Liuzzo08_CH34_PPT

8/19/2019 Liuzzo08_CH34_PPT

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Chapter 34

Professionals’

Liability


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© 2013 The McGraw-Hill Com anies Inc. All ri hts reserved.

Professional

• Professional: A person who performs highly specializedwork that depends on special abilities, education,eperience, and knowledge!

• Professionals generally are members of state and

national professional societies!• Example: "ar associations or medical societies

• #any professionals must pass a state$administeredeamination and gain accreditation, certification, or alicense before they are permitted to work in their field!

• Examples of professionals: %ealth care pro&iders 'physicians,psychiatrists, nurses, and pharmacists( and accountants!

• )uits by in*ured or damaged parties charging negligencefre+uently target professionals!

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#alpractice

• #alpractice: A professional-s improper or immoralconduct in the performance of his or her duties throughcarelessness or lack of knowledge!• .hile the term is usually applied to physicians, dentists,

attorneys, and accountants, it may be applied to allprofessionals!

• #alpractice is a specific type of negligence/ that is, themalpractice lawsuit is really a negligence lawsuit inwhich a professional is the defendant!

• 0or the purpose of the law, howe&er, there is littledifference between malpractice and negligence!

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1lements of #alpractice

• A claim of negligence must generally pro&e each of fourelements, for if e&en one of these is not present, anaction for negligence will be dismissed!• 2uty: he plaintiff must show that the defendant owed him or her

a duty to either perform an action or not perform an action!• "reach: he plaintiff must show that the defendant either acted

improperly or failed to act!

• Proimate cause: he plaintiff must show that the professionaldefendant-s act or failure to act directly caused the in*ury or loss!

• 2amages: he plaintiff must pro&e, as in all ci&il lawsuits, that heor she was in*ured or sustained some other loss as a result ofthe professional defendant-s act or failure to act!

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iability for Professional #alpractice

Liability of Health Care Providers

• A medical professional commits malpractice when his orher actions demonstrate that he or she has failed toobser&e accepted standards of performance and, as aresult, the patient suffers in*ury or death!

• 5ood )amaritan laws, which &ary greatly from state tostate, pro&ide medical professionals who renderemergency care or treatment to in*ured indi&idualsoutside the scope of their regular employment immunityfrom malpractice lawsuits!• 5ood )amaritan laws do not protect the reckless acts of medical

professionals!• Example: 6nder most 5ood )amaritan laws, a doctor who

happens upon a car accident and renders emergency aid to anin*ured passenger would be immune to a lawsuit resulting fromthe treatment!

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iability for Professional #alpractice

Liability of Health Care Providers

• Physicians• A physician-s malpractice might in&ol&e his or her failure to:

• 8ender a correct diagnosis of a patient-s condition!• 9rder appropriate tests!•

Prescribe appropriate medications!• 8ender an accurate prognosis!

• A physician also can be liable for failing to inform a patient of therisks in&ol&ed in a particular treatment or surgery or of otheralternati&es a&ailable!

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iability for Professional #alpracticeLiability of Health Care Providers (cont.)

• Physicians 'cont!(• he malpractice of a physician does not cause

in*ury or loss to third parties, ecept in cases wherethe physician-s negligence results in the patient-sdeath or permanent disability!

• ;n the case of the patient-s death, the physiciancan be held liable to a sur&i&ing spouse, children,or parents for wrongful death!

• ;f the physician-s negligence results in either thepatient-s death or disability, a spouse may re+uestdamages for loss of consortium, that is, the loss ofcompanionship!

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iability for Professional #alpracticeLiability of Health Care Providers (cont.)

• Psychiatrists• Psychiatrists and other counselors, such as clergy, psychologists, and

social workers, who learn from a patient that he or she intends to doharm to another ha&e the legal responsibility to inform the possible&ictim and the appropriate authorities!

• 0ailure to do so is considered malpractice and is also unethical!

• Nurses• 1&en though nurses customarily work under the super&ision of

physicians, a nurse can be found negligent!

• Pharmacists• Pharmacists who dispense drugs other than those specifically

prescribed by authorized professionals such as physicians also can becharged with malpractice if the incorrectly dispensed drugs cause in*uryto the legal user!

• Pharmacists are also liable if they dispense multiple medications that,when taken together, cause in*ury!

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iability of Accountants

• Accounting professionals are liable to their clientsand to third parties when they fail to obser&eestablished standards for their profession and ifsuch failure has caused clients or third parties to

suffer a loss!• An accountant is liable to a client when as a resultof his or her negligence, the accountant fails todisco&er or conceals e&idence that a client-semployee has been embezzling funds!

• )imilarly, an accountant is also liable if he or shefails to file appropriate and timely ta returns withthe result that penalties are assessed against theclient!

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iability of0inancial Planners

• 0inancial planning: A profession in whichpractitioners attempt to ad&ise their clients, whocan be either indi&iduals or businesses, of thebest ways to manage their financial affairs!

• he work of financial planners in&ol&es an initialanalysis of the client-s personal and financialsituation!• he analysis leads to recommendations that typically

in&ol&e insurance, in&estments, and pensions!• .hen the client relies on the financial planner-s

recommendations and suffers a loss, the financialplanner can be sued for negligence, but each of thefour elements of negligence must be pro&ed!

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awsuits against0inancial Planners

• #ost lawsuits against financial planners in&ol&e one ormore of the following:• Churning: 6nreasonably ecessi&e buying or selling of securities to

generate commissions!

• 6nauthorized trading: 1ceeding his or her authority as agreed to bycontract between the financial planner and the client!

• 6nsuitability: 8ecommendation of in&estments that are inconsistentwith the client-s particular situation, needs, and desires!

• 0raud or misrepresentation: ;ntentional or negligent misstatement ornondisclosure of a material fact relating to an in&estment!

• ransfer of account problems: 2eliberate obstruction of the client-sdesire to transfer one or more accounts to another professional!

• 0ailure or delay in processing: eglect in complying with the client-swishes to purchase or sell securities in a timely fashion!

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iability of Architectsand 1ngineers

• Architects design and super&ise the construction ofbuildings and other large structures!

• 1ngineers usually design de&ices or installations of acomple nature, such as bridges and power$generating

stations!• he engineering profession includes a number ofspecialties, including mechanical, electrical, and ci&ilengineering!• 1ach specialty in&ol&es work that, if done negligently, could

result in in*ury to others!

• Architects and engineers are sub*ect to lawsuits fornegligence if their work results in in*ury to parties withwhom they ha&e contracted or to third parties!

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1ample: iabilityfor Professional #alpractice

• Facts:• Bane hired the architectural firm of .illiams and Co! to

design and super&ise the construction of a four$bedroom house!

• hree years after the house was built, a consultingengineer determined that the house had been built onunstable soil, and it would gradually becomeuninhabitable!

• Kane can charge negligence on the part ofWilliams and Co., and she may collect monetarydamages.

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iability of Attorneys

• An attorney is liable to a client if he or she fails to eercisedue care in handling a client-s affairs!• ;f the attorney is in general practice, the standard of performance

is that of other attorneys engaged in similar practices in the area!• ;f the attorney is in a specialized practice, such as real estate,

family law, or immigration law, it is the performance of otherattorneys engaged in similar practice by which he or she will be

*udged!

• An attorney can be found to ha&e committed malpractice if heor she fails to act in a timely fashion in filing claims or bringingsuit before the statute of limitations epires!

• #alpractice also can be established if an attorney fails toproperly in&estigate matters related to a client-s case,such as seeking clear title to property in real estatematters!

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iability of ;nsurance Agentsand "rokers

• ;nsurance agents and insurance brokers are deemed topossess superior knowledge of insurance and to ha&ethe ability to use their epertise to protect buyers against&arious kinds of losses!• .hen an agent or broker fails to recommend appropriate

insurance and the buyer suffers a financial loss that could ha&ebeen pre&ented or reduced, the agent or broker can be chargedwith negligence!

• #alpractice on the part of insurance agents and brokersgenerally relates to either their failure to recommend the

purchase of the right kind of insurance to protect againsta specific type of loss or their failure to recommendappropriate amounts of co&erage!• Example: he agent or broker must be able to distinguish whole

life insurance from term insurance!

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1ample: iabilityfor Professional #alpractice

• Facts:• )aul consulted with okare&, a life insurance agent!• okare& recommended a whole life policy, with a face &alue

of ?@@,@@@! )aul named his wife the beneficiary!

• At the same cost, )aul could ha&e purchased a terminsurance of



9ther Professionals- iability

• #ost other types of professionals are sub*ect to lawsuitsfor negligence when they fail to perform according to thestandards epected of them!• 1ducators and their schools ha&e been sued for failure to

educate students to an epected le&el!• ra&el agents ha&e been sued for selling substandard hotel

accommodations and tours!

• 2irectors and officers of corporations ha&e been successfullysued for breach of their duty of loyalty and duty of care, resultingfrom negligence, error, or omission!

• )hareholders of corporations ha&e sued directors and officers,demanding reimbursement from the company for financial lossesresulting from an action or inaction by the director or officer!

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8educing Professionals-8isk of iability

• Professionals need to consider additionalprecautions!• #any professional groups conduct workshops and

training sessions to help members of the professionreduce the risks that lead to negligent actions and thelawsuits that fre+uently result!

• o minimize the risk of negligence, associations ofinsurance agents instruct their members on how best

to conduct themsel&es in dealing with clients!• #any states re+uire continuing education for certain

professionals in order for the indi&iduals in theprofessions to retain their licenses!

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