Chapter 3 – Products
& Professional Liability Claims
I. Products Liability Claims
-
Manufacturers of goods,
wholesalers, jobbers, repairers, installers and retailers can be held liable
for injuries and damages caused by the products they manufacture, fix, or sell
-
Decisions on liability
and settlement amounts must be based on prevailing judicial trends
How Claims are Made
-
There are two (2) ways
that claims are made for product liability:
I.
Arise out of breach of
contract, OR
II.
Tort; through wrongful
action of the retailer, wholesaler, manufacturer, or other party in the stream
of distribution
-
Each of the above has
its own set of rules
-
When many individuals
have experienced a common type of loss, then through a common lawyer or law
firm, the claimants can present a class action law suit
Products Liability
under Contract
-
The warranty which is
implied when a seller sells a good is that the item sold is suitable for the
purpose for which it is purchased.
Example - A hammer is used to drive nails into wood, and when a customer
purchases this tool from the hardware store, the buyer assumes it is strong
enough for the force needed to complete the task it is purchased for. The hardware store selling it implies that it
will serve its intended purpose and not cause malfunction in the course of
using the hammer.
-
Privity of contract is
established between the buyer and the seller; giving them both the power to
enforce the contract's obligations
-
The actions
demonstrated by the seller, when selling the product, warrant that the product
is reasonably fit for its purpose
-
Provincial legislation
governs the sale of goods and affirms that products sold must be warranted in
order to be fit for their intended use and merchantable quality
-
The provisions which
might limit liability for warranty of fitness are:
·
The conditions under
which the product was sold
·
Did the seller describe
the product to the customer?
·
Did the customer tell
the seller why s/he is buying the product? (implied or directly)
·
Did the customer rely
on the seller for guidance in selecting and purchasing the product?
·
The decision to buy the
product indicates that the buyer may have relied on the seller's judgement
-
The goods sold must be
in the seller's scope of business; even if it is the seller's first time
selling the goods
-
Privity of contract
gives power to the buyer to take action against the party selling a defective
product based on the breach of this warranty without proof of negligence; if someone else was injured (other than the
original buyer) by the same defective product, this person can NOT sue the
seller for breach of warranty because no contract existed; privity of contract
did NOT exist
-
Advertising and
marketing material contain implied warranties
-
A contract that exists
between the purchaser and the retailer, also exists between the retailer and
the wholesaler and the manufacturer. Any
intermediary handling the product may have damaged it during preparation for
sale. The loss adjuster should
investigate anyone in the chain of preparation that might have contributed to
the injury
-
The relationship
between purchaser, retailer, wholesaler and manufacturer may be changed by
special circumstances. The bill of sale
may contain special provisions or express warranties
-
Express
Warranty - contractual obligation set forth in
the contract to take action if a certain situation arises; example - A TV purchased from a local
electronics store has an express warranty, that if something goes wrong with
the TV, then the electronics store will arrange its repair or replacement. The contract also states that the electronics
store is not responsible for any injuries or economic loss that stem from the
malfunction of the TV.
-
Even if the express
warranty has a provision that dismisses a fundamental term of the contract, it
will probably not stand up in court
-
In Quebec, under the Civil
Code:
"Article 1726 - The seller is bound to warrant the buyer that the property and its accessories are, at the time of the sale, free of latent defects which render it unfit for the use for which it was intended…"
"Article 1726 - The seller is bound to warrant the buyer that the property and its accessories are, at the time of the sale, free of latent defects which render it unfit for the use for which it was intended…"
-
The seller, however, is
NOT bound to warrant against any latent defect known to the buyer or any
apparent defect
-
Apparent
Defect - defect that can be perceived by a
prudent and diligent buyer without the help of an expert
-
"Article 1730 -
The manufacturer, distributer…, supplier…., wholesaler…, and/or importer are
also bound to warrant the buyer in the same manner as the seller"
Products Liability in
Tort
-
A manufacturer owes a
duty to any TP who might reasonably be affected by the product even though no
contract is made between them; privity
of contract is NOT enforceable in this circumstance
-
Example - Donoghue v. Stevenson; A person bought a
bottle of ginger beer for friend. The
friend drank the beer and found a decomposed snail in the bottle. The friend suffered injuries as a result. The friend sued the manufacturer, even though
there was no contract between them. The
court agreed that manufacturer was liable for the defendant's injuries as it
was responsible for any potential consumer to ingest the product assuming it
was safe to do so.
-
A claimant must
demonstrate that the manufacturer negligently created the goods, then there
must have been:
·
Flaws in the design of
the product
·
Flaws caused in product
during manufacturing process
·
Product had a tendency
to cause injury
·
Warning labels that
were inadequate or improper
-
The questions a loss
adjuster could ask when examining a claim of negligence in the
design/manufacture of a product are:
·
Was the product
defective or was the design flawed?
·
Did the defect or
design flaw cause the injury?
·
Was the manufacturer
negligent in causing the defect?
·
Was the designer of the
product negligent?
·
Did the manufacturer
fail to exercise reasonable care?
-
The required standard
of care for the sale of products are:
·
Terms of the sales
transaction
·
Nature of the goods
·
Opportunity for
intermediate inspection may influence the standard of care
-
The standard is less
stringent if the manufacturer knows the product is only used by a large
commercial operation familiar with its product's characteristics
-
Products available to
general public must be safe for those who are not familiar with the potentially
dangerous effects
-
Standard of care is
even higher for children that it is towards the general public
-
When the design of the
product is the issue, the adjuster should investigate the answers to the
following questions:
·
How useful is the
product to the individual or to the public?
·
How likely is it to
cause harm?
·
Did the manufacturer
employ an engineer to assess the product's safety when it was being designed?
·
Is a safer design
available?
·
Is a safer product
already being manufactured?
·
Are competitive
products similar or better in quality?
·
Are competitive
products distributed with instructions and warnings that are similar?
·
How easy would it have
been to design the product differently?
·
How easily could the
consumer have avoided being injured?
·
Was the consumer aware
of the potential dangers?
-
Breach of statute is
not a cause for an action by an injured
consumer, but it may provide evidence of negligence
-
The manufacturer can't
plead that it complied with a statute as a defence to a claim, but the loss
adjuster can use the statute as a useful guide to the standard of care
-
If a manufacturer
produces an inherently dangerous product, and ignores a reasonable method to
make the product safe for consumers, the manufacturer may be judged as NOT
having exercised reasonable care.
Example - A vehicle is an inherently dangerous product and if it is not
equipped with functioning seat belts, and the manufacturer knew of this, then any
resulting injuries for occupants in that vehicle may result in a tort action
against the manufacturer. The court
would deem the manufacturer as not using reasonable care to protect the
consumers of its vehicle.
Warning and Labels
-
Manufacturers have a
duty to warn consumers about products that could pose a danger to them and
products that are defective
-
The duty of care a
manufacturer has are:
·
Providing adequate
instructions about how to use the product
·
Provide specific
instructions on how to deal with an accidental injury should it occur
-
If the defect is
discovered after a product is released into the market, then consumers must be alert
to the problem in an appropriate way
-
Consumer Product Safety
division of Health Canada establishes and enforces safety standards for
consumer products
-
Hazardous Product Act
has regulations set up for products that are likely to be a danger to the
health and safety of the public
-
For certain products
there may be more than one federal act that applies; example - cosmetics are subject to the Food
and Drug act regarding their composition, safety, labelling, and advertising
and are also subject to Consumer Packaging and Labelling Act imposing bilingual
labelling and keeping strict control over deceptive packaging
-
The reasons a loss
adjuster needs to inspect packaging and materials as part of the investigation
of a products liability claim are:
·
Foreseeable risks
associated with the use of the product was made known to the consumer
·
Analyze the information
provided
·
Packaging and labelling
criteria must meet legislated standards
·
Useful to compare
similar products of other manufacturers to compare labelling and packaging
·
Lambert
v. Lastoplex Chemicals Co - claimant was
seriously injured when he used a product to seal his floor. The pilot light in his furnace ignited the
fumes from the product resulting in injury and property damage. The warning labels were to general and only
advised of the product to be kept away from open flames. Another manufacturer of a similar product was
much more specific advising consumers to turn off pilot light in the furnace. Manufacturer was held liable for the injuries
and property damage due to insufficient warning on its labelling
-
It is often difficult
for injured parties to prove that the product was defective, but to prove that
the warning was inadequate is less complicated
-
For warnings to be
adequate they must meet the following requirements:
·
Enough information
provided to allow consumer to make an informed decision
·
The information
provided allows the consumer to accept the risk when using the product
-
If the manufacturer has
properly discharged its duty, it can rely on the defense of volenti non-fit
injuria
-
The loss adjuster must
investigate the claim of inadequate warnings/labels by:
·
Seeing if the warning
was to general
·
If other similar
products have more specific warnings/labelling addressing the loss occurrence
·
Seeing if the
misuse/abuse/improper use of the product was addressed and possible
consequences of this type of behaviour
·
If the injury suffered
by the claimant was due to inadequate or missing warnings/labelling
-
If no link between
warning and injury then the claim will be without merit and possibly
unsuccessful
-
Obvious danger; no duty
required; example - consumer who buys a knife to cut things expects the knife
to be sharp. The manufacturer doesn't
need to warn consumer that the knife may cause cuts
Dangerous Products
-
The inherent danger of
a product affects the standard of care owed to the consumer by increasing this
duty - i.e. a higher standard of care is needed
-
The chance of a
consumer to be seriously injured is greater with a product that is inherently
dangerous like fireworks, gas furnaces, guns or dangerous chemicals. As such, the manufacturer's responsibility
for taking precautions and providing warnings also increases
-
The burden of proof
shifts to the manufacturer to prove that they were not negligent
Quebec and Products
Liability in Extracontractual Matters
-
Extracontractual
liability can be assessed against the manufacturer, distributor, wholesaler, or
retailer
-
"Article 1468 -
The manufacturer of a moveable property is liable for injury caused to a TP due
to safety defect in the thing, even if it is incorporated with or placed in an
immovable for the service or operation of the immovable"
-
Same rules applies to a
person who distributes the thing, whether a wholesaler or a retailer and
whether or not he imported the thing
-
Inappropriate or insufficient
labelling and warnings are address in "Article 1469 - A thing has a safety
defect where....it does not afford the safety which a person is normally
entitle to expect, particularly by reason of a defect in the design or
manufacture of the thing, poor preservation or presentation of the thing or the
lack of sufficient indications as to the risks and dangers it involves or as to
safety precautions."
Products Claims
Investigation
-
The following are the
steps that a loss adjuster should undertake when investigating a products
liability claim:
I.
Assessing Coverage
-
Covered under CGL
policy
-
The policy may have
claims-made basis or occurrence basis coverage
-
Coverage will only
apply for BI and/or PD when the loss qualifies as an occurrence or accident
arising out of the product or the work performed; the occurrence or accident
must have happened away from the insured's premises, after control of the
product has be transferred over to the new owner or the work has been completed
-
Coverage applies when
liability is imposed on the insured by law
-
Coverage applies for
loss of use of tangible property, even if no physical injury has taken place
-
Excludes the replacing
or removing of the defective work/product
-
Exclusions usual to a
CGL policy for product's liability will be those products in the care, custody
and control of the insured
-
Excludes pure economic
loss; professional liability policy are designed to cover pure economic loss
claims; example - An accountant produced a report advising that a company was
sound financially. The accountant had
overlooked a recent construction project and as such overvalued the company's financial
standings. Investors, based on the
accountant's report, financed the company for an ambitious expansion into new
markets. Due to the overlooked
construction project, the company suffered financial hardship and the investors
lost their money. The CGL policy will
not respond to such a loss, but the accountant's professional liability policy
did respond to the claims of the investors
-
Excludes the cost of
recalling a product; example - Several
people had suffered injuries after eating canned food. To prevent more incidents, the manufacturer
issued warnings and arrange for the removal of the canned foods that remain in
the market for purchase and consumption.
The insured claimed for the expense of the recall. The policy entertained the injury claims
presented by the consumers who suffered injury, but denied the insured's claim
for cost of recall as this was a part of doing business to mitigate the injury
to others.
II.
Gathering Information
and Application of the Law
-
Information gathered
must show if the claim is due to be either breach of contract or of negligence
-
The investigation
should also show what is the relationship of the claimant and the insured, to
expose any collusion, or verify the relationship was commercially based
-
Expert should be hired
to examine any claim that alleges defect of product causing injury
-
The loss adjuster
should gather all docs like, manuals, warnings, instructions, and product
material and review them thoroughly
-
A tour of the insured's
operation with an employee who knows about the claim and the relevant
manufacturing details will be beneficial to the investigation
-
Experts like a plant
chemist having knowledge about allergies, chemical changes, or skin irritations
would need to be interviewed for these type of claims
-
The loss adjuster
should know about any hazards associated with the product and also be aware of
misunderstood characteristics that could allege one thing but be something that
is normal; example - Canned salmon has salt crystals used to preserve the meat,
but a claim was presented that glass was found in the product. Experts assured the "glass" was
really a large chunk of salt crystal that resembled glass.
-
The adjuster should
review recent precedents and case law to determine what is the likely award for
injuries suffered by the claimant; the
loss adjuster based on these case laws should suggest a reserve to accurately reflect
the probable payout of the claim
III.
Are Others Responsible
for the Defect
-
The loss adjuster
should know the chain off handling, like wholesalers and distributors to note
how the product left the manufacturer, in what condition it was received, and in
what condition did the product leave
-
If any negligence is
found and attributed to any of the entities in the chain of handling, the
subrogation or cross claim action should be taken under joint and several
liability
-
The loss adjuster
should investigate if any of the parties in the chain of handling the goods or
even the final consumer should have noticed and corrected the obvious defect,
then liability may be limited
-
The loss adjuster
should investigate if any tampering of the product alleged to have cause the
injury had taken place; the adjuster should isolate where the tampering
occurred and take the appropriate action to defend the insured
-
Learned
Intermediary Rule; principle of
intermediate examination and intervening cause;
example - consumer relies on pharmacist to be skilled in dispensing
drugs to patients. It is not the
consumer to understand the technical application associated with the product,
this should be left to the pharmacist
-
If the manufacturer does not apprise the
learned intermediary of the risk associated with the product, then the learned
intermediary cannot properly make judgements about the use of the product or
inform the consumer about the potential risk.
However, the professional is expected to have knowledge that any similar
professional, in the same field would have, and if the majority of
professionals understood the product to have potential risk, then the learned
intermediary rule would apply.
Example - A surgeon is to perform a procedure on a patient, whereby, they use an instrument to treat the patient of a physical ailment. The product is made of latex, and the surgeon is NOT made aware by the manufacturer that persons suffering from latex allergy may suffer injuries if this product is used. The surgeon reviews the patient's profile and in the report it clearly advises that the patient suffers from a latex allergy. The surgeon picks up on this and confirms with the manufacturer that the instrument is made of latex. The surgeon advises the patient the potential risks associated with the instrument, due to the latex allergy, and decides the risk is to great and treats the patient with medication instead.
Example - A surgeon is to perform a procedure on a patient, whereby, they use an instrument to treat the patient of a physical ailment. The product is made of latex, and the surgeon is NOT made aware by the manufacturer that persons suffering from latex allergy may suffer injuries if this product is used. The surgeon reviews the patient's profile and in the report it clearly advises that the patient suffers from a latex allergy. The surgeon picks up on this and confirms with the manufacturer that the instrument is made of latex. The surgeon advises the patient the potential risks associated with the instrument, due to the latex allergy, and decides the risk is to great and treats the patient with medication instead.
-
The learned
intermediary might need less information than the general public would about a
product and must take the appropriate action to mitigate any potential harm to
his/her clients
-
There is the
possibility that even if the product is used, that the accident was caused by
the negligent installation and not necessarily because a product was defective
Loss Mitigation
-
The claimant is
required to do all that is possible to mitigate their injury
-
The claimant must
undertake reasonable treatment that would improve his/her condition
-
Deductions would be
made to the settlement amount by the courts if the claimant refused to undergo
treatment that would have helped him/her to improve their condition
Contributory Negligence
-
If the consumer knows
of the defect in the product yet continues to use it or does not take
reasonable care in using it, s/he may have contributed to the cause of the
injury
-
Example - Tom didn't
read the instruction manual when installing a ceiling fan and had no knowledge
of electrical work. While installing the
ceiling fan Tom was electrocuted which resulted in his death. His surviving wife had to settle for a
reduced settlement amount because of Tom's contributory negligence.
Abnormal Use
-
If a product is used in
a way that was not intended for its purpose, then the claimant could be help
partially or fully liable for the resulting injury or damage
-
Example - "Yachetti v. John Duff & Sons
Ltd." - The claimant decided to eat pork in a raw state. The pork was distributed by the
defendant. The court ruled that pork is
to be cooked properly before being eaten and the claimant abnormally used the
product which resulted in the claimant to suffer trichinosis. Hence, the court awarded no damages to the
plaintiff.
Sensitivity of User
-
One person's allergic
reaction doesn't make the product defective
-
If the product benefits
the majority of its consumers, like a prescription drug, then the benefits will
be weighed against the minor allergic reaction of a small minority
-
The injury is more
serious and many people are affected, then the manufacturer may have a duty of
care to warn the consumer of potential allergic reaction
Volenti Non-Fit Injuria
- Voluntary Assumption of Risk
-
No liability when a
person knows of a defect and uses the product anyways
-
It is as though the
person waived their right and are no longer protected by the law
-
If enough warning is
provided about the product and the associated risk, a person who uses the
product anyways assumes the risk and has no protection from the law
-
Example - Kevin has a
sever peanut allergy. Kevin buys some
peanut butter and consumes it. Kevin
suffers from anaphylactic shock and dies.
His widow is denied any damages as it was shown that Kevin knew of the
potential risk associated with the consumption of the product and still used it. It was later discovered Kevin was upset with
his wife and committed suicide using the peanut butter.
Obvious Danger
-
When an obvious danger
exists the manufacturer does not have a duty to warn the consumer
-
Example - Exterminex
Co. manufacturers rat poison. The
product didn't have warning labels advising that after a rat consumes the poison
it will die and may cause a foul odour due to decomposition. John uses the product and the rat he meant to
kill actually dies in the wall of his living room. The decomposing carcass causes a foul
odour. John sues Exeterminex for the
cost to extract the carcass from the wall and de-odorize the house. The court ruled that Exterminex didn't have a
duty to warn that a carcass will cause foul odour and denied the plaintiff's
claim.
Strict Liability
-
The circumstances where
strict liability applies for products liability are:
·
Damages suffered when
products like dangerous goods (eg. guns, fireworks, food, drink, and medicines)
are used
·
Res
Ipsa Loquitar - circumstantial evidence shows
the manufacturer was negligent
Example - The consumer buys a new wrench and the first time he uses it, the wrench breaks causing him injury. Based on the evidence the wrench broke due to a defect, and the manufacturer of the wrench had to prove that it was not negligent in the production of the wrench.
Example - The consumer buys a new wrench and the first time he uses it, the wrench breaks causing him injury. Based on the evidence the wrench broke due to a defect, and the manufacturer of the wrench had to prove that it was not negligent in the production of the wrench.
-
Traditionally the plaintiff
must prove the defendant was negligent, but under the strict liability the onus
is reversed, where the defendant must prove s/he/it was not negligent causing
injury to the plaintiff.
Defences Against
Products Liability Claims in Quebec
-
Article 1473 in the
Civil Code provides that manufacturer has three (3) defenses if the claimant
succeeds in proving a safety defect in the product:
I.
The state of the
knowledge regarding the product in existence at the time; Example - the
manufacturer was unaware of the potential risk associated with the product
II.
The fact that a
claimant could have known about the defect and should have known its risks; Example - the claimant knew the wrench was
not designed to install plumbing equipment, but used it anyways. The wrench didn't fasten the plumbing fixture
properly and water, suddenly and accidentally, escaped the fixture causing
damage to the surrounding area.
III.
The fact that the
manufacturer made available all the proper information about the shortcomings
of the product; Example - the
manufacturer had a warning label, which was clear on the ladder, that the
maximum weight it could hold was 200 lbs.
John weighed about 275 lbs and decided to ascend the ladder to clean his
gutters. The ladder failed and John
suffered injuries as a result. The court
advised that John was aware of his overweight and the limits of the ladder and
therefore the manufacturer was not liable.
II. Professional Liability Claims
-
The legal principles
which affect the finding of liability against professionals are:
·
Law of contract;
responsibility rested with professional to perform duties owed to his/her
client within the terms of the contract between these parties
·
Hedley
Bryne & Co. v. Heller & Partners Ltd
- expanded liability to allow legal action based on negligence. A person who has a special skill has a duty
of care towards those who depend on this person for this skill. This type of liability will exist even if
there is no contract in place between the parties
-
The standard of care is
higher for professionals because they represent themselves as having superior
knowledge and skill. As such, they have
an increased level of responsibility when practicing in their field. Professionals will be tested against others
in his/her field claiming to have this superior knowledge.
Example - A surgeon will be tested against other surgeons of the same calibre. A surgeon will not be tested against a general practitioner since they have very different roles when practicing medicine.
Example - A surgeon will be tested against other surgeons of the same calibre. A surgeon will not be tested against a general practitioner since they have very different roles when practicing medicine.
-
Each professional
organization sets a standard of conduct for its members, which can be used as a
guide by the adjuster
-
The degree of skill
which the law expects from a professional is to perform to the same level as
others with similar training & practicing in the same or comparable
community
-
The professional is NOT
required to possess the highest degree of skill that can be achieved; only
accreditation that supports this person having superior knowledge against those
who have not been trained in the same manner;
specialists do NOT have to achieve perfection
-
The professional will
not be held liable for an error in judgment.
The test of liability will be whether the defendant failed to do what a
competent practitioner would customarily do given the same circumstances.
Professional Liability
Policies
-
The insurer agrees to
indemnify the insured for any sums that the insured becomes legally obligated
to pay as compensatory damages because of BI or PD caused by an accident
-
Professional liability
claims that arise from rendering or failing to render services, often relate to
purely economic loss rather than to PD
-
Errors & omissions
insurance or professional liability insurance generally provides for claims of
economic loss that arise from negligently rendering or failing to render
services
-
Policies unique to the
profession are often provided through the association or society that regulates
the profession and to which the professional must belong in order to practice
-
The professional will
also obtain a CGL policy which provides premises and operations coverage
-
There may be cases
where two (2) policies (i.e. CGL policy and professional liability policy) might
contribute to:
I.
Defence costs
II.
Indemnity payments
-
The failure of the
insured to report a claim may jeopardize any coverage under the policy, if such
failure results in the insurer to become prejudiced; the insured has a duty to
report the claim promptly to the insurer
Basis for Handling
Professional Liability Claims
-
Professional liability
claims are handled by specialist adjusters; the adjuster should have many years
of experience in general claims adjusting and be familiar with the procedures
and practices of the profession in which the claim is being made
-
Improper investigation
leads to an inappropriate claims settlement; the adjuster must act responsibly
and handle all claims with the utmost diligence and thoroughness; an improper investigated claim can result in
a law suit against the insurer and/or the adjuster
-
The adjuster can act as
a mediating influence which reduces the friction between the parties in dispute
and could help to create a positive atmosphere;
this in turn will likely lead to a final solution
-
Admission of liability
on the part of the insured is strictly prohibited; if the claim occurs the insured cannot admit
responsibility even if liability is clear;
the only time the insured can admit liability is if the insurer gives
permission to do so, otherwise such admission of liability without the
insurer's permission could result in the insurer to deny coverage
-
There is a balance to
be maintained between the insured's reputation as a professional and the
insurer's desire to close a file in an economical manner; settlement may be recommended without an
admission of negligence
Lawyers' Errors and Omissions
-
The standard which
governs the duty of care that a lawyer owes when giving legal advice are:
·
Exercise competency
while practising
·
Not liable for an error
in judgement because there is no guarantee that legal advice provided will be
interpreted in a positive light or produce a positive result
·
Provide an opinion that
is considered reasonable under the circumstances
-
Hedley
Byrne & Co v. Heller and Partners Ltd
- supports that if a lawyer gave negligent advice to a person, even if no
contract existed, and that person relied on this advice, and ultimately this
advice caused the loss, the lawyer could be responsible for the damages
suffered under tort
-
Therefore a lawyers
duty of care extends to clients as well as others to whom s/he gives advice
-
If the insured has been
negligent the adjuster will attempt to determine the cost of putting the client
into the same position as before the negligent conduct arose
Medical Malpractice
Claims
-
Canadian Medical
Protective Association, which most physicians subscribe, is there to ensure
that defenses against medical malpractice suits are skillfully managed
-
Each claim is
vigorously defended with the long-term goal of preserving the professional
reputation of physicians
-
Most legal experts in
medicine tend to be on the side of defendants
-
Patients who make a
case against doctors can bring their claims to the applicable provincial
college of physicians and surgeons
-
The colleges, as per
legislation, are put in place to detect incompetent or unethical doctors,
rather than to further the interests of doctors
-
The types of medical
negligence that often occurs are:
·
Burns from an electric
cauterizer
·
Allergic reaction to a
drug prescribed
·
Sponges left in the
patient after an operation
·
Removal of the wrong
organ
-
Parties that could also
be involved in medical negligent claims are:
·
Attending doctor
·
Nurse
·
Other professional
staff (e.g. anesthesiologist, PSW, orderlies, etc.)
·
Hospital
·
Combination of any of
the above
-
An uninvolved doctor
will offer the unbiased expert testimony needed to deny an allegation of
negligence
-
The role of a
consulting medical expert can play in assessing medical malpractice claim are:
·
Assessment of injury
severity of the claimant to allow the adjuster to develop a suitable plan of
investigation
·
To assess if treatment
or procedure was appropriate and executed with competency
·
What type of injuries
were suffered?
·
Is the injury a result
of a negligent act?
·
How much is the claim
worth?
-
The consulting medical
expert will make an assessment of the injury so the adjuster can evaluate the
severity of the case and develop a suitable plan of investigation
-
The loss adjuster
requires permission from the patient (claimant) to obtain hospital
records; the hospital board may or may
not release the information to the adjuster
-
If the hospital board
doesn't release the information to the adjuster, the adjuster must apply to the
court for release of the documents
-
The relationship
between the doctor and the hospital must be described; i.e. doctors experience,
education, and the title he has with the hospital
-
The surgeon must have
the patient's permission in order to proceed with the procedure; the consent can either be oral or written
depending on the jurisdiction
-
Battery
- is a tort when a doctor doesn't have consent to operate on a patient; an individual has the right over their own
body; exception to having consent is if the patient is in a life threatening
medical emergency and consent from the patient is not possible
-
Claims for by-products
are not considered; e.g. surgery hurts and the incision will leave a scar are
expected by-products when a patient undergoes a procedure
-
When there is a doubt
about disclosing the risk, the question to be asked is "Would a reasonable
person have consented to the treatment knowing the risks?"
-
For a medical
malpractice case the burden of proof rests with the patient to show the doctor
was negligent in treatment and advice
-
It is quite rare for a
doctor to be found in breach of the medical standard of care in Canada; an
error in judgement on the part of the doctor will not necessarily equate to
negligence
-
To qualify for the act
to be negligent, the error is one that would not have been made by a reasonably
competent professional acting with ordinary care and having the usual standard
and type of skill expected of such an individual
-
A treatment that fails,
causing a adverse outcome, is not evidence of negligence
-
Another situation where
negligence is not applicable is if the doctor failed to diagnose an illness but
the natural progression of a patient's disease would not have changed and the
only treatment was palliative or the masking of the symptoms; for many
illnesses a delay in treatment will not necessarily have any harmful effects
Dental Malpractice
Claims
-
Claims made against
dentists are investigated in a similar fashion as claims made against medical
practitioners
-
The elements that must
be examined in a dental malpractice claim are:
·
Issues of consent
·
Issue of battery; did
the claimant give permission to the dentist to examine or touch him/her; if consent was not obtained then the tort of
battery may apply
·
Exact standards applied
to specialists
·
Is there a link between
injury and breach of the standard of care
·
Before an operation did
the dentist explain the procedure and any inherent dangers to the patient
Druggists' Errors and
Omissions Claims
-
Claims that are made
against druggist involve the dispensing of drugs
-
The adjuster in the
course of the investigation must determine:
·
If the druggist
recommended the drug
·
What was the cause of injury?
- a side effect of the drug - a substituted but medically accepted drug - the
wrong drug
·
If the drug was the
cause of injury then what dosage was given?
·
Did the druggist
clearly present to the claimant the instructions on how to take the drugs? What food and/or drink to avoid? How often to take the drug and in what time
intervals or what time of the day?
·
Did the claimant ignore
the instructions and/or warnings of the druggist?
-
In a druggist liability
claim the parties that might be responsible for injury are:
·
Druggist
·
Manufacturer
·
Doctor who prescribed
the drug
·
Claimant
-
In most cases liability
will be shared amongst the above parties
Architects' and
Engineers' Errors and Omissions
-
Architects are closely
associated with engineers; the adjuster may have to distinguish between who is
responsible for a particular function
-
Possibility of joint
tortfeasors exists; example - public officials may share in liability because
they failed to properly examine the plans or the work
-
The contract of
employment should be reviewed by the adjuster as this doc will set out what
services were required of the professional for that particular job; the amount of involvement may affect the
degree of liability
-
Other docs that should
be obtained for a thorough investigation are:
·
Minutes of all site
meetings; records discussions about the problems encountered during
construction
·
Copies of all
deficiency lists; method used to record failures and defects on a job
-
The three (3) areas
where architects and engineers may be found negligent are:
·
Inadequate site
inspection
·
Negligent proposals
·
Defective designs,
plans or specifications
-
Expert that is usually
hired in cases of claims are independent architect or engineer, who will
establish the cause of the mishap and provide expert testimony if necessary
-
Once the investigation
yields the exact cause of the loss, the investigation then shifts to who was
involved in that particular activity or area; example - the architect may have
miscalculated the bearing stresses on a steel beam and ordered the wrong size
beam. The manufacturer may have supplied
the architect with erroneous information about the strength of the beam, which
the architect used in his/her calculation, leading to the loss
-
A law suit can be
presented by the owner who contracted the work or the subsequent purchaser of
the property
Directors' and
Officers' Liability Claims
-
Directors and officers
can be held personally liable if they do not perform competently, diligently,
prudently, and honestly; they must perform in good faith
-
Federal and provincial
legislation may govern the duties and responsibilities of directors and
officers
-
To assess liability the
loss adjuster must ask:
·
Would a prudent person
in a similar circumstance with comparable knowledge act in this way?
-
Business
Judgement Rule - allows directors to make
decisions without fear as long as duties are discharged in good faith and in
the best interest of the corporation;
this rule allows any resulting damage for a decision made by a director to
be free of negligence, as long as the director made the decision in good faith
and in the best interest of the corporation
-
For the a thorough
investigation the loss adjuster should review the charter and bylaws of the
company as this document will describe the mandate and limitations that the
director must operate within
-
The loss adjuster
should look for any communications that the director has made, as s/he may have
records of disagreements with certain activity which is now the focus of a
lawsuit; this will provide a defense in favour of the director
-
The activities of the
director, which were brought to light through the investigation, must
determine:
·
Review corporate law,
taxation law, environmental law, employment law, or securities law to assess
liability
·
If liability exists
·
To ensure that the
director has not engaged in activities that will exclude coverage under the
policy
Policy Coverage
Considerations
-
Professional liability
policies are sold under a claims-made form and usually exclude any prior acts
-
Prior
Act Exclusion - preclude of coverages for
wrongful conduct that took place prior to the inception date of the policy
-
The loss adjuster must
determine:
·
The date of loss when
the wrongful act took place
·
When the damage
manifested itself
·
When the company or
director first knew that a potential claim existed
·
When the director was
given notice that the action would be taken
-
There are usually two
(2) insuring agreements:
I.
Indemnifying the
director or officer
II.
Reimbursing the
corporation
-
When only the
corporation has been sued and not the directors, a Directors' and Officers'
Liability policy may not provide coverage for the defence of the corporation
-
If both the corporation
and the director are sued the policy may provide an allocation formula to
apportion defence costs if the corporation is not insured
Miscellaneous
Professional Liability
-
Diverse groups carry
professional liability insurance like:
·
Beauticians
·
Undertakers
·
Real estate agents
·
Insurance adjusters
·
Brokers
-
The policy will be
modified based upon the specialized skills and types of exposure relevant to
that profession
-
The standard of care
will also depend on the knowledge, work and training afforded to the
professional and they will be judged based on others in their field; example - a beautician's actions will be
compared to other beauticians of the same class to see if the standard of care
was exercised properly or negligently
Loss Control
-
The adjuster's report
may help in future loss control activities, since the exposure of the claim
should have been addressed in the report
-
Information concerning
an insured's lack of controls or faulty procedural practices should be
forwarded to underwriters for review; this may lead to changes in underwriting
rules or questionnaires to determine if future or existing lines of insurance
should be continued or discontinued