If you are unfamiliar with the legal claims system and someone has made a claim against you as a healthcare professional, then it is helpful for you to understand the various parties involved in a claim and their roles in the process.
In this article, we discuss key parties typically involved when a claim is brought against an insured party, the possibility of transferring claims, and the crucial distinction between employees and independent contractors.
At the heart of any insurance claim is the insured entity. This is either the individual or business that holds an insurance policy to be indemnified against potential liabilities, and is the entity against whom the claim is brought. This entity relies on their insurance coverage to protect them in the event of claims arising from their services or treatments. This party will typically have brokers with whom they can correspond to assist them in the process. The insured party should always inform their broker of any claims or potential claims against them or their business.
The claimant is entitled to make a claim against the person they allege to have caused them harm. For personal injury cases, the claimant typically has three years to commence their claim from the date of the treatment (known as the ‘cause of action’) or from the date when they knew an injury had occurred (known as the ‘date of knowledge’). The end of this three-year period is known as the ‘limitation date’, and the claimant may not be able to bring a claim against the defendant once this period has passed. It is important to bear the limitation date in mind as a claim can arise up to three years post-incident, or even later, if the claimant’s ‘date of knowledge’ arises after the alleged act/omissions when the cause of action occurred. This is often the case when the claimant has not realised that the treatment provided caused their injury, and so the three-year ‘clock’ would not start running until they first knew that the insured party’s treatment was the cause.
It is helpful to understand the nuances of an employee vs an independent contractor, because if the person who carried out the work being criticised is actually an independent contractor, it may be possible to transfer a claim to them. Transferring the claim means that you may still have to pay your policy excess as a claim has been made against you. However, if transferred, the claim will no longer continue to be pursued against you, and you can be confident that you won’t be liable for the alleged actions or omissions.
Bear in mind though, it is possible for an independent contractor to actually be treated as an employee in the eyes of the law, so there are three things that you should consider which would impact the chances of successfully transferring the claim to another party.
Firstly, you must be able to convince the claimant that this person committed the tortious act, as otherwise, they would not transfer the claim.
Secondly, you must show that this person was not an employee of your business or company. The distinction between an independent contractor and an employee lies in factors such as the level of control this person has over their work, the level of independence they have, tax arrangements, how they get paid and whether their work is for their own account or is carried out for the benefit of another by whom they have been engaged. It is also worth considering whether this person can send someone else to do their work for them and whether they are responsible for their own equipment. Therefore, where the member of staff has less control over the work they do, then they would be more likely to be seen as engaging in ‘an employment-like’ relationship, and you would be vicariously liable and unable to pass on the claim. Vicarious liability is a legal mechanism which treats you - i.e. the employer - as ‘standing in the shoes of’ the person that you engaged to provide the service.
Lastly, the courts will consider whether the person committed the tortious act during the course of their employment. For this point, you should consider whether the act/omission was closely connected to the task that they were required to do, and whether it would be fair and just to hold their employer accountable in the given situation.
If you are unable to prove one of these three requirements, it is unlikely that you will be able to transfer the claim to this person.
Where the insured party has wholly subcontracted work to another party and a claim arises related to that subcontracted work, there may be opportunities to transfer the claim and associated liability to the subcontractor.
Gaining a comprehensive understanding of parties involved in a claim, distinguishing between employee vs independent contractors, and exploring the potential to transfer a claim, can help insured parties navigate the process more effectively, if and when a claim does arise.
For more information, please contact Stella Chereshneva, Case Handler.
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