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Warning over vicarious liability lawsuits

15 August 2011

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Healthcare employers could be exposed to costly lawsuits due to the actions of their staff, according to a leading healthcare insurance broker.

Many employers are unaware of their obligations concerning vicarious liability, according to PALM Insurance. This legal principle means companies or partnerships can be liable to pay compensation should a successful claim be made against them due to the actions of employees.

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 within the scope of their employment.

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

Dave Mackie, Director of PALM Insurance, 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 smaller organisations may think they do not require the cover, but leaving gaps in a policy can potentially lead to damaging compensation claims.”

Within a partnership, partners can also be considered liable for the actions of fellow partners in work accident compensation claims. If the partnership’s liability is ‘Joint and Several’ and there is no insurance in place for the partnership, individuals can be personally liable for the acts of colleagues.

Mr Mackie said: “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.

“The principle of vicarious liability means employers can be held liable for the actions of anyone working under their direction or control, so it really shouldn’t be ignored.”