Professional Liability Claim
What do I do when I have a Professional Liability claim?
Ignore it and hopefully it will go away. This is not an uncommon response to potentially bad news. It may be difficult to accept or acknowledge that someone believes your actions or inactions have caused them harm.
Report It.
Ignoring a claim of professional negligence will not make it go away. It is vital that once you received information about a claim or potential claim you should immediately contact your insurance agent. Your professional liability policy has requirements regarding when and how to report a claim. Failure to adhere to these requirements may jeopardize coverage. You should always be familiar with the policy’s reporting requirements and consult with your insurance broker regarding any questions you may have.
Have Documentation and Records Readily Available.
When a claim is made the clock is ticking. When reporting a claim or potential claim, have on hand your firm name and policy number, the name of the company or entity making the professional liability claim, and any communication, written or verbal, you may have received related to the allegation. Once you have reported the claim you should immediately gather all records and documentation related to the professional services you provided to the entity or company alleging professional negligence. This includes your engagement letter and any addendum, and if applicable, a disengagement letter. All communications with this client, especially records of verbal conversations, should be gathered as well. These are items your claims professional and legal advisors are likely to ask for immediately, so it is important to have them ready.
Communicate with Your Insurance Broker and Carrier, Claims and Legal Professionals.
Arguably one of the least considered keys to a favorable outcome for a claim of professional negligence is timely communication with your insurance broker, claims professional and legal advisors. When you receive a message from your claims professional or someone else involved in the handling of a claim of professional negligence, it is important that you respond in a timely manner. A claim of professional negligence can be stressful, and it may be tempting to put off until tomorrow or another day, communications with those assisting you. You may be thinking, “I’m busy. They have everything under control.” Failure to communicate and respond will not make the matter go away and may make things worse. If those assisting you with a claim have questions or are asking for information, there is a reason. Responsiveness is important. What may be a relatively minor issue at 4pm on Wednesday may be a major issue by noon the next day.
Things That May Make a Claim Worse
Ignoring a claim and failure to timely report it may jeopardize coverage and failure to have proper documentation and records may make defense of a claim more challenging as well as decrease the likelihood of a favorable outcome. But other behaviors may also make a claim worse. Below are a few items to consider. • Communication via Traditional and Social Media Platforms. In addition to traditional media outlets such as newspapers and broadcast stations, we live in an age where a lot of news and information is shared via social media platforms such as Facebook and Instagram. It is not unusual to want to respond to a request for comments from a newspaper or news station on a particular matter that you may have been involved in. Likewise with social media platforms. It may be tempting to want to respond to news that one of your clients is being audited, to post on a social media platform, “I am the accountant for Mr. Jones and I can assure you the tax returns I prepared for him are in order!” While you may sincerely believe that statement to be true, and in fact it may be true, it is best to limit communications regarding a claim or potential claim to your Insurance broker, claims professional and your legal advisors.
Loose lips do sink ships. • Meeting with Opposing Party without Consulting Your Claims Professional. “Come on Joe… we’ve known and worked with each other for years. Let’s meet for dinner and drinks to resolve this.” In an effort to keep a client happy and not make a “big deal” of a potential issue, this may be a tempting invitation and a way to resolve a matter quickly and discreetly. But during informal meetings, like a dinner invitation to “resolve” a matter, you may say something that not only could subsequently be used against you, but also may jeopardize coverage for a claim. Client relationships are important. But it is equally important to avoid situations like this in an attempt to resolve the matter on your own.
• Signing and Accepting a Release Without Consulting Your Claims Professional.
“OK… I’ll take another look at your tax filings if you release me from all future claims.” Just as it may be tempting to meet with your client or someone else in an attempt to resolve a matter before it escalates, it is equally important not to assume or admit liability by agreeing to a release from future claims or similar documents, even if it is one you prepared yourself. Doing so not only may jeopardize coverage but also, despite the intent, open the door to other claims of professional negligence.
• Admitting Fault or Placing Blame on Others. “Yes I goofed. Sorry.” No professional is perfect. Mistakes do occur during the normal course of providing professional services and the legal standard Design professionals must adhere to recognize this. As a professional, you may want to “admit” when you believe you are at fault, but it is important to remember that professional liability claims are complex. So on the surface it may appear that you were professionally negligent, but that may not always be true. Equally bad is to rush to place the blame on others. You may genuinely believe that others are responsible but rushing to that conclusion may lead to additional liability. You should rely on the advice of legal counsel and the claims professional working with you. If you were professionally negligent, that conclusion will be reached at the appropriate time. But admitting fault may compromise coverage as well as make your defense more challenging.
In the End… The myth is that when frightened, ostriches instinctively bury their heads in the sand in the hopes that trouble will pass them by. But that is not true of ostriches nor if you ignore a claim of professional negligence. When faced with a claim, or potential claim of professional negligence, it is important to accept that this has happened and communicate immediately with your insurance broker, claims professional and legal advisor until the matter is resolved.
If you think you may have a potential claim please contact your professional liability ASAP. For more information please contact us here.