Professional Liability or General Liability: What Qualifies as the Rendering of "Professional Services"?
by Alicia R. Bromfield, Saxe Doernberger & Vita, P.C., Hamden, CT
In today's litigious society, the healthcare provider inevitably will need to turn to its insurers to cover claims and suits brought against it. Especially with increasing verdicts, it is crucial that healthcare providers and risk managers be aware of and understand what coverage is available to respond to liability claims -- and what must be done to gain access to that coverage. A healthcare provider typically has, as part of its insurance arsenal, a professional liability policy and a general liability policy. Although in the past, it was typical for a healthcare provider to purchase both policies from the same insurer, this is no longer the case due to adverse trends in the professional liability market and the increased use of self-insurance. Sometimes a healthcare provider is self-insured at the primary layer for its professional liability but purchases coverage from an insurer for its general liability. It is important to understand when a claim might be considered professional liability, when it might be considered general liability, when it might be a combination of both, and what the healthcare provider must do to ensure that it receives all of the coverage to which it is entitled.
The professional liability policy typically covers damages because of a "medical incident" resulting from "professional healthcare services." A "medical incident" is typically defined as any act or omission in the rendering or failure to render professional healthcare services. Although some policies further define by way of example what is meant by "professional services," the term "professional services" as defined by case law generally means work "requiring knowledge of an advanced type in a field of learning or science customarily acquired by a prolonged course of study of specialized intellectual instruction" or "services that require specialized skill, knowledge, learning, or attainments...." On the other hand, services requiring "training in the performance of routine, manual, or physical processes" are not considered "professional services" and will not be covered under a professional liability policy.
As evidenced by case law, it is sometimes unclear as to what type of claim falls on the professional liability side, and what type falls on the general liability side. Consider the following scenario: An elderly patient walking down a hospital hallway slips and falls on spilled water, and breaks an arm. Conceivably, a resulting claim involves the rendering or failure to render "professional services," due to the staff's failure to monitor and to prevent the patient from walking the hallways unassisted. The claim could also, however, invoke a general liability policy by way of allegations of negligence against the hospital for failing to keep the premises in a safe condition. Does the claim fall on the professional liability side or the general liability side? More importantly, should the hospital's professional liability carrier (or self-insurance) or its general liability carrier respond to the claim? Arguably, this scenario presents a mixed claim of both professional liability and general liability, and both policies should respond to the claim.
Although the definition of "professional services" is somewhat consistent from state-to-state, the application of this definition can lead to differing results as to whether a claim did, in fact, result from "professional services." In Am. Econ. Ins. Co. v. Jackson, 476 F.3d 620 (8th Cir. 2007), for example, the court held that a nurse's decision to refrain from turning on a nursing home's air conditioning during a heat wave, which led to patient deaths, involved the rendering of (or lack of rendering) professional services. The court found that, "the decision to refrain from switching the HVAC system to air conditioning for the medical benefit of the residents rested on [the nurse's] training and experience as a nurse, director of nursing and nursing home administrator. Nursing and nursing home administration are certainly occupations that require specialized knowledge and skill." In contrast, in Buckeye Ranch, Inc. v. Northfield Ins. Co., 134 Ohio Misc. 2d 10, (Ohio Misc. 2005), the court found that a behavioral health facility's decision to assign a younger patient to a room with an older, larger, and historically aggressive patient -- leading to an assault of the younger patient -- did not involve the rendering of a professional service. The court found that, "[m]aking a room assignment was a generic, administrative decision," which "did not require the exercise of specialized knowledge or skill." Likewise, consider Brockbank v. Travelers Ins. Co., 12 A.D.2d 691 (3rd Dept. 1960), where the court concluded that a patient's allegations of negligence against a provider for failing to raise bedrails leading to a patient's fall were allegations arising from a "professional service." The court noted that, "[c]learly the alleged negligence in connection with the placing, raising or adjustment of sideboards on the bed of a patient in a nursing home constitutes 'nursing service'..." and was thus excluded from coverage under a general liability's professional services exclusion. By contrast, in a factually similar scenario, the court in D'Antoni v. Sara Mayo Hospital, 144 So.2d 643 (Ct. App. La. 1962), held that: "[t]he raising of the side rail was purely a mechanical act which any unskilled person could perform. It certainly requires no professional training or knowledge." These decisions seem to be inconsistent, evidencing a lack of clear distinction in case law as to what exactly qualifies as professional liability and what qualifies as general liability.
Items to Consider
Practically, what does this "grey area" between professional liability and general liability mean to the healthcare provider and/or risk manager? If in doubt as to whether a claim falls on the professional or general liability side, the insured should consider the claim to fall potentially under both. This means providing all required notices and satisfying all conditions under any potentially applicable policies, whether they be professional liability, general liability, or excess insurance coverage. If the healthcare provider has self-insurance on the professional liability side, but is insured by a third party on the general liability side, notice of the claim should be immediately provided both to any claims administrator on the professional liability side and to the insurer on the general liability side. In addition, if the healthcare provider has excess insurance sitting above self-insurance on the professional liability side, the excess policy should be consulted to determine whether notice should be provided under that policy as well. Because notice is always an issue in insurance disputes, it is better to err on the side of caution and to provide notice to all potentially liable carriers when an insured is unclear as to whether a claim falls under the professional or general liability coverage.