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Professional Liability Insurance Coverage in COVID-19 Litigation
By Kathryn A. Rivera on February 26, 2021
Professional Liability Insurance Coverage in COVID-19 Litigation

The COVID-19 pandemic has undoubtedly resulted in innumerable challenges to the healthcare industry and its workers.  Hospitals and other healthcare entities have been faced with staffing shortages; the expectation of quick expansion; shortages in PPE and other medical equipment; and the frequently changing guidelines surrounding patient care.  Likewise, many healthcare workers have personally grappled with shifting provider roles; ambiguities in science; a lack of public support; and personal anxieties and trauma.  Yet, at the close of nearly one year of battling this virus, both healthcare facilities and their workers are now facing a new impending threat: civil litigation.  This potential for an influx in medical negligence cases has been raising state-wide concerns over the applicability of professional liability insurance to COVID-19 related claims.  Healthcare facilities and providers should verify with their insurers whether and to what extent COVID-19 claims will be covered. 

One such issue that should be addressed is the existence of coverage for unintentional/negligent versus intentional/reckless COVID-19 transmission.  Given the highly contagious nature of this virus, it will be difficult for anyone to establish where, when or how a particular individual became infected; still, we anticipate civil claims arising from infectious spread at healthcare facilities.  Coverage of these claims will likely be determined based upon the categorization of the alleged transmission: unintentional/negligent versus intentional/recklessness.  Where an allegation of unintentional/negligent transmission is proven—the healthcare entity and providers took reasonable steps to prevent infection—coverage is expected to apply as it would to other covered claims.  However, where an allegation of intentional/reckless transmission is proven—the healthcare entity and providers knowingly placed patients at an unreasonable risk of infection—insurers may attempt to disclaim coverage thereby exposing a healthcare entity or provider to personal liability and out of pocket costs.  Intentional and reckless actions are not frequently covered in a professional liability policy.  Similarly, if the entity is self-insured, its self-insurance policy must identify these types of claims to ensure coverage.  As such, it is essential that proper risk management measures are in place and that healthcare entities and providers review their policy for communicable disease provisions, contacting their insurance carrier regarding any ambiguities.  Similarly, self-insurance policies should be reviewed to determine the extent of applicable coverage for same. 

Another critical area of discussion has been the insurance impact of the immunity legislation that became retroactively applicable on March 9, 2020.  As discussed in our prior blog post, “Immunity Statutes for Healthcare Providers and Facilities in New Jersey,” certain provisions in this legislation have raised concern.  By way of example, the text of the law withholding immunity for “reckless” conduct may lead to an increase in complaints alleging “recklessness” rather than negligence.  As previously indicated, reckless and intentional acts are generally excluded from professional liability policies, both carrier-held and self-insured; however, the definition of “recklessness” in any particular set of circumstances is guided by the applicable standard of care, which will certainly be the center of litigation following this novel COVID-19 pandemic.  Given this potential, it is critical that litigation strategies are put into place for immunity litigation and that healthcare entities and providers contact their insurance carrier to confirm whether such claims and litigation costs would be covered under their current policy.  Likewise, self-insurance policies should be reviewed for the inclusion or exclusion of such language.  

Other commonly considered issues have included the necessary shift in provider roles; the installment of retired or temporary healthcare workers due to staffing shortages; the use of telemedicine; and complications with vaccinations.  These issues should also be addressed with an insurer.

After nearly a year of combatting COVID-19 on the front lines, healthcare entities and their workers should be afforded peace of mind regarding the protections available to them should litigation be instituted.  Parker McCay, P.A.’s medical malpractice defense COVID-19 team is not only available to assist with these inquires, but it can also help better prepare the healthcare industry for the next COVID-19-related battle: lawsuits.

The content of this post is for informational purposes only and should not be construed as legal advice or legal opinion. You should consult a lawyer concerning your specific situation and any specific legal question you may have.

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