Introduction to Professional Errors and Omissions

Professional liability arises out of a failure to render professional services competently.  Negligence is decided if there is a failure to conform to the professional standard of practice (Natl Tele Coop Assn v. Exxon Mobil Corp, U.S. District of Columbia, 04/03/01) in the community.  The standard of practice is the subject of expert testimony unless either the professional violated the law or an ethical standard, or the conduct was such that any reasonable person could determine that it fell below standards.  

PROFESSIONAL  A professional is any person who holds her or himself out as having special expertise in a field and provides a service in that field for compensation.  Most professionals have a license and have special education, but some have not. Those that have not might not be legally categorized as professionals (Chase Scientific Research v. NIA Group, NY Court of Appeals, 03/22/01).  

PROFESSIONAL RELATIONSHIP  Professionals have fiduciary relationships with their clients or patients. The professional relationship is contractual so the duties to the client or patient arise from that contract.  A licensed professional may owe a duty to, not only the client, but also to the general public.  As an example, an architect has a duty to the client to design a functional building, but also to the general public to design a safe building.  Similarly, a physician would have a duty to the public to advise of a serious and highly contagious disease.  

COVERAGE  Coverage is usually excluded by a general liability policy. Professional liability coverage for some professions is under an "occurrence" based policy, but for many others the only available coverage is under a "claims made" or "claims made and reported" form.  

INVESTIGATION  The investigation of professional liability claims should include two important elements at the outset.  The insured professional should be personally interviewed and all relevant documents obtained.  Unless negligence is obvious, informal consultation with a peer professional is the next step.  

Since a professional relationship is based on either an oral or written contract, the contracted scope of services is an important consideration.  If the contract is oral, the insured's initial communications with the client or patient need to be reconstructed.

The insured's file or chart should be copied and carefully examined.  All contracts should also be copied.

A client or patient may suffer harm without the harm being caused by a negligent professional. Accordingly, consultation with the insured and expert should focus on causation issues as well as negligence.