Can a nurse jeopardise your financial health?

PALM insurance discusses the principle of vicarious liability; where employers can be held liable for the actions of anyone working under their direction.

The law on vicarious liability has been transformed in recent times, with courts prepared to find the employer liable, when previously they would have held that the employee was acting outside the course of their employment.

The judgment of the Court of Appeal in Brinks Global Services Inc v Igrox Ltd (2011) is the most recent example of the change in interpretation of the law in this area.

An Igrox employee was responsible for fumigating a sealed container holding bars of silver belonging to Brinks. Having done this, he returned later and stole 15 bars.

The Court of Appeal held that Igrox was vicariously liable for the theft by its employee. Igrox had argued that although his employment provided the employee with the opportunity to steal, his theft was not in the course of his employment.

The court confirmed that in order for a company to be held vicariously liable, the wrongful acts of the employee must have a ‘sufficiently close connection’ with their employment, so that it would be fair and just to hold the employer vicariously liable. In this case, theft by an employee from the container is considered a risk reasonably significant to the purpose for which he was employed.

PALM, a strategic partnership with MPS Risk Solutions, offers specialist insurance cover to corporate healthcare organisations for all professional liabilities. PALM has created a standalone nurse indemnity cover with RSA, which provides up to £10 million indemnity limit any one claim with no aggregate limit, which also includes Indemnity to Principal and Indemnity to Employees as standard and can meet the usual Schedule 9 requirements as necessary.

Cover is rated on a Whole Time Equivalent basis to keep it simple to arrange and administer and avoid the need to name the nurses included. This cover sits seamlessly alongside your existing indemnity arrangements.

PALM can also offer a full suite of insurances specifically designed for the health sector, providing appropriate and affordable protection. They can also provide a discounted facility to obtain CRB checks online with an average 14-day turnaround.

Dave Mackie, director of PALM insurance, said: "This case clearly demonstrates that arguments that health care employers may not be vicariously liable for the actions of a nurse performing health care task that aren’t expressly covered in his or her job description (such as independent prescribing), are no longer viable".

"It is crucial that healthcare employers review their policies, and ensure that they have the appropriate level of cover in place, so that should the worst happen, you are at least safe in the knowledge that you are financially covered."

This ruling clearly demonstrates how healthcare employers could be exposed to costly lawsuits due to the actions of their staff. However, many employers are unaware of the extent of their obligations when it comes to vicarious liability, Therefore, should a successful claim be made against them, companies can be liable to pay compensation, due to the actions of employees; including nurses whether they are indemnified individually or not.

Under a 'contract of service' agreement, an employer will always be liable for any loss or injury to a third party caused by an employee, including nurses, within the scope of their employment (the usual PAYE situation).

There are also circumstances where companies can be held vicariously liable for the actions of someone who is not their employee, such as an agent under a Contract for Service, or an independent contractor working under their direction or control.

Dave Mackie said: "While protection against vicarious liability is a well-known legal precedent it is clear that not all private healthcare providers appreciate the extent of their exposure."

"Some organisations may think they do not require the cover as nurses have their own indemnity, but leaving gaps in a policy can potentially lead to damaging compensation claims. A significant problem is that the legal position may not be resolved until after an incident has occurred, as in the Igrox case. My advice would be have the insurance in place rather than rely on a legal argument after the event, which might not prove successful, and which may result in you losing your case and being found liable to pay damages.

"Everyone working in the healthcare sector knows that these types of claims are increasing, so if appropriate insurance isn't in place within an organisation, the financial implications could be devastating."

If you would like a free no obligation review, or some more information on vicarious liability or how you could be exposed, contact PALM on:

• Tel: 08459 28 28 28
• Email: info@palm-insurance.co.uk
• Web: www.palm-insurance.co.uk

Palm Insurance is a trading style of CBG Insurance Brokers Ltd which is Authorised and Regulated by the Financial Services Authority and is a member of the CBG Group of companies.