Sexual abuse insurance claims in the healthcare industry
September 16, 2018
The type of claim that’s currently having the biggest effect on insurance carriers are sexual abuse claims. These have been front and center in the media with the Larry Nassar cases at Michigan State, George Tyndall at USC, and Earl Bradley at Beebe Medical Center in Delaware – the latter is an older case involving pediatrics. With the #MeToo movement continuing to gain momentum, there’s no reason to believe these claims won’t continue impacting insurance carriers in the future.
If you’re the administrator of a healthcare facility, your next question should be, “my malpractice policy covers sexual abuse, correct?” The short answer is maybe. Suppose 20 years ago it was common not to see any exclusion for sexual abuse claims. Then the hard market of the early 2000’s hit. One of the causes of the hard market was the large number of sexual abuse claims that nursing homes had to contend with. Before the hard market, insurance policies were silent and typically took the stance that if the courts determined the claim was malpractice, then it was covered. Usually, the insurance carriers would provide coverage up until it was determined that the claimant was guilty and then they would exclude coverage due to the exclusion in the policy for violations of the law.
With these class action lawsuits affecting insurance carriers, they needed to be more proactive and would add more restrictive wording or, in a lot of cases, would provide a sublimit of coverage. While it was nice to have a separate limit of coverage for sexual abuse claims, they wouldn’t be close to the limits they had for malpractice and if they had umbrella coverage, these claims wouldn’t fall under that limit.
Today, sexual abuse coverage takes on many different forms. From policies being completely silent to full blown exclusions, you must be sure to review your policy so you’re aware of the coverage provided. While everybody understands not providing insurance coverage to a criminal, you’ll want to be sure your company has coverage for any vicarious exposure you may have for unwittingly employing a sexual predator. Also, be sure you’re aware of the carrier’s stance on punitive damages — these may be tacked on, depending on whether the jury wants to make an example of the facility. Some carriers will provide coverage depending on whether the state will allow punitive damages to be covered by insurance (some states won’t allow this because it defeats the purpose of punishment). Many carriers will flat out exclude these types of claims, so that’s something to be aware of.
Taking all this into consideration, it’s imperative you have a comprehensive background check to ensure you’re able to weed out potential questionable hires. Not an easy task when it’s tough to find qualified candidates, but as you’ve seen the alternative could bankrupt a facility.