Professional Liability Insurance: Is It Optional?

Events over the past two-plus years have made many nursing professionals reconsider whether they should continue to rely solely on their employer's liability insurance to protect their ability to practice as a nurse, their financial wellbeing, and even their freedom. Whether due to the pandemic or, most recently, the RaDonda Vaught case, nursing professionals have begun to question how much trust they should put in their employer's insurance to protect them.

The most common reason Nurses Service Organization (NSO) hears for a nurse not having their own coverage is that they are relying upon their employer's insurance policy. In the event of a malpractice lawsuit, your employer's policy may not protect your interests. Your employer's insurance policy is in place to protect the interests of the employer, not necessarily you. To the insurance company, the client is your employer … not you. Should there be a lawsuit, the attorney(s) on the case are obligated to achieve the best outcome for their client, your employer, whether that translates into a positive outcome for you is questionable. You may want to ask yourself: if a lawsuit is brought forth and I am named, will the attorney defending my employer have my best interests first?

Another interesting observation from speaking with nursing professionals is that no one reads the employers policy as it applies to them. Have you ever read your employer's insurance policy or were you just told that you are covered? So many nursing professionals are placing their license to practice, their career, and everything they've done to get to this point on a policy designed to protect the best interests of the employer. What if you were to make a mistake on the job? Will your employer's insurance policy react? Will it protect you? Or will you be speaking with HR? What if there is a conflict of interest between you and your employer? You may not have coverage or be viewed adversarial as was the case for RaDonda Vaught.

The other common reason for individual nursing professionals not having their own insurance is because they were told they would become a target or "deep pocket." The truth is that no one knows that you have coverage when a lawsuit is brought forth. It is only during the Discovery phase of a lawsuit that this information will be uncovered and by then you've been named in the suit. Should your involvement in the events leading to the incident be deemed negligent, then it's good to have insurance versus having to utilize your own assets to defend and/or pay for any indemnity payment. On the other hand, if you didn't have any involvement in the case (oftentimes attorneys will "throw a wide net" and include individuals listed to a certain area, floor, or station, whether working or not), then your own attorney/defense can work to have you dropped from the case (something an employer has no motivation to do).

A third reason often mentioned for not having coverage is "I don't have any money." This is a reason often given by newer-to-practice nursing professionals. The underlying premise here, of course, is that a plaintiff's attorney won't sue a nursing professional who doesn't have large assets during the Discovery phase. The fact is, should a lawsuit occur and the nursing professional be found negligent (and a percentage contribution can be deemed), a court order is brought with an amount to pay in damages. If unable to pay, an unsatisfied judgment will result in assets (for example, savings), including future garnished wages. Further, an unsatisfied judgment will then likely lead to a State Board of Nursing  (SBON) investigation spiraling into additional legal and licensure impacts.

All too often nursing professionals mistakenly view the SBON as their ally should a complaint be brought against the nurse leading to an investigation and inquiry. The biggest mistake nursing professionals make with the SBON is dismissing the allegation or complaint as trivial or as a misunderstanding that will be easily rectified. What nurses don't realize is that the mission of the SBON is to protect public health. The SBON has the power to fine, suspend, and even revoke a nurse's license to practice. Based upon NSO's statistics of licensure matters against nurses from 2015–2019, half of all complaints to the SBON against nurses end with some kind of action against their license. Unfortunately, employer policies do not cover expenses or attorney fees associated with SBON matters. This is in part because the employer is often the one making the complaint to the SBON as part of its policies.

Clearly, there are practices to help mitigate and reduce your exposure to being involved in a malpractice lawsuit and licensure investigation, but there will always be risk. As nurse staffing challenges become greater, travel nursing introduces additional risks, and incidents are scrutinized for criminal activity, take steps to reduce your risk.