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Nursing homes: Professional or General Liability?

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Nursing homes exist in a still-developing area of law that sometimes inconsistently applies liability rules. Nursing homes, if they are healthcare providers, are required to carry two insurance policies: professional and general. Each policy will have different requirements, coverage, and liability rules which can profoundly affect the way an injured resident’s claim is treated.

Overview of nursing home liability

Nursing homes are subject to two forms of liability if they are healthcare providers, professional and general. Professional liability arises from the providing of medical services such as diagnosing, treatment or dispensing medications. General liability refers to all other forms of responsibility that could implicate the nursing home.

Professional liability, or medical malpractice, is a broad field that covers and medical incident. The insurance policy will provide a precise definition, but it will include a “specialized” knowledge component. A medical professional is deemed to have “specialized” knowledge if she acquired it through specialized training or schooling (e.g. like a nurse or doctor).

General liability can be defined as anything for which the nursing home is liable but is not professional liability.

Defining a liability claim

Discerning whether a policy is for general or professional liability is sometimes hard to distinguish, especially in nursing homes. For example, an elderly resident is walking alone down a hallway, slips in water, and breaks a hip.

Initially, an attorney may believe this is a general liability issue, a basic slip and fall. But, it could also be argued that this was a professional failure because the resident was unsupervised therefore the nursing staff must have missed him.

The answer to the question is critical because it will determine which insurer the resident pursues. The nursing home is liable regardless. However, the nursing home probably won’t pay out the compensation; the insurance company will. Any dispute over assigning liability could significantly extend the litigation period.

Impact on litigation

While assigning payment responsibility between the insurance companies and nursing home isn’t an issue for the injured party, the problem does come up.

For instance, if the nursing home is unable to pay the compensation (i.e. it will go bankrupt) because its insurers refused to provide coverage, then some attorneys will sign a mutual litigation agreement. Joint litigation agreements mean that the injured resident and the nursing home sue the nursing home’s insurers. The injured party is entitled to their compensation while the nursing home is entitled to damages for bad faith coverage.

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