the center for professional education presentation professional liability (excluding d&o) aig...
TRANSCRIPT
![Page 1: THE CENTER FOR PROFESSIONAL EDUCATION Presentation Professional Liability (excluding D&O) AIG St. John’s University Wednesday, September 30 1](https://reader036.vdocument.in/reader036/viewer/2022062802/56649ec95503460f94bd754d/html5/thumbnails/1.jpg)
THE CENTER FOR PROFESSIONAL EDUCATION
Presentation
Professional Liability
(excluding D&O)
AIG
St. John’s University
Wednesday, September 30
1
![Page 2: THE CENTER FOR PROFESSIONAL EDUCATION Presentation Professional Liability (excluding D&O) AIG St. John’s University Wednesday, September 30 1](https://reader036.vdocument.in/reader036/viewer/2022062802/56649ec95503460f94bd754d/html5/thumbnails/2.jpg)
THE CENTER FOR PROFESSIONAL EDUCATION 2
Tort
A wrongful act.
One party has harmed another.
Not a breach of contract.
Courts provide remedies:•Money to reimburse loss.•Performance to fix the situation.
![Page 3: THE CENTER FOR PROFESSIONAL EDUCATION Presentation Professional Liability (excluding D&O) AIG St. John’s University Wednesday, September 30 1](https://reader036.vdocument.in/reader036/viewer/2022062802/56649ec95503460f94bd754d/html5/thumbnails/3.jpg)
THE CENTER FOR PROFESSIONAL EDUCATION 3
Business Torts
• General. Losses incurred from business operations.
• Employer. Injuries incurred by workers in the course of performing their duties.
• Product. Failure of a product or service to perform as advertised.
• Professional. Harm from faulty services.
![Page 4: THE CENTER FOR PROFESSIONAL EDUCATION Presentation Professional Liability (excluding D&O) AIG St. John’s University Wednesday, September 30 1](https://reader036.vdocument.in/reader036/viewer/2022062802/56649ec95503460f94bd754d/html5/thumbnails/4.jpg)
THE CENTER FOR PROFESSIONAL EDUCATION 4
Liability Coverages
Damages. Insures companies from losses from general liability exposures.
Duty to Defend. Pays the costs of defending the company against liability claims and legal fees.
![Page 5: THE CENTER FOR PROFESSIONAL EDUCATION Presentation Professional Liability (excluding D&O) AIG St. John’s University Wednesday, September 30 1](https://reader036.vdocument.in/reader036/viewer/2022062802/56649ec95503460f94bd754d/html5/thumbnails/5.jpg)
THE CENTER FOR PROFESSIONAL EDUCATION 5
Liability Coverage Forms
Occurrence. The policy covers an injury or damage that occurs during the policy period.
Claims-made. The policy covers claims made during the policy period regardless of when the injury occurs.
![Page 6: THE CENTER FOR PROFESSIONAL EDUCATION Presentation Professional Liability (excluding D&O) AIG St. John’s University Wednesday, September 30 1](https://reader036.vdocument.in/reader036/viewer/2022062802/56649ec95503460f94bd754d/html5/thumbnails/6.jpg)
THE CENTER FOR PROFESSIONAL EDUCATION
Question (1)
CPA firms conduct annual audits on companies to certify that financial statements:
• Match generally accepted accounting principles.• Comply with statutory requirements.• Disclose all relevant matters.
The CPA issues an unqualified opinion if a firm is in full compliance with the standards.
6
![Page 7: THE CENTER FOR PROFESSIONAL EDUCATION Presentation Professional Liability (excluding D&O) AIG St. John’s University Wednesday, September 30 1](https://reader036.vdocument.in/reader036/viewer/2022062802/56649ec95503460f94bd754d/html5/thumbnails/7.jpg)
THE CENTER FOR PROFESSIONAL EDUCATION
Question (2)
• March, 2015. Bergman CPA gives Darwin Corporation an unqualified opinion.
• October, 2015. The U.S. Securities and Exchange Commission (SEC) announces it launched an investigation of Darwin's financial practices.
• May 4, 2016. The U.S. SEC charges Darwin with money laundering and fraud.
7
![Page 8: THE CENTER FOR PROFESSIONAL EDUCATION Presentation Professional Liability (excluding D&O) AIG St. John’s University Wednesday, September 30 1](https://reader036.vdocument.in/reader036/viewer/2022062802/56649ec95503460f94bd754d/html5/thumbnails/8.jpg)
THE CENTER FOR PROFESSIONAL EDUCATION
Question (3)
• Darwin declares bankruptcy in 2017.• Hundreds of people lose money.• Six lawsuits are filed against the Bergman CPA
firm for failing to uncover the misbehavior.
8
![Page 9: THE CENTER FOR PROFESSIONAL EDUCATION Presentation Professional Liability (excluding D&O) AIG St. John’s University Wednesday, September 30 1](https://reader036.vdocument.in/reader036/viewer/2022062802/56649ec95503460f94bd754d/html5/thumbnails/9.jpg)
THE CENTER FOR PROFESSIONAL EDUCATION
Question (4)
Bergman had two insurance policies to cover lawsuits resulting from mistakes made on audits:
• 2015. A claims-made policy from United Insurance.
• 2016. An occurrence policy from Northern Insurance
• 2017. No insurance.
Does Bergman have insurance to cover the loss?
9
![Page 10: THE CENTER FOR PROFESSIONAL EDUCATION Presentation Professional Liability (excluding D&O) AIG St. John’s University Wednesday, September 30 1](https://reader036.vdocument.in/reader036/viewer/2022062802/56649ec95503460f94bd754d/html5/thumbnails/10.jpg)
THE CENTER FOR PROFESSIONAL EDUCATION
Answer
No.• The claim was not filed during the period of
claims-made coverage.• The occurrence did not occur during the time
period of the occurrence policy.
10
![Page 11: THE CENTER FOR PROFESSIONAL EDUCATION Presentation Professional Liability (excluding D&O) AIG St. John’s University Wednesday, September 30 1](https://reader036.vdocument.in/reader036/viewer/2022062802/56649ec95503460f94bd754d/html5/thumbnails/11.jpg)
THE CENTER FOR PROFESSIONAL EDUCATION
Sources of Professional Liability
A profession is a unique form of liability for several reasons:
Defined knowledge and skills. People know what to expect from professionals.
Formal training or education. It qualifies an individual to perform at a high level.
Performance Expectation. A failure to meet the expectation can produce a lawsuit.
![Page 12: THE CENTER FOR PROFESSIONAL EDUCATION Presentation Professional Liability (excluding D&O) AIG St. John’s University Wednesday, September 30 1](https://reader036.vdocument.in/reader036/viewer/2022062802/56649ec95503460f94bd754d/html5/thumbnails/12.jpg)
THE CENTER FOR PROFESSIONAL EDUCATION
Professional Liability Insurance (1)
Who is Covered?• Errors and Omissions. Lawyers, Accountants,
Financial Planners.• Medical Professionals. Doctors, Nurses,
Dentists, Hospitals.• Directors and Officers. Corporate officers and
board members.
12
![Page 13: THE CENTER FOR PROFESSIONAL EDUCATION Presentation Professional Liability (excluding D&O) AIG St. John’s University Wednesday, September 30 1](https://reader036.vdocument.in/reader036/viewer/2022062802/56649ec95503460f94bd754d/html5/thumbnails/13.jpg)
THE CENTER FOR PROFESSIONAL EDUCATION
Professional Liability Insurance (2)
What is Covered?•E&O. Covers losses and defense costs for alleged financial harm in the service or product. •Medical Malpractice (MedMal). Covers losses caused by health care providers who do not meet expected professional standards.•Directors and Officers. Covers losses from actions outside the scope of the authorized duties or with a conflict of interest.
13
![Page 14: THE CENTER FOR PROFESSIONAL EDUCATION Presentation Professional Liability (excluding D&O) AIG St. John’s University Wednesday, September 30 1](https://reader036.vdocument.in/reader036/viewer/2022062802/56649ec95503460f94bd754d/html5/thumbnails/14.jpg)
THE CENTER FOR PROFESSIONAL EDUCATION
Errors and Omissions
Characteristics are:• Form. Claims made.• Deductible. High.• Damage. Does not cover tangible property
losses, bodily injury, libel, or slander.• Exclusions. Few. Include dishonest, fraudulent,
criminal, and malicious acts.
14
![Page 15: THE CENTER FOR PROFESSIONAL EDUCATION Presentation Professional Liability (excluding D&O) AIG St. John’s University Wednesday, September 30 1](https://reader036.vdocument.in/reader036/viewer/2022062802/56649ec95503460f94bd754d/html5/thumbnails/15.jpg)
THE CENTER FOR PROFESSIONAL EDUCATION
Medical Malpractice Coverage
Characteristics include:• Form. Claims made.• Deductible. Low.• Coverage. Individuals, groups, and
organizations.• Liability. Covers accidental acts as well as
deliberate events that are faulty.• Exclusions. Coverage limits.
15
![Page 16: THE CENTER FOR PROFESSIONAL EDUCATION Presentation Professional Liability (excluding D&O) AIG St. John’s University Wednesday, September 30 1](https://reader036.vdocument.in/reader036/viewer/2022062802/56649ec95503460f94bd754d/html5/thumbnails/16.jpg)
THE CENTER FOR PROFESSIONAL EDUCATION
MedMal Buyers
Three groups of buyers can be identified: Health Care Facilities. Hospitals, clinics,
skilled nursing centers, and rehabilitation centers.
Medical Professionals. Physicians, surgeons, dentists, and nurses.
Facilities and Professionals. Single policy covering the facility and the medical professionals that work in or with it.
1616
![Page 17: THE CENTER FOR PROFESSIONAL EDUCATION Presentation Professional Liability (excluding D&O) AIG St. John’s University Wednesday, September 30 1](https://reader036.vdocument.in/reader036/viewer/2022062802/56649ec95503460f94bd754d/html5/thumbnails/17.jpg)
THE CENTER FOR PROFESSIONAL EDUCATION
Directors and Officers
Characteristics include:• Breach of Fiduciary Duty. Failure to put the
interests of organization above own interests.• Negligence. Failure to make reasonable
decisions or actions outside the assigned role or responsibilities.
• Bad Faith. Actions outside the scope of the authorized duties or with a conflict of interest.
17
![Page 18: THE CENTER FOR PROFESSIONAL EDUCATION Presentation Professional Liability (excluding D&O) AIG St. John’s University Wednesday, September 30 1](https://reader036.vdocument.in/reader036/viewer/2022062802/56649ec95503460f94bd754d/html5/thumbnails/18.jpg)
THE CENTER FOR PROFESSIONAL EDUCATION 18
Question (1)
A hospital rents clinic space in an office building. A man was sitting in the clinic waiting to see a doctor.
• A sign on the wall said “no pets allowed.”• A patient sitting next to the man had a large dog
on a leash.• The dog bit the man on the arm.
![Page 19: THE CENTER FOR PROFESSIONAL EDUCATION Presentation Professional Liability (excluding D&O) AIG St. John’s University Wednesday, September 30 1](https://reader036.vdocument.in/reader036/viewer/2022062802/56649ec95503460f94bd754d/html5/thumbnails/19.jpg)
THE CENTER FOR PROFESSIONAL EDUCATION 19
Question (2)
• The doctor treated the bite, assuring the man that the wound was clean and he would have no problems.
• Two weeks later, doctors amputated the man’s swollen leg.
• As he recovered from surgery, the man learned the dog had rabies.
• He underwent an expensive and painful series of shots.
![Page 20: THE CENTER FOR PROFESSIONAL EDUCATION Presentation Professional Liability (excluding D&O) AIG St. John’s University Wednesday, September 30 1](https://reader036.vdocument.in/reader036/viewer/2022062802/56649ec95503460f94bd754d/html5/thumbnails/20.jpg)
THE CENTER FOR PROFESSIONAL EDUCATION 20
Question (3)
Who will the person sue for damages?
![Page 21: THE CENTER FOR PROFESSIONAL EDUCATION Presentation Professional Liability (excluding D&O) AIG St. John’s University Wednesday, September 30 1](https://reader036.vdocument.in/reader036/viewer/2022062802/56649ec95503460f94bd754d/html5/thumbnails/21.jpg)
THE CENTER FOR PROFESSIONAL EDUCATION 21
Lawsuits
The man can sue:•The office building for unsafe premises.•The hospital for unsafe premises.•The hospital for medical malpractice.•The doctor for professional malpractice.
Does insurance cover any damages awarded by the court?
![Page 22: THE CENTER FOR PROFESSIONAL EDUCATION Presentation Professional Liability (excluding D&O) AIG St. John’s University Wednesday, September 30 1](https://reader036.vdocument.in/reader036/viewer/2022062802/56649ec95503460f94bd754d/html5/thumbnails/22.jpg)
THE CENTER FOR PROFESSIONAL EDUCATION 22
Question (1)
Dentist Robert Woo used anesthesia to make a patient unconscious.
• While she sat in the dentist chair, he inserted fake boar tusks into her mouth and took pictures.
• When he revealed the practical joke, the patient sued for damages.
![Page 23: THE CENTER FOR PROFESSIONAL EDUCATION Presentation Professional Liability (excluding D&O) AIG St. John’s University Wednesday, September 30 1](https://reader036.vdocument.in/reader036/viewer/2022062802/56649ec95503460f94bd754d/html5/thumbnails/23.jpg)
THE CENTER FOR PROFESSIONAL EDUCATION 23
Question (2)
• Fireman's Fund Insurance issued a professional liability policy agreeing to pay defense costs and damages if the dentist was sued for improper or negligent medical treatment.
• The insurer denied the claim. • Woo sued the insurer. • Should he win the lawsuit?
![Page 24: THE CENTER FOR PROFESSIONAL EDUCATION Presentation Professional Liability (excluding D&O) AIG St. John’s University Wednesday, September 30 1](https://reader036.vdocument.in/reader036/viewer/2022062802/56649ec95503460f94bd754d/html5/thumbnails/24.jpg)
THE CENTER FOR PROFESSIONAL EDUCATION 24
Answer (1)
The lower court awarded dentist Robert Woo $750,000 from Fireman's Fund Insurance.
![Page 25: THE CENTER FOR PROFESSIONAL EDUCATION Presentation Professional Liability (excluding D&O) AIG St. John’s University Wednesday, September 30 1](https://reader036.vdocument.in/reader036/viewer/2022062802/56649ec95503460f94bd754d/html5/thumbnails/25.jpg)
THE CENTER FOR PROFESSIONAL EDUCATION 25
Answer (2)
A Washington state appeals court overturned a decision.
• It was not a professional liability behavior.• Putting fake boar tusks in a patient's mouth as a
joke "could not conceivably be considered" covered under a professional liability insurance policy.
![Page 26: THE CENTER FOR PROFESSIONAL EDUCATION Presentation Professional Liability (excluding D&O) AIG St. John’s University Wednesday, September 30 1](https://reader036.vdocument.in/reader036/viewer/2022062802/56649ec95503460f94bd754d/html5/thumbnails/26.jpg)
THE CENTER FOR PROFESSIONAL EDUCATION
Negligence
Negligence is the most common basis for a a professional liability lawsuit.
• Behavior. An provider failed to behave in a highly skilled manner.
• Duty. The professional had the duty to exercise a proper degree of care in a given situation.
• Harm. The behavior caused harm to an individual or property.
![Page 27: THE CENTER FOR PROFESSIONAL EDUCATION Presentation Professional Liability (excluding D&O) AIG St. John’s University Wednesday, September 30 1](https://reader036.vdocument.in/reader036/viewer/2022062802/56649ec95503460f94bd754d/html5/thumbnails/27.jpg)
THE CENTER FOR PROFESSIONAL EDUCATION 27
Presentation
Errors and Omissions
![Page 28: THE CENTER FOR PROFESSIONAL EDUCATION Presentation Professional Liability (excluding D&O) AIG St. John’s University Wednesday, September 30 1](https://reader036.vdocument.in/reader036/viewer/2022062802/56649ec95503460f94bd754d/html5/thumbnails/28.jpg)
THE CENTER FOR PROFESSIONAL EDUCATION
E&O Insurance
Characteristics:• Other Names. Professional liability insurance
(PLI). Professional Indemnity Insurance (PII).• Buyers. Professional individuals and
organizations that provide advice or service.• Coverage. Cost of defending against client
negligence claims and damages from a lawsuit or settlement.
• Exclusion. Criminal acts.
28
![Page 29: THE CENTER FOR PROFESSIONAL EDUCATION Presentation Professional Liability (excluding D&O) AIG St. John’s University Wednesday, September 30 1](https://reader036.vdocument.in/reader036/viewer/2022062802/56649ec95503460f94bd754d/html5/thumbnails/29.jpg)
THE CENTER FOR PROFESSIONAL EDUCATION
E&O Buyers
E&O insurance is purchased by individuals and organizations in:
• Consulting, Broking, and Legal Services.• Accounting and Financial Services.• Construction and Maintenance Services.• Charitable and Nonprofit Services.
29
![Page 30: THE CENTER FOR PROFESSIONAL EDUCATION Presentation Professional Liability (excluding D&O) AIG St. John’s University Wednesday, September 30 1](https://reader036.vdocument.in/reader036/viewer/2022062802/56649ec95503460f94bd754d/html5/thumbnails/30.jpg)
THE CENTER FOR PROFESSIONAL EDUCATION
Question
The wording of E&O policies can be tricky. As example:
• A professional liability policy has been issued to a lawyer.
• It covers a "negligent act, negligent error, or negligent omission.”
• A lawsuit alleges damages because a lawyer did not file a motion to dismiss a lawsuit.
• Does the policy cover legal fees and damages for the failure to file the motion?
30
![Page 31: THE CENTER FOR PROFESSIONAL EDUCATION Presentation Professional Liability (excluding D&O) AIG St. John’s University Wednesday, September 30 1](https://reader036.vdocument.in/reader036/viewer/2022062802/56649ec95503460f94bd754d/html5/thumbnails/31.jpg)
THE CENTER FOR PROFESSIONAL EDUCATION
Answer
Maybe. •It covers the loss only is negligence is proved.•Not all lawsuits involve such a motion.•The failure to file could simply be a judgment call.•Better wording would be “negligent act, error, or omission.”
31
![Page 32: THE CENTER FOR PROFESSIONAL EDUCATION Presentation Professional Liability (excluding D&O) AIG St. John’s University Wednesday, September 30 1](https://reader036.vdocument.in/reader036/viewer/2022062802/56649ec95503460f94bd754d/html5/thumbnails/32.jpg)
THE CENTER FOR PROFESSIONAL EDUCATION
Question
A dentist offered cosmetic surgery services.• A man was severely injured in an accident.• The dentist agreed to repair his teeth.• After looking more closely, the dentist said
nothing could be done.• The man alleged negligence and sued for
$300,000 in damages.• Does a professional liability lawsuit cover the
lawsuit?
32
![Page 33: THE CENTER FOR PROFESSIONAL EDUCATION Presentation Professional Liability (excluding D&O) AIG St. John’s University Wednesday, September 30 1](https://reader036.vdocument.in/reader036/viewer/2022062802/56649ec95503460f94bd754d/html5/thumbnails/33.jpg)
THE CENTER FOR PROFESSIONAL EDUCATION
Answer
Yes.
• A lawsuit related professional services.
• No damage so negligence does not apply.
33
![Page 34: THE CENTER FOR PROFESSIONAL EDUCATION Presentation Professional Liability (excluding D&O) AIG St. John’s University Wednesday, September 30 1](https://reader036.vdocument.in/reader036/viewer/2022062802/56649ec95503460f94bd754d/html5/thumbnails/34.jpg)
THE CENTER FOR PROFESSIONAL EDUCATION
Question (1)
An accountant prepares tax returns for wealthy investors.
• A client asked him to manage a trust fund for a non-profit foundation.
• He invested in high-risk and high-return securities.
• The portfolio collapsed causing the foundation to file bankruptcy.
34
![Page 35: THE CENTER FOR PROFESSIONAL EDUCATION Presentation Professional Liability (excluding D&O) AIG St. John’s University Wednesday, September 30 1](https://reader036.vdocument.in/reader036/viewer/2022062802/56649ec95503460f94bd754d/html5/thumbnails/35.jpg)
THE CENTER FOR PROFESSIONAL EDUCATION
Question (2)
• The investor accused the accountant of misconduct and sued for reimbursement of losses.
• The accountant had an E&O policy.
• Does the policy cover damages and legal fees?
35
![Page 36: THE CENTER FOR PROFESSIONAL EDUCATION Presentation Professional Liability (excluding D&O) AIG St. John’s University Wednesday, September 30 1](https://reader036.vdocument.in/reader036/viewer/2022062802/56649ec95503460f94bd754d/html5/thumbnails/36.jpg)
THE CENTER FOR PROFESSIONAL EDUCATION
Answer
Issues include:
• Is tax preparation a profession?
• Is investment advising covered for a professional accountant?
• Was informed consent present?
36
![Page 37: THE CENTER FOR PROFESSIONAL EDUCATION Presentation Professional Liability (excluding D&O) AIG St. John’s University Wednesday, September 30 1](https://reader036.vdocument.in/reader036/viewer/2022062802/56649ec95503460f94bd754d/html5/thumbnails/37.jpg)
THE CENTER FOR PROFESSIONAL EDUCATION
Informed Consent
A medical provider seeks to obtain an informed consent prior to providing a medical intervention.
This is a higher standard than asking a patient to sign a written consent form.
The professional should engage in a process of communication so the client/customer/patient understands the risks and benefits prior to authorizing a specific action or treatment
37
![Page 38: THE CENTER FOR PROFESSIONAL EDUCATION Presentation Professional Liability (excluding D&O) AIG St. John’s University Wednesday, September 30 1](https://reader036.vdocument.in/reader036/viewer/2022062802/56649ec95503460f94bd754d/html5/thumbnails/38.jpg)
THE CENTER FOR PROFESSIONAL EDUCATION
Informed Patient or Client
The professional should provide information as part of the process of securing consent to perform the agreed-upon work.
38
![Page 39: THE CENTER FOR PROFESSIONAL EDUCATION Presentation Professional Liability (excluding D&O) AIG St. John’s University Wednesday, September 30 1](https://reader036.vdocument.in/reader036/viewer/2022062802/56649ec95503460f94bd754d/html5/thumbnails/39.jpg)
THE CENTER FOR PROFESSIONAL EDUCATION
Question
A lawyer had a $10 million E&O policy.
• He lost a lawsuit.
• His client paid $3 million in damages and threatened to sue the lawyer.
• The client offered to settle for $2 million.
• The lawyer refused claiming it would damage his reputation.
• Can the insurer settle?
39
![Page 40: THE CENTER FOR PROFESSIONAL EDUCATION Presentation Professional Liability (excluding D&O) AIG St. John’s University Wednesday, September 30 1](https://reader036.vdocument.in/reader036/viewer/2022062802/56649ec95503460f94bd754d/html5/thumbnails/40.jpg)
THE CENTER FOR PROFESSIONAL EDUCATION
Answer
Current forms usually allow the insurer to settle without the insured’s consent.
40
![Page 41: THE CENTER FOR PROFESSIONAL EDUCATION Presentation Professional Liability (excluding D&O) AIG St. John’s University Wednesday, September 30 1](https://reader036.vdocument.in/reader036/viewer/2022062802/56649ec95503460f94bd754d/html5/thumbnails/41.jpg)
THE CENTER FOR PROFESSIONAL EDUCATION
Question
While errors and omissions policies are generally claims-made coverage, an extended endorsement period can be added. Who needs such an endorsement?
41
![Page 42: THE CENTER FOR PROFESSIONAL EDUCATION Presentation Professional Liability (excluding D&O) AIG St. John’s University Wednesday, September 30 1](https://reader036.vdocument.in/reader036/viewer/2022062802/56649ec95503460f94bd754d/html5/thumbnails/42.jpg)
THE CENTER FOR PROFESSIONAL EDUCATION
Answer
An extended reporting period endorsement is needed by: Professional that retires. Individual or group that changes
insurers. Individual or group that drops E&O
coverage.
42
![Page 43: THE CENTER FOR PROFESSIONAL EDUCATION Presentation Professional Liability (excluding D&O) AIG St. John’s University Wednesday, September 30 1](https://reader036.vdocument.in/reader036/viewer/2022062802/56649ec95503460f94bd754d/html5/thumbnails/43.jpg)
THE CENTER FOR PROFESSIONAL EDUCATION 43
Question (1)
A financial planner presented the following information on a company and recommended buying its stock.
Assets Debt & Capital
Cash 350B Debt 400B
Securities 500B Capital 450B
Toxic Assets 0
Total 850B Total 850B
![Page 44: THE CENTER FOR PROFESSIONAL EDUCATION Presentation Professional Liability (excluding D&O) AIG St. John’s University Wednesday, September 30 1](https://reader036.vdocument.in/reader036/viewer/2022062802/56649ec95503460f94bd754d/html5/thumbnails/44.jpg)
THE CENTER FOR PROFESSIONAL EDUCATION
Question (2)
The financial planner was aware that:• The company had sold $50 billion of toxic
assets prior to preparing the balance sheet.• It had a repurchase agreement to buy them
back one week later paying a fee of $1 billion.
.
44
![Page 45: THE CENTER FOR PROFESSIONAL EDUCATION Presentation Professional Liability (excluding D&O) AIG St. John’s University Wednesday, September 30 1](https://reader036.vdocument.in/reader036/viewer/2022062802/56649ec95503460f94bd754d/html5/thumbnails/45.jpg)
THE CENTER FOR PROFESSIONAL EDUCATION 45
Balance Sheet before Transfer
Assets Debt & Capital
Cash 300B Debt 400B
Securities 500B Capital 450B
Toxic Assets 50B
Total 850B Total 850B
![Page 46: THE CENTER FOR PROFESSIONAL EDUCATION Presentation Professional Liability (excluding D&O) AIG St. John’s University Wednesday, September 30 1](https://reader036.vdocument.in/reader036/viewer/2022062802/56649ec95503460f94bd754d/html5/thumbnails/46.jpg)
THE CENTER FOR PROFESSIONAL EDUCATION 46
Balance Sheet after One Week
Assets Debt & Capital
Cash 299B Debt 400B
Securities 500B Capital 449B
Toxic Assets 50B
Total 849B Total 849B
![Page 47: THE CENTER FOR PROFESSIONAL EDUCATION Presentation Professional Liability (excluding D&O) AIG St. John’s University Wednesday, September 30 1](https://reader036.vdocument.in/reader036/viewer/2022062802/56649ec95503460f94bd754d/html5/thumbnails/47.jpg)
THE CENTER FOR PROFESSIONAL EDUCATION
Question (3)
• The company went bankrupt.• The investor sued.
Is this covered by professional liability insurance?
47
![Page 48: THE CENTER FOR PROFESSIONAL EDUCATION Presentation Professional Liability (excluding D&O) AIG St. John’s University Wednesday, September 30 1](https://reader036.vdocument.in/reader036/viewer/2022062802/56649ec95503460f94bd754d/html5/thumbnails/48.jpg)
THE CENTER FOR PROFESSIONAL EDUCATION 48
Answer
A court would decide the dishonesty issue. Numbers come from Lehman Brothers bankruptcy case.
![Page 49: THE CENTER FOR PROFESSIONAL EDUCATION Presentation Professional Liability (excluding D&O) AIG St. John’s University Wednesday, September 30 1](https://reader036.vdocument.in/reader036/viewer/2022062802/56649ec95503460f94bd754d/html5/thumbnails/49.jpg)
THE CENTER FOR PROFESSIONAL EDUCATION
Question
A patient received medical treatment and incurred no improvement or decline in his condition. Subsequently he learned the doctor: Made the wrong diagnosis. Failed to treat the ailment. Prescribed the wrong drug.
Which of the above are examples of medical malpractice?
4949
![Page 50: THE CENTER FOR PROFESSIONAL EDUCATION Presentation Professional Liability (excluding D&O) AIG St. John’s University Wednesday, September 30 1](https://reader036.vdocument.in/reader036/viewer/2022062802/56649ec95503460f94bd754d/html5/thumbnails/50.jpg)
THE CENTER FOR PROFESSIONAL EDUCATION
Answer
None of the above. In order to be medical malpractice, the patient must be harmed or suffer a worsened condition.
5050
![Page 51: THE CENTER FOR PROFESSIONAL EDUCATION Presentation Professional Liability (excluding D&O) AIG St. John’s University Wednesday, September 30 1](https://reader036.vdocument.in/reader036/viewer/2022062802/56649ec95503460f94bd754d/html5/thumbnails/51.jpg)
THE CENTER FOR PROFESSIONAL EDUCATION
Question
In spite of efforts to reduce medical losses, they occur. Do many people die each year while undergoing medical treatment or medication?
5151
![Page 52: THE CENTER FOR PROFESSIONAL EDUCATION Presentation Professional Liability (excluding D&O) AIG St. John’s University Wednesday, September 30 1](https://reader036.vdocument.in/reader036/viewer/2022062802/56649ec95503460f94bd754d/html5/thumbnails/52.jpg)
THE CENTER FOR PROFESSIONAL EDUCATION
Hospital Deaths
Estimates are
Cause of Death Annual Deaths
Unnecessary surgery: 2,000
Medication errors: 7,000
Hospital non-medication errors: 20,000
Infections in hospitals: 80,000
Adverse effects of medications 106,000
Total 215,000
5252
![Page 53: THE CENTER FOR PROFESSIONAL EDUCATION Presentation Professional Liability (excluding D&O) AIG St. John’s University Wednesday, September 30 1](https://reader036.vdocument.in/reader036/viewer/2022062802/56649ec95503460f94bd754d/html5/thumbnails/53.jpg)
THE CENTER FOR PROFESSIONAL EDUCATION
Question
The health care industry can purchase professional liability insurance. Who are the buyers of medical malpractice insurance?
5353
![Page 54: THE CENTER FOR PROFESSIONAL EDUCATION Presentation Professional Liability (excluding D&O) AIG St. John’s University Wednesday, September 30 1](https://reader036.vdocument.in/reader036/viewer/2022062802/56649ec95503460f94bd754d/html5/thumbnails/54.jpg)
THE CENTER FOR PROFESSIONAL EDUCATION
Buyers
Three groups of buyers can be identified: Health Care Facilities. Hospitals, clinics,
skilled nursing centers, and rehabilitation centers.
Medical Professionals. Physicians, surgeons, dentists, and nurses.
Facilities and Professionals. Single policy covering the facility and the medical professionals that work in or with it.
5454
![Page 55: THE CENTER FOR PROFESSIONAL EDUCATION Presentation Professional Liability (excluding D&O) AIG St. John’s University Wednesday, September 30 1](https://reader036.vdocument.in/reader036/viewer/2022062802/56649ec95503460f94bd754d/html5/thumbnails/55.jpg)
THE CENTER FOR PROFESSIONAL EDUCATION
Question
Can professionals waive the right to sue a medical or other professional for careless behavior?
55
![Page 56: THE CENTER FOR PROFESSIONAL EDUCATION Presentation Professional Liability (excluding D&O) AIG St. John’s University Wednesday, September 30 1](https://reader036.vdocument.in/reader036/viewer/2022062802/56649ec95503460f94bd754d/html5/thumbnails/56.jpg)
THE CENTER FOR PROFESSIONAL EDUCATION
Waivers
Professionals can obtain waivers and use them to defend in professional liability lawsuits. It can take two forms:
Intentional. Conscious surrender of a right. Unintentional. Taking actions or failure to
provide proper information may waive the professional’s obligation to achieve a promised outcome.
56
![Page 57: THE CENTER FOR PROFESSIONAL EDUCATION Presentation Professional Liability (excluding D&O) AIG St. John’s University Wednesday, September 30 1](https://reader036.vdocument.in/reader036/viewer/2022062802/56649ec95503460f94bd754d/html5/thumbnails/57.jpg)
THE CENTER FOR PROFESSIONAL EDUCATION
Insurer Professional Liability
Insurance carriers are often targets of claims bordering on professional liability.
57
![Page 58: THE CENTER FOR PROFESSIONAL EDUCATION Presentation Professional Liability (excluding D&O) AIG St. John’s University Wednesday, September 30 1](https://reader036.vdocument.in/reader036/viewer/2022062802/56649ec95503460f94bd754d/html5/thumbnails/58.jpg)
THE CENTER FOR PROFESSIONAL EDUCATION
Question 问题
Who posted the following quote on its web page?
“Insurance companies are long on happy slogans, but infamous for denying . . . claims.”
谁在其网页上引用了下面这句话?“ 保险公司擅长唱高调,但却因拒赔而声名狼籍。”
58
![Page 59: THE CENTER FOR PROFESSIONAL EDUCATION Presentation Professional Liability (excluding D&O) AIG St. John’s University Wednesday, September 30 1](https://reader036.vdocument.in/reader036/viewer/2022062802/56649ec95503460f94bd754d/html5/thumbnails/59.jpg)
THE CENTER FOR PROFESSIONAL EDUCATION
Answer 回答
The Gulfport, Mississippi, law firm of Owen, Galloway & Myers. 密西西比州的一家律师事务所•The firm is your “Ally in Insurance Coverage Disputes.” 该公司是“你在保险范围争议上的盟友”•Its “experienced attorneys” represented 400 clients with property damage claims after Katrina.
公司 “经验丰富的律师”在卡特里娜飓风过后代理了400 位客户的财产损失理赔案•The firm won many bad faith claims after Katrina. 卡特里娜飓风后,该公司在很多不公平理赔案中胜诉
59
![Page 60: THE CENTER FOR PROFESSIONAL EDUCATION Presentation Professional Liability (excluding D&O) AIG St. John’s University Wednesday, September 30 1](https://reader036.vdocument.in/reader036/viewer/2022062802/56649ec95503460f94bd754d/html5/thumbnails/60.jpg)
THE CENTER FOR PROFESSIONAL EDUCATION
Question 问题
Who posted the following quote?
“You trust your insurer to help when you need it. Some insurance companies make bad faith claims. When you are the victim of bad faith claims, you need a bad faith insurance lawyer to defend your rights.”
谁发布了下面这段话?“ 你相信保险公司在需要时能够帮助你。但某些保险公司进行了不公平的理赔。当你成为不公平理赔的受害者时,你需要一位不公平保险律师来维护你的权益。”
60
![Page 61: THE CENTER FOR PROFESSIONAL EDUCATION Presentation Professional Liability (excluding D&O) AIG St. John’s University Wednesday, September 30 1](https://reader036.vdocument.in/reader036/viewer/2022062802/56649ec95503460f94bd754d/html5/thumbnails/61.jpg)
THE CENTER FOR PROFESSIONAL EDUCATION
Answer 回答
The New Orleans Law Offices of Edward A. Shamis, Jr., J.D. handles: 新奥尔良的一家律师所,他们的业务包括:•Birth injuries. Boating accidents. Brain injuries. Distracted driving accidents. Dog bite injuries. Drunk driving accidents. Fires and burns. Insurance bad faith. Medical malpractice. Motorcycle accidents. Personal injury. Premises liability. Catastrophic injuries. Back injuries. Texting and driving accidents . Trucking accidents. Workers compensation. Wrongful death.
出生创伤,划船事故,脑损伤,分心驾驶事故,狗咬伤,酒后驾车事故,火灾和烧伤,保险不公平事件,医疗事故,摩托车事故,人身伤害,物业责任,巨灾伤害,背部伤害,短信和驾驶事故,卡车事故,劳工赔偿,过失致人死亡等。
61
![Page 62: THE CENTER FOR PROFESSIONAL EDUCATION Presentation Professional Liability (excluding D&O) AIG St. John’s University Wednesday, September 30 1](https://reader036.vdocument.in/reader036/viewer/2022062802/56649ec95503460f94bd754d/html5/thumbnails/62.jpg)
THE CENTER FOR PROFESSIONAL EDUCATION 62
Leader’s Guide
Northeast Hospital Case Study
Professional Liability
![Page 63: THE CENTER FOR PROFESSIONAL EDUCATION Presentation Professional Liability (excluding D&O) AIG St. John’s University Wednesday, September 30 1](https://reader036.vdocument.in/reader036/viewer/2022062802/56649ec95503460f94bd754d/html5/thumbnails/63.jpg)
THE CENTER FOR PROFESSIONAL EDUCATION 63
Initial Visit
Janet Saunders, 43, had a physical examination by Frank Lee at Northeast Hospital.
• Her health problem involved sinuses.• Swollen with allergies.• Severe headaches.• Refused surgery three times.
![Page 64: THE CENTER FOR PROFESSIONAL EDUCATION Presentation Professional Liability (excluding D&O) AIG St. John’s University Wednesday, September 30 1](https://reader036.vdocument.in/reader036/viewer/2022062802/56649ec95503460f94bd754d/html5/thumbnails/64.jpg)
THE CENTER FOR PROFESSIONAL EDUCATION 64
An Incident
A few weeks later:• She fell down a flight of stairs.• She felt a sharp pain in her back.• She had a headache all day.
![Page 65: THE CENTER FOR PROFESSIONAL EDUCATION Presentation Professional Liability (excluding D&O) AIG St. John’s University Wednesday, September 30 1](https://reader036.vdocument.in/reader036/viewer/2022062802/56649ec95503460f94bd754d/html5/thumbnails/65.jpg)
THE CENTER FOR PROFESSIONAL EDUCATION 65
The Next Day
• Dr. Lisa Barker, a hospital chiropractor, treated her for possible back injury.
• The pain subsided.• Mrs. Saunders told Dr. Barker about the
headache.• Dr. Barker did not review the file.
![Page 66: THE CENTER FOR PROFESSIONAL EDUCATION Presentation Professional Liability (excluding D&O) AIG St. John’s University Wednesday, September 30 1](https://reader036.vdocument.in/reader036/viewer/2022062802/56649ec95503460f94bd754d/html5/thumbnails/66.jpg)
THE CENTER FOR PROFESSIONAL EDUCATION 66
Two Days Later
Dr. Lee examined Mrs. Saunders.• He concluded the headache was the result of
the fall, not the sinus problems.• He gave her a powerful pain medication.• The headache was slightly less painful.• The headache resumed its severity.
![Page 67: THE CENTER FOR PROFESSIONAL EDUCATION Presentation Professional Liability (excluding D&O) AIG St. John’s University Wednesday, September 30 1](https://reader036.vdocument.in/reader036/viewer/2022062802/56649ec95503460f94bd754d/html5/thumbnails/67.jpg)
THE CENTER FOR PROFESSIONAL EDUCATION 67
Day 36 After the Fall
Mrs. Saunders collapsed.• She was rushed to the emergency room.• She was diagnosed with a burst aneurysm.• She was completely paralyzed.
![Page 68: THE CENTER FOR PROFESSIONAL EDUCATION Presentation Professional Liability (excluding D&O) AIG St. John’s University Wednesday, September 30 1](https://reader036.vdocument.in/reader036/viewer/2022062802/56649ec95503460f94bd754d/html5/thumbnails/68.jpg)
THE CENTER FOR PROFESSIONAL EDUCATION 68
Long-term Injury
The paralysis was long term. • She needed 24-hour nursing care. • She had the ability to speak slowly.• She filed a lawsuit against Northeast Hospital,
Dr. Frank Lee, and Dr. Lisa Barker.
![Page 69: THE CENTER FOR PROFESSIONAL EDUCATION Presentation Professional Liability (excluding D&O) AIG St. John’s University Wednesday, September 30 1](https://reader036.vdocument.in/reader036/viewer/2022062802/56649ec95503460f94bd754d/html5/thumbnails/69.jpg)
THE CENTER FOR PROFESSIONAL EDUCATION 69
Alleged Negligence
She alleged the hospital and doctors failed to recognize a “sentinel bleed.”
• It led to a ruptured aneurysm.• If the doctors identified the problem, survey
would avoid the aneurysm. • The failure to identify the problem was
negligence.
![Page 70: THE CENTER FOR PROFESSIONAL EDUCATION Presentation Professional Liability (excluding D&O) AIG St. John’s University Wednesday, September 30 1](https://reader036.vdocument.in/reader036/viewer/2022062802/56649ec95503460f94bd754d/html5/thumbnails/70.jpg)
THE CENTER FOR PROFESSIONAL EDUCATION 70
Bodily Injury Liability Claim
Negligence: Failure to exercise reasonable care.• Duty to Act. • Failure to Act.• Occurrence of Loss .• Proximate Cause. A cause-effect relation-ship
must exist between the act and the loss.
![Page 71: THE CENTER FOR PROFESSIONAL EDUCATION Presentation Professional Liability (excluding D&O) AIG St. John’s University Wednesday, September 30 1](https://reader036.vdocument.in/reader036/viewer/2022062802/56649ec95503460f94bd754d/html5/thumbnails/71.jpg)
THE CENTER FOR PROFESSIONAL EDUCATION 71
Hospital MedMal Coverage
• $5 million policy limit.• $500,000 retention.• No deductible.
![Page 72: THE CENTER FOR PROFESSIONAL EDUCATION Presentation Professional Liability (excluding D&O) AIG St. John’s University Wednesday, September 30 1](https://reader036.vdocument.in/reader036/viewer/2022062802/56649ec95503460f94bd754d/html5/thumbnails/72.jpg)
THE CENTER FOR PROFESSIONAL EDUCATION 72
Physician MedMal Coverage
• $2.5 million policy limit.• $500,000 retention. • No deductibles.
![Page 73: THE CENTER FOR PROFESSIONAL EDUCATION Presentation Professional Liability (excluding D&O) AIG St. John’s University Wednesday, September 30 1](https://reader036.vdocument.in/reader036/viewer/2022062802/56649ec95503460f94bd754d/html5/thumbnails/73.jpg)
THE CENTER FOR PROFESSIONAL EDUCATION 73
Defense of Claims
PPIC pays legal and settlement costs outside policy limits.
• PPIC must defend claims.• PPIC can make the final decision on whether to
settle.
![Page 74: THE CENTER FOR PROFESSIONAL EDUCATION Presentation Professional Liability (excluding D&O) AIG St. John’s University Wednesday, September 30 1](https://reader036.vdocument.in/reader036/viewer/2022062802/56649ec95503460f94bd754d/html5/thumbnails/74.jpg)
THE CENTER FOR PROFESSIONAL EDUCATION 74
First Plaintiff Deposition
A retired doctor expert witness.• Hospital should have procedures to recognize
an aneurysm. • All three parties were negligent.
![Page 75: THE CENTER FOR PROFESSIONAL EDUCATION Presentation Professional Liability (excluding D&O) AIG St. John’s University Wednesday, September 30 1](https://reader036.vdocument.in/reader036/viewer/2022062802/56649ec95503460f94bd754d/html5/thumbnails/75.jpg)
THE CENTER FOR PROFESSIONAL EDUCATION 75
Second Plaintiff Deposition
Ear, nose, and throat specialist:• Doctors did not deviate from accepted medical
practice.• Doctors should have recognized the sentinel
bleed symptoms.• This does not mean that the doctors were
negligent.
![Page 76: THE CENTER FOR PROFESSIONAL EDUCATION Presentation Professional Liability (excluding D&O) AIG St. John’s University Wednesday, September 30 1](https://reader036.vdocument.in/reader036/viewer/2022062802/56649ec95503460f94bd754d/html5/thumbnails/76.jpg)
THE CENTER FOR PROFESSIONAL EDUCATION 76
Third Plaintiff Deposition
Mrs. Saunders’ husband:• Prior to aneurysm. was in constant pain from
her back and sinuses.• He thought about taking his wife to a hospital
but did not do it.
![Page 77: THE CENTER FOR PROFESSIONAL EDUCATION Presentation Professional Liability (excluding D&O) AIG St. John’s University Wednesday, September 30 1](https://reader036.vdocument.in/reader036/viewer/2022062802/56649ec95503460f94bd754d/html5/thumbnails/77.jpg)
THE CENTER FOR PROFESSIONAL EDUCATION 77
Defendant Expert Deposition
A neurosurgeon:• It is difficult to treat a cerebral artery bleed.• Doctors did nothing wrong• She maintained this position during intensive
questioning.
![Page 78: THE CENTER FOR PROFESSIONAL EDUCATION Presentation Professional Liability (excluding D&O) AIG St. John’s University Wednesday, September 30 1](https://reader036.vdocument.in/reader036/viewer/2022062802/56649ec95503460f94bd754d/html5/thumbnails/78.jpg)
THE CENTER FOR PROFESSIONAL EDUCATION 78
Dr. Lee Deposition
• He had seen Mrs. Saunders four times after her fall.
• She said the headache pain was easing but the back pain was constant.
• He said he saw no change to require a neurosurgeon.
![Page 79: THE CENTER FOR PROFESSIONAL EDUCATION Presentation Professional Liability (excluding D&O) AIG St. John’s University Wednesday, September 30 1](https://reader036.vdocument.in/reader036/viewer/2022062802/56649ec95503460f94bd754d/html5/thumbnails/79.jpg)
THE CENTER FOR PROFESSIONAL EDUCATION 79
Dr. Barker
• She was quite thorough and saw no signs of an aneurysm.
• She said most of her patients have headaches.• A fall could increase the severity of sinus
headaches.
![Page 80: THE CENTER FOR PROFESSIONAL EDUCATION Presentation Professional Liability (excluding D&O) AIG St. John’s University Wednesday, September 30 1](https://reader036.vdocument.in/reader036/viewer/2022062802/56649ec95503460f94bd754d/html5/thumbnails/80.jpg)
THE CENTER FOR PROFESSIONAL EDUCATION 80
Other Depositions
Six other individuals were questioned on various aspects of the case.
![Page 81: THE CENTER FOR PROFESSIONAL EDUCATION Presentation Professional Liability (excluding D&O) AIG St. John’s University Wednesday, September 30 1](https://reader036.vdocument.in/reader036/viewer/2022062802/56649ec95503460f94bd754d/html5/thumbnails/81.jpg)
THE CENTER FOR PROFESSIONAL EDUCATION 81
Plaintiff Motion #1
The plaintiff’s lawyers asked:• Permission to show a jury a videotape of “a day
in the life of Mrs. Saunders” in the long-term care facility.
• The hospital objected.
![Page 82: THE CENTER FOR PROFESSIONAL EDUCATION Presentation Professional Liability (excluding D&O) AIG St. John’s University Wednesday, September 30 1](https://reader036.vdocument.in/reader036/viewer/2022062802/56649ec95503460f94bd754d/html5/thumbnails/82.jpg)
THE CENTER FOR PROFESSIONAL EDUCATION 82
Plaintiff Motion #2
The plaintiff’s lawyers also asked:• Permission for the jury to visit Mrs. Saunders in
the hospital.• The jury should see where she will spend the
rest of her life under perpetual care.
![Page 83: THE CENTER FOR PROFESSIONAL EDUCATION Presentation Professional Liability (excluding D&O) AIG St. John’s University Wednesday, September 30 1](https://reader036.vdocument.in/reader036/viewer/2022062802/56649ec95503460f94bd754d/html5/thumbnails/83.jpg)
THE CENTER FOR PROFESSIONAL EDUCATION 83
Exercise
• The trial will start in 14 days.• Mrs. Sanders wants to settle for $6 million. • Should PPIC agree?