Essentials Of Business Law

Chapter 30

Professionals’ Liability

McGraw-Hill/Irwin Copyright © 2007 The McGraw-Hill Companies, Inc. All rights reserved.

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Professionals

Person who performs work requiring special education, experience, and knowledge Specialized work poses great risk of personal injury

or financial loss to others May need to pass a state-administered examination

and gain accreditation, certification, or a license Architects & engineers Attorneys Insurance agents & brokers

Health care providers Accountants Financial planners

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Malpractice

A specific type of negligence lawsuit in which a professional is the defendantA professional’s improper or immoral conduct in the performance of duties Carelessness Lack of knowledge

A claim of negligence must prove: Duty Breech Proximate cause Damages

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Liability Of Health-Care Providers

Physicians, can be found negligent for failure to: Render a correct diagnosis of a patient’s condition Order appropriate tests Prescribe appropriate medications Render an accurate prognosis Inform a patient of the risks involved in a particular

treatment or surgery, or of other alternatives available

Psychiatrists, can be found negligent for: Not warning third parties if a patient intends to do

harm to them

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Liability Of Health-Care Providers

Nurses, can be found negligent for: Incorrectly administering prescribed medications Failure to properly monitor a patient’s condition

Pharmacists, can be found negligent for: Dispensing drugs other than those specifically

prescribed Incorrectly dispensing drugs that cause injury to the

legal user Dispensing multiple medications, that when taken

together, cause injury

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Liability Of Accountants

Liable to clients and third parties when they fail to: Observe standards for their profession

causing clients or third parties to suffer a loss Discover or conceal evidence that a client’s

employee has been embezzling funds File appropriate and timely tax returns

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Liability Of Financial Planners

Liable to their clients when the client relies on their recommendations and suffers a lossChurning Excessive buying or selling of securities to generate

commissions

Unauthorized trading Exceeding authority as agreed to by contract

between the financial planner and the client

Unsuitability Recommendation of investments that conflict with the

client’s particular situation, needs, and desires

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Liability Of Financial Planners

Fraud or misrepresentation Intentional or negligent misstatement or non-

disclosure of a material fact relating to an investment

Transfer of account problems Deliberately obstructing the client’s desire to transfer

one or more accounts to another professional

Failure or delay in processing Neglect in complying with the client’s wishes to

purchase or sell securities in a timely fashion

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Liability Of Architects And Engineers

Architects and engineers are liable if their negligence results in: Injury to parties with whom they have

contracted or to third parties

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Liability Of Attorneys

An attorney is liable to a client if he or she fails to: Exercise due care in handling a client’s affairs Act in a timely fashion in filing claims Properly investigate matters related to a

client’s case

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Liability Of Insurance Agents And Brokers

An insurance agent or broker is liable to a client if he or she: Fails to recommend appropriate insurance and

the buyer suffers a financial loss Fails to recommend the right kind of insurance

to protect against a specific type of loss Fails to recommend appropriate amounts of

coverage

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Reducing Professionals’Risk Of Liability

Liability insurance

Attend training sessions to help reduce the risks that lead to negligent actions

Continuing education