The COVID effect: What’s happening to EPL claims in the US healthcare sector?

Kelly Webster and Greg Staron

We are dealing with challenges that are unprecedented in modern times. As the pandemic continues to dominate our lives and global news headlines, healthcare workers are on the frontline responding with skill, tenacity and compassion to the plight of those most seriously affected.

Individuals and institutions that provide care to coronavirus patients are in the spotlight and the conditions are ripe for social inflation to blossom, as we have seen happen frequently in recent years. With this increased media focus and public interest comes greater scrutiny of the treatment of healthcare employees as well as an obligation for employers to be both aware of, and prepared for, a potential shift in the employment practice liability (EPL) environment.

The added challenge of a global health pandemic, which brings with it a host of unprecedented risks and complex liabilities, is necessitating change in the insurance industry. More specifically, it is impacting the claims environment in the immediate term and demands that terms and conditions of coverage and wordings are reviewed to ensure they remain fit for purpose.

Evolving exposures as a result of COVID-19

As incidents of EPL claims directly related to the pandemic begin to rise, policyholders too need to consider how they can build resilience through their preparedness to deal with these new risks and to ensure they are ready to adapt, or face a heightened exposure to litigation.

At Beazley we are already seeing claims emerge in which medical providers state they have been retaliated against by their employers for raising patient safety concerns involving the treatment and spread of COVID-19.

In these extraordinary times our daily routines, both personal and professional, as well as our consideration of health and safety have changed considerably. The comfort level of individual employees regarding social distancing and PPE is likely to be far more important than it previously was, as is the individual’s need to shield themselves and their families from potential exposure to the virus.

As a result of these and other considerations, we expect to see certain types of EPL claims specific to the effect of the pandemic manifest in the following ways:

  • Increased potential for employment retaliation or wrongful termination claims resulting from an employee’s complaint about the safety of patients or employees due to a lack of PPE.
  • Retaliation against an employee for comments to, or interaction with, the press or social media which an employee feels is justified.
  • Employees making reasonable requests of their employers regarding the conditions under which they return to work and having them turned down.
  • A high-risk employee who refuses to return to work and is subsequently dismissed may pursue a claim for discrimination based on disability.
  • Departments that are deemed ‘non-essential’ in the fight against COVID-19 having staff numbers reduced or funding cut due to financial constraints, subsequently leading to claims.
  • Claims for discrimination arising over how employees were selected for inclusion in groups that were furloughed or whose pay was reduced.
  • In the instance of a labor pool having been created for furloughed employees, claims may be brought by those who are either reluctant to return to work when selected, or resentful that they have not been selected to return.

Preparing for the new normal

The impact of the coronavirus pandemic has reshaped our lives in a myriad of ways, forcing us to adapt to a new normal and to reinvent practices and processes that had previously been in place. COVID-19 has also expedited a trend that social inflation began several years ago.

From a healthcare insurers’ perspective, there has never been a more critical time to provide our brokers and policyholders with specialist service and tangible expertise with regard to both underwriting and claims handling. Maintaining a sense of proportionality and fairness in the instance of claims is paramount, as is the need for clear and consistent communication between insurers and brokers, particularly when the environment is liable to evolve more rapidly.

For healthcare organizations, being prepared means careful consideration of the current working environment and the physical and emotional challenges that employees are facing in the wake of COVID-19. Acknowledgement of the challenges – from both an employers and employees perspective – and clear, fair communication between an employer and its workforce can help to mitigate areas of possible confusion.

The risk landscape is evolving in the wake of the pandemic and failure to move with the times could have financial and reputational cost implications for healthcare sector employers. By recognizing the potential for EPL claims associated directly with the coronavirus and taking steps to work cohesively with their workforce, policyholders can provide greater support during uncertain times and manage the risk of claims inflation at a time when support and concern for healthcare workers has never been higher.

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About the author:

Greg joined Beazley in June 2011 as an Employment Practices Liability Claim Manager, and joined the Healthcare Team in October 2014 as a Healthcare Management Liability Underwriter.

Greg Staron
Greg Staron

Underwriter - Management Liability

About the author:

Kelly joined Beazley in January of 2009 as a management liability underwriter. She focuses on Directors & Officers, Employment Practices, Fiduciary and Regulatory Liability for healthcare clients. Kelly began her healthcare management liability underwriting career in 2001.

Kelly Webster
Kelly Webster

Focus Group Leader - Healthcare Management Liability