A recent Law 360 story by Emma Cueto, “Atty Overbilling Suit Not Covered By Insurance: 10^th Circ.,” reports that the Tenth Circuit declined to revive a dispute between a Colorado foreclosure attorney and his insurance company, ruling that the lower court was right to find the company did not have to defend the lawyer from a class action over alleged overbilling.

The appellate panel ruled that under Michael Medved's policy with Evanston Insurance Co., the insurer had no duty to defend Medved or his solo practice from a homeowner class action or during an investigation by the state attorney general — which eventually resulted in a $1 million settlement — because the policy only covered professional services, which did not include billing.

"The claims against Mr. Medved and his firm arose out of their billing practices, not their professional services," the decision said. "The policy therefore did not cover either the class action or the Colorado attorney general's investigation, and Evanston had no duty to defend in either of these matters."

Evanston filed suit against Medved in 2014, asking the court to clarify that it was not obligated to defend the attorney regarding his billing practices. Medved was one of several lawyers and law firms investigated by the Colorado attorney general connected to alleged foreclosure overbilling. Medved represented lenders and investors, and although he billed them directly, the cost of his services was typically passed on to property owners, according to the decision.

After the investigation became public, Medved was hit with a class action that eventually settled for $16,000, the decision said.

Evanston defended Medved for 10 months during the class action, but said it reserved the right to later assert it wasn't obligated to cover the suit, according to the decision. It declined to represent Medved during depositions in the state's investigation because no legal action had been filed, the decision said.

The insurer later argued it had no duty to defend Medved's billing and that Medved should reimburse it for its expenses, an argument backed by the district court, which granted Evanston a quick win.

On appeal, the Tenth Circuit agreed. Under Colorado precedent, billing does not fall under the heading of "professional services," the court said. It also rejected Medved's argument that his policy did include billing-related suits because it promised coverage for damages "by reason of" professional services.

"By reason of" was much more limited than the term "arising out of," the panel said, and was not expansive enough to fold billing matters into his policy, the decision said.

Counsel for both parties did not respond Tuesday to a request for comment.  Evanston is represented by M. Courtney Koger of Kutak Rock LLP.   Medved is represented by Damian Arguello of Colorado Insurance Law Center.  The case is Evanston Insurance Co. v. Law Office of Michael P. Medved et al., case number 16-1464, in the U.S. Court of Appeals for the Tenth Circuit.