Is insurance only for those in private practice?

If you work in an agency, hospital, or large group practice, do you still need your own professional liability insurance?  Doesn’t your employer’s policy cover you?

Let’s be clear about something: your employer’s policy covers your employer, not you.  If you get into trouble your employer’s policy may cover you if it is in the best interests of your employer.

There are a number of different reasons why your employer may choose to defend you:

• In many situations an employer will be held responsible for the acts of an employee.  The legal doctrine that applies in this situation is called “respondeat superior,” and essentially means that if an employee does something wrong in the course of their employment the employer may ultimately responsible.  This makes sense: employees often work on behalf of their employer so the employer should be held responsible.  Under these situations the employer has a lot to loose and it is in the employer’s best interest to defend their employee.  But note that the interests the employer is actually defending is his/her/its own.  It just happens to be the case that the interests of the employee and employer are in alignment.

• Your employer may also calculate that, as a purely business decision, it makes financial sense to defend you.  You might be forced to take time away from work or other revenue-generating activities to defend yourself.  Your employer might simply wish to protect the bottom line and minimize losses.  Under these situations your employer chooses to defend you.

• Your employer might choose to defend you as a matter of loyalty.  Fortunately for many employees, employers choose to defend their employees as a matter of principle.  You work hard for your employer’s interests and your employer returns the favor.  It’s a very nice thing to do; cynicism hasn’t totally carried the day.  Employers that defend their employees also reap the benefits of improved workplace morale, lower turnover, etc.  But, again, this is a employer-driven choice.

Alas, if only employers and employees always got along so well….

We all wish it was the case that employers and employees made mutually beneficial commitments to each other that withstood the test of time.

We all wish employers didn’t sometimes turn on their employees (and vice versa).

We all wish that scapegoating didn’t occur.

Here are just a few of the many situations where employees are on their own:

• A defense is needed after the employee has left.  In my experience it’s fairly unusual that employers defend former employees unless the employer’s defense relies upon a finding that the employee did nothing wrong.

• There is a change in management or supervisors: relationships sour.

• Here’s a(n unfortumately) common situation: a hospital or health organization wants to dismiss an employee, and the efforts to do so involve searching for and identifying “wrongdoing” on the part of the employee.  In these cases management needs “cause” to fire an employee (this is often the case if the employee is a member of a union) and management convenes a peer review committee to make the “cause” official.  While this is ostensibly done to document the basis for the firing or dismissal, the damage doesn’t end there: peer-review committees that make a finding against a health care provider are often required to disclose that information to the Medical Board of California, which then coordinates with the appropriate licensing agency to investigate.  If a licensing agency is investigating you, you probably want an attorney.  If you have your own insurance and your professional liability policy covers board actions or administrative actions you might not have to pay for your defense out of pocket.

So even if you aren’t in private practice, it’s still a good idea to consider a professional liability policy.  Hope for the best but prepare for the unexpected.

IMPORTANT: This website is for basic information only. Nothing in this website should be construed to be formal legal advice, nor does it create an attorney-client relationship. Please see the “Important Information” page at the top of the screen