Professional Indemnity Insurance: When to notify a potential claim

When things go wrong, combined liability insurance can provide much needed financial assistance for legal and compensation costs in the event action is taken against you.

As with all insurance covers, there is a range of conditions and obligations under your insurance contract that you need to understand. A common area that is often misunderstood is when to contact your insurer regarding an incident involving a patient a nurse is treating. This article tells you why reporting is important and the implications you might face if you don’t report.

Why do I have to report?

The combined liability policy being offered to APNA members by Insurance House includes Professional Indemnity Insurance and is issued on a ‘claims made and notified’ basis, which means the policy responds to claims first made against the insured during the policy period, and notified to the insurer during that same policy period. In short, for a claim to be covered your policy must have been in place at the time the allegation was made against you, and when the claim is lodged.

However, many health professionals believe that until a formal notification or demand is received they do not need to report the incident to their insurer. Under the terms of the policy, section 7 – Claims Conditions, there is a specific requirement for notification as follows: 7.1. This policy applies only to claims first made against you during the period of insurance and notified to us during the period of insurance. 7.2. A claim is considered to be first made against you when you:  

(a) Receive a demand for compensation or damages or an assertion of a financial right made by a third party in writing to you; or 
(b) Receive any writ, statement of claim, summons, application or other originating legal or arbitral process, cross-claim, counterclaim or third or similar party notice served upon you and claiming compensation, damages
or other civil rights or remedies against you.

We have underlined the word ‘assertion’ as this is where many insured professionals can become confused. What this means is that you are obligated to inform your insurer as soon as possible after you first become aware of a situation. This could potentially result in a claim being made, even if your patient or the third party has not yet formally made an official complaint or engaged a lawyer. So, in other words, you must advise your insurance provider.  

When should I report? 

Here are the types of incidents that may require a notification:

• Any mistake, oversight or omission in your work that you are aware of that could possibly lead to a claim being made, even if your patient is not yet aware of it.
• A patient has criticised or complained about your work, even if you feel the criticism is unjustified.
• A patient is refusing to pay for work you have completed that they are unhappy with. 
• Any comments or remarks a patient makes that indicates that they may make a claim against you, either now or in the future, even if you feel they are empty threats.
• Any instances where you are accused of failing to provide a service as promised or advertised. 
• If a complaint is made about you to your industry body or licensing board such as the Nursing and Midwifery Board of Australia. 

While each of the above appears onerous it is actually common sense and most, if not all, nurses would be aware of when things don’t go quite as planned.

What if I don’t report?

The key to it all is– if in doubt, report. A failure to notify your insurer as soon as reasonably possible could, in the worst-case scenario, lead to your claim being rejected. So even if you’re unsure whether it’s worth letting them know or not, it’s in your best interest to do so. 

But surely when it’s only a small issue I can handle it myself?

Another common misconception and problem are where we believe we can solve those small issues ourselves.

We assume:

• What could possibly be the issue in refunding fees to appease the patient’s complaint? or
• Since we have insurance, letting the patient know when something happens wouldn’t affect us. In both circumstances, no matter how small the problem is, you may inadvertently admit liability which can result in your insurer suffering prejudice and jeopardise the chance of your claim being paid. 

So, once again, reporting such issues prior to taking action yourself will allow us to guide and provide the appropriate response to hopefully settle the matter quickly and efficiently before escalating. Similarly, nurses may receive a letter from the Nursing and Midwifery Board of Australia and disagree with the allegations being made against them or not consider them serious. They might also feel it is easier to just respond directly without involving the insurer.

Time and time again we have seen the matter escalate to an investigation or even further to a hearing before an insured advises us of the matter. Not only can this prejudice your registration or result in conditions being imposed, which takes time away from your work, it can also jeopardise the chance of receiving assistance under your policy from the insurer. 

On the other hand, when informed the insurer can take the step of appointing solicitors who have expertise with the disciplinary process and will assist you with your communications to the regulatory body. This will hopefully resolve the notification early, avoid an investigation or hearing, and minimise any repercussions on your professional registration.

Take away message

Many nurses will never have a claim or complaint made against them. However, if it does happen contact Insurance House and let us do the worrying for you. We can guide, assist and ultimately alleviate what can soon become a very stressful experience if not managed correctly. The reason you have insurance is to protect you in the event of a claim – keep this in mind the next time something happens. As a nurse, your goal is to ensure the health and wellbeing of patients; your insurance, when used correctly, provides you with the financial treatment program to restore your reputational health if things go wrong. 

Find out more about APNA’s member policy with Insurance House – including frequently asked questions, compare your cover checklist, and information about the free legal hotline – at www.apna.asn.au/insurance.

Source: Primary Times Summer 2017 (Volume 17 Issue 4)