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Keeping up with today’s intricate risk environment can be a monumental task for occupational and environmental health and safety professionals. As an OEHS professional, it is your responsibility to ensure that the work environment is safe for all employees. This means not only adhering to industry standards and regulations, but also staying up to date on the latest research, relevant cases, and best practices.

One recent court case relevant to OEHS professionals illustrates the importance of full disclosure on applications for insurance policies. Although the case involved a medical doctor, it has significant implications for OEHS professionals who carry errors and omissions (E&O) liability insurance.

Before the court, a professional liability insurer alleged that a surgical center made material misrepresentations on its policy renewal application by failing to report that one of its doctors was issued a restriction on their license from the Medical Board. Given this failure, the insurer argued that rescission of the surgical center’s policy was appropriate. In response, the surgical center claimed that its doctor was only “publicly reprimanded and ordered to enroll in and complete a recordkeeping course” but did not have any restrictions on practicing medicine.

In its decision, the court pointed to the unambiguous language of the application form for the policy, which required the surgical center to disclose information about any former disciplinary proceedings and consequences in the last five years. Further, the application asked whether any current or former employees had ever been subject to disciplinary or investigative proceedings or had been reprimanded by a governmental license board. “If being ordered to take a course within an allocated amount of time or risk further disciplinary action from the Medical Board is not a restriction on one’s medical license, this court is not clear on what would constitute a restriction,” the court stated, implying that the failure to disclose that information would have justified rescission of the policy.

The court also held that the medical center failed to disclose several lawsuits in addition to the restriction on the doctor’s license. For these reasons, the court rendered the policy void and deprived the medical center of any coverage. 

The takeaway from this case is that, when in doubt, applicants for insurance should fully disclose information on their applications. Not doing so risks voiding any risk coverage when the event for which the insurance was purchased occurs.

For their E&O coverage to apply, OEHS professionals should be fully transparent on renewal applications to avoid material misrepresentation. Having professional liability insurance not only protects you, it also protects your clients. By demonstrating that you are properly insured, you are showing your clients that you take your responsibilities seriously and are committed to minimizing risk—especially in the workplace.

This post is based on a contribution to the December issue of Alliant Executive Liability Insights by Steve Shappell, executive vice president of Alliant Claims & Legal. For more information on executive liability, professional liability, cyber risk, employment practices liability, and more, access the issue on the Alliant website.

The observations and commentary in this post reflect the author’s understanding of the case. For additional clarity, please contact Barry Peters. More information about Alliant’s insurance product for AIHA members is available online.