1. Professional Liability Claims & Reporting Triggers; Tips & Traps
Presented By: Lee Nestel, President CBIZ Insurance Services &
Frank Ceurvels, Business Administrator, Ramapo Indian Hills Regional High School District

2. Today’s Goal – Avoid a claim denial!
Understanding when to report
Understanding what should be reported
Understanding reporting parameters
Understanding claims process

3. Claims Made (usually E&O/Professional) vs
Claims Made (usually E&O/Professional) vs. Occurrence (usually General Liability)
Claims Made
Occurrence
The coverage trigger is the date the claim is first asserted, however circumstances which can result in a future a claim must be reported.
Be mindful of a listed Retroactive date, full prior acts is best.
The coverage trigger is the date of the incident giving rise to the claim.

4. Duty to Report vs Duty to Defend – Claims Made
When you know of a potential claim
When you have an actual covered claim
May or may not trigger defense
Will trigger defense if allegation is not excluded

5. Duty to Report
You must give prompt notice to the insurer of any claim or any circumstance which might result in a future claim against your Board
Notice must be given prior to the expiration of the policy period when you first became aware of the claim or potential claim (usually have day “grace” period). Red Alert! Check with your broker in case you have no “grace” period.

6. A Claim matter may trigger both General & Professional Liability
Example I: A student is allegedly injured in an altercation and the Notice of Tort alleges both bodily injury and violation of civil rights.
Example II: A student alleges a bully caused emotional distress which resulted in medical care in the Notice of Tort. However, when the law suit is filed it also includes an allegation of a Civil Rights violation.
When you receive a Notice of Tort, always put both the General and Professional Liability insurers on notice even if it appears to be just bodily injury.

7. Danger of Not Reporting
Prior Knowledge - Most, if not all policies exclude claims arising from any circumstance which you reasonably could expect to result in a claim and knew of the circumstances prior to the beginning of the policy period in which the claim was formally asserted.
No penalty for reporting a potential claim
Danger – You are stuck with an uninsured loss and all the negative consequences which accrue.

8. Choice of Counsel
Policy language dictates choice of counsel OR insurer assigns
If policy allows choice of counsel, it is subject to approval by insurer. An application by counsel is usually required along with a fee agreement (acceptance of the insurers fee schedule).
If policy does not allow choice of counsel (most often the case), the insurer will assign defense and take over from there. $$$ spent before assignment not counted towards deductible. Speak up if assigned counsel does not share Board’s philosophy and demand consistency.

9. Types of Claims & Communications to Report
Tort Notices (even if only BI) & Due Process Requests
Any Legal Process/Investigation (EEOC, DOE, PEOSHA, OPRA Disputes & HIB Disputes etc.)
Grievances & PERC – when circumstances could result in a future claim (ex.: discrimination & hostile work environment)
Employee Terminations for cause
Communications from Attorneys or Anyone demanding money or services

10. Types of Demands Demand for money Demand for services
Demand for specific performance – “my star child should be the lead in the play or else I will sue…” or “I want that coach fired”
Demand to stop an activity – “do not cut down those trees”

11. Matters Not Covered Legal action when the Board is the Plaintiff
Punitive Damages
Generally speaking, matters which are the subject of another policy (General Liability, Workers Comp…)
Coverage does not extend to protect 3rd parties & independent contractors (ex.: Curriculum Consultant or Grant Writer). They need to purchase coverage to protect their interests.

12. Reservation of Rights Letter (ROR)
Sent by insurer for all professional liability claims
Discusses potential aspects of a claim that could later lead to a denial. Without this letter, the insurer would be “estopped” from dropping defense coverage. The ROR is for the insurer’s benefit.
If the letter assigns counsel, it is an indication that the claim is more likely to be covered
If the letter does not assign counsel, either the claim threshold has not been met or there may be a coverage “problem”. The ROR may be a defacto coverage denial.

13. Reservation of Rights Letter (ROR) Continued
Lawsuit pleadings may include allegations of Bodily Injury (BI). The ROR will disclaim coverage for the BI aspects of the claim except with respect to employment claims alleging emotional distress. Panic Attack Alert - ROR usually does not explain that the BI portion of the claim should be addressed by the Board’s General Liability policy.
You can and should dispute an improper claim denial.

14. Non-Waivers
Letter that requires signature of the Insured (used rarely)
States the company does not believe there is coverage in the policy for the claim but will still proceed investigating it
Maintain the right to deny the claim at any point in time
May be the first step of a claim denial.
If insured refuses to sign letter, insurer likely to send a Reservation of Rights letter.

15. What Constitutes Proper Notice
What Constitutes Proper Notice? Letters, s & Legal Notices Addressed to:
Business Administrator: Yes
Board Attorney: Yes
Superintendent: Yes
Board Member: Yes
Principal: Probably
Any Other Employee: ?
Anonymous letters: ?
Best scenario - policy language stating that notice only valid if given to named positions: Super, BA, Board Attorney, or Board President

16. Claims Made Coverage; Consider Tail vs. No Tail When Changing Insurers
Policy language usually includes a “free” Automatic Tail (usually days) and Optional Tail (usually one – three years) for an additional premium
The Optional Tail extends the amount of time you have to report a claim that would have been covered by the expiring policy when you switch to a new insurer or you close your school.
Verify via written request to your Superintendent, Director of Special Services, Board Attorney and Principals whether there are any potential claims on the horizon. Prior to expiration, report all potential claims to the current insurer. Report potential claims on application for replacement coverage as well. Confirm strategy with Broker.

17. Questions?