A tragic but ordinary mistake
A family sued and won a nearly million-dollar judgment from the hospital where their daughter committed suicide after being admitted for psychiatric observation. The daughter gained access to a window from which she jumped to her death. One of the hospital’s insurers, which provided general liability coverage, denied the claim. It argued that the daughter’s act involved a professional error which was excluded under its policy.
Below is how the court ruled.
The family of Margaret Wagner sued Texas Memorial Hospital after her death from suicide. In 1983, after being admitted for psychiatric observation, Memorial employees put her in an open unit (having windows capable of being opened), because no space was available in a closed unit. During the night, Wagner climbed up and jumped out of a window, to her death. Wagner’s family was awarded damages of nearly one million dollars, based on a finding that Memorial did not adequately watch Wagner, that it did not address the situation of access to the window and that it did not sufficiently staff the psychiatric unit with trained personnel.
At the time of Wagner’s death, Memorial had the following policies:
2. USF hospital professional liability $200,000
3. Guaranty National umbrella policy, $500,000 excess over $500,000
4. Ranger secondary umbrella policy $25,000,000 excess over all other underlying
River paid nothing, relying on a professional liability exclusion. USF paid its full occurrence limit of $200,000 and the rest of the damages were paid by Guaranty and Ranger. All four insurers filed summary judgments with regard to their payment obligations. After a court filed in favor of USF and against North River, River and Guaranty appealed. An appellant court ruled that River’s policy did have an obligation to pay and the USF’s obligation was restricted to it per claim limit. River and Guaranty appealed again.
The crux of the appeal dispute was that USF policy’s aggregate limit should apply rather than its policy’s $200,000 per claim limit. River argued that its med mal and professional liability exclusion should still apply to the loss.
The higher court addressed both questions, including decisions from other cases it deemed relevant to this situation. In its opinion, the fact that a lack of adequate supervision and improperly securing against access to the window were ruled as separate causes of the patient suicide. Since those factors were general in nature, River CGL’s professional exclusion was inapplicable. With regard to USF, the higher court’s view was that the loss involved a single incident and the policy’s aggregate policy limit was not triggered. The lower court decision against River and in favor of USF was affirmed.
Guaranty National Insurance Co., and Ranger Insurance Co., Plaintiffs-Appellees-Appellants v, The North River Insurance Company, Defendant-Appellant, United States Fire Insurance Co., Defendant-Appellee. No. 89-1890. United States Court of Appeals, Fifth Circuit. Filed Aug. 17, 1990. 909 F.2d 133. Affirmed.
Regular premises exposures
Naturally we want to be sure that clients are protected as intended and commercial general liability policies offer coverage for regular premises exposures. The above case, while definitely occurring in a professional setting (a hospital) the loss itself still fell within the scope of a regular loss exposure:
Read a brief explanation of a standard general liability policy’s primary coverage in the PF&M analysis.
The insurance company provides insurance coverage on the following but only when a specific limit or premium charge is shown for it on the declarations.
Coverage L–Bodily Injury Liability and Property Damage Liability
The sums an insured is legally obligated to pay as damages due to bodily injury and property damage covered by this insurance will be paid by the insurance carrier. The injury or damage must be caused by an occurrence. The occurrence must take place in the coverage territory. The bodily injury or property damage must happen during the policy period.
(Editorially added wording from GL 0950–Known Injury or Damage Amendments)
Insurance for Coverage L is only available to:
Bodily injury or property damage that is separate and distinct from bodily injury or property damage of which a designated insured was aware before this policy’s effective date. This means that the current bodily injury or property damage cannot be a resumption, change or continuation of that prior bodily injury or property damage.
It is important to realize that continuation, resumption, and change in such prior bodily injury or property damage is considered to be known in that prior policy period.
|Example: Paula falls at Porgy’s Place. She had a head injury and made it home before collapsing. She never came out of the coma. One year later she dies of those injuries.
Scenario 1: Paula’s estate traced her actions prior to her accident and discovered that Paula fell at Porgy’s. The family hired an investigator and was able to present a claim against Porgy’s Place. This is covered under the current policy because the injury had never been known by anyone at Porgy’s.
Scenario 2: Justin, a partner at Porgy’s, witnessed the fall. He was concerned and asked Paula if she wanted an ambulance. She declined but asked for a cab. Justin is a designated insured so because he had knowledge of the bodily injury, the current policy does not respond but the prior one might.
The professional standard of care is special
The circumstances that lead to exposures reaching the level of becoming professional are distinct from general loss risks. Professional liability stems largely from the high degree of expert service being provided. When mistakes are made, the negative consequences are often substantial.
Here is a brief explanation of an overview of health care providers professional liability coverage in the PF&M analysis.
This insurance covers claims against an insured health care professional alleging malpractice arising from his or her professional acts or omissions or those of persons for whom he or she is responsible.
Insurance coverage for health care professional liability exposures may be written using the standard Insurance Services Office (ISO) Coverage Form or independent coverage forms and policies prepared by and filed on behalf of individual insurance companies.
In many cases, coverage must be written using agents of domestic companies listed in the Market Directory and through Lloyd’s representatives. Much of this business is now written through various state Joint Underwriting Associations and doctors’ mutual insurance companies.
HIGH STANDARD OF CARE
Health care providers are extremely vulnerable to claims for errors and omissions. This is because human lives and people’s health are involved. An error or omission can result in serious injury or a patient’s death. An injury could seriously reduce the patient’s quality of life and result in that patient requiring life-long maintenance in an assisted living facility. A patient’s death could result in dependent children being left without a parent’s support. A birth-related injury could result in parents being responsible to care for a severely disabled infant for the rest of that child’s life. This results in the need for high insurance limits.
Health care providers are not held to absolute standards of performance. Courts both in the past and currently recognize that medicine is a profession that requires judgment. However, providers are required to exercise a degree of care and skill common to their area of expertise. Not every medical intervention results in a favorable outcome. The issue that must be resolved in a malpractice action is to determine what a competent and prudent provider would have done under the same circumstances and in the same geographical area.
Handling what clients need and expect
You’re the expert! Our clients have a great deal of knowledge of their own businesses but you’re the expert in the myriad ways that client actions and operations may create liabilities. You are most effective when you can clearly communicate the sources of loss that clients may face. Sometimes, the most effective communications are examples.
Here are some tips on creating examples.
While communication may be achieved faster and more conveniently than ever before; that is no guarantee that we are communicating effectively. Often, the only accomplishment is that we spread confusion and frustration at unprecedented speed.
Key to Effective Communication
Regardless the various methods that are made available to us; one issue about communication remains the same; did the other party understand our message? The type of technology or medium we use for communication is a secondary concern. However, when we make contact with others, whether our message is understood is often taken for granted. This occurs even when the topic is simple. Fortunately, there is an old, actually ancient, technique that we can use to aid our communication efforts…storytelling or examples.
Short stories or examples are often used in training, schools and textbooks, but are rarely used in important business discussions (including insurance). Any person who wants to better understand their policy needs, coverages and exclusions, should just ask for examples. Insurance policies are contracts and, like other legal documents, can be confusing. Often an illustration is more useful than a detailed discussion of policy language. Instead of trying to dissect how one policy part modifies or makes exception to another, ask the speaker if they can demonstrate their point. One source of excellent examples is claims or loss examples. Taking the elements of an actual claim, stripping out any identifying details and using it to portray how a coverage part or exclusion works is a great way to provide information.
A person who can create a good example is someone who has a thorough understanding of his subject and that understanding can be passed along to the listener. The listener often appreciates the work it takes to create examples and this can ease future communication. So take an active role whenever you communicate with an insurance professional and ask: Can you give me an example?