defend under the medical professional liability (MPL) or commercial general liability (CGL) coverage parts of the Landmark policy with respect to a class action asserting claims for deceptive advertising and misrepresentations relating to preimplantation genetic testing for aneuploidy (PGT-A).

Landmark insured Reproductive Genetics Institute Inc. (RGI) under a policy that included coverage parts applicable to CGL and MPL. In October 2024, a lawsuit was filed against RGI alleging that it marketed and sold PGT-A testing by making false and deceptive representations regarding the test’s accuracy. The complaint asserted various causes of action, including violations of Illinois’ consumer protection statutes, fraud, breach of warranty, and unjust enrichment.

Prior to the filing of the underlying lawsuit, RGI received a demand letter related to the claims and tendered the demand to Landmark for coverage. Landmark denied coverage, and the underlying lawsuit was subsequently filed.

In a separate coverage action, Landmark sought a declaration that it had no duty to defend or to indemnify RGI in the underlying suit under either the CGL or MPL coverage parts, arguing that marketing and advertising are not professional services in the context of RGI’s line of business as an embryo storage lab. RGI countered that the underlying allegations implicated both the CGL and MPL coverage parts because testing was performed in connection with IVF treatment and genetic screening and that the underlying lawsuit sought damages for injuries that qualify as bodily injury under the Landmark policy.

The court agreed with Landmark, finding that the gravamen of the underlying complaint concerned RGI’s marketing and promotional activities rather than the performance of professional medical services. The court found claims alleging false or misleading advertising do not arise from the rendering of or failure to render professional services simply because the advertised product or service is medical in nature. The alleged misconduct centered on representations made to consumers, not errors in the actual performance of genetic testing services. Further, the court found that the underlying complaint did not allege that any purported class members actually lost embryos as a result of RGI’s PGT-A testing, thus rendering the alleged injuries purely financial in nature. As a result, the court concluded that neither the CGL nor MPL coverage parts were triggered by the underlying allegations.

Landmark also sought a declaration that the policy’s violation of consumer protection law exclusion — which barred coverage for claims based upon or arising directly or indirectly out of alleged violations of consumer protection laws — served as an independent basis for categorically excluding coverage for the lawsuit. RGI conceded that the exclusion precluded coverage for the claims alleging violations of consumer protection statutes but argued that Landmark’s duty to defend is triggered so long as at least one of the alleged claims falls within the policy’s coverage.

The court held that even if the exclusion does not preclude coverage for all claims, there is still no coverage because the claims never satisfied the CGL or MPL insuring agreements. The court therefore declined to decide whether the exclusion was an independent basis to deny coverage.