Chapter 34

Professionals
Liability

34-2

Professional

Professional: A person who performs highly specialized

work that depends on special abilities, education,
experience, and knowledge.
Professionals generally are members of state and
national professional societies.
Example: Bar associations or medical societies

Many professionals must pass a state-administered

examination and gain accreditation, certification, or a
license before they are permitted to work in their field.
Examples of professionals: Health care providers (physicians,
psychiatrists, nurses, and pharmacists) and accountants.

Suits by injured or damaged parties charging negligence

frequently target professionals.

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Malpractice

34-3

Malpractice: A professionals improper or immoral

conduct in the performance of his or her duties through
carelessness or lack of knowledge.
While the term is usually applied to physicians, dentists,
attorneys, and accountants, it may be applied to all
professionals.

Malpractice is a specific type of negligence; that is, the

malpractice lawsuit is really a negligence lawsuit in
which a professional is the defendant.
For the purpose of the law, however, there is little
difference between malpractice and negligence.

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34-4

Elements of Malpractice

A claim of negligence must generally prove each of four

elements, for if even one of these is not present, an
action for negligence will be dismissed.
Duty: The plaintiff must show that the defendant owed him or her
a duty to either perform an action or not perform an action.
Breach: The plaintiff must show that the defendant either acted
improperly or failed to act.
Proximate cause: The plaintiff must show that the professional
defendants act or failure to act directly caused the injury or loss.
Damages: The plaintiff must prove, as in all civil lawsuits, that he
or she was injured or sustained some other loss as a result of
the professional defendants act or failure to act.

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Liability for Professional Malpractice

Liability of Health Care Providers

34-5

A medical professional commits malpractice when his or

her actions demonstrate that he or she has failed to
observe accepted standards of performance and, as a
result, the patient suffers injury or death.
Good Samaritan laws, which vary greatly from state to
state, provide medical professionals who render
emergency care or treatment to injured individuals
outside the scope of their regular employment immunity
from malpractice lawsuits.
Good Samaritan laws do not protect the reckless acts of medical
professionals.
Example: Under most Good Samaritan laws, a doctor who
happens upon a car accident and renders emergency aid to an
injured passenger would be immune to a lawsuit resulting from
the treatment.

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Liability for Professional Malpractice

Liability of Health Care Providers

34-6

Physicians
A physicians malpractice might involve his or her failure to:

Render a correct diagnosis of a patients condition.

Order appropriate tests.
Prescribe appropriate medications.
Render an accurate prognosis.

A physician also can be liable for failing to inform a patient of the

risks involved in a particular treatment or surgery or of other
alternatives available.

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Liability for Professional Malpractice

Liability of Health Care Providers (cont.)

34-7

Physicians (cont.)
The malpractice of a physician does not cause
injury or loss to third parties, except in cases where
the physicians negligence results in the patients
death or permanent disability.
In the case of the patients death, the physician
can be held liable to a surviving spouse, children,
or parents for wrongful death.
If the physicians negligence results in either the
patients death or disability, a spouse may request
damages for loss of consortium, that is, the loss of
companionship.

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Liability for Professional Malpractice

Liability of Health Care Providers (cont.)

34-8

Psychiatrists
Psychiatrists and other counselors, such as clergy, psychologists, and
social workers, who learn from a patient that he or she intends to do
harm to another have the legal responsibility to inform the possible
victim and the appropriate authorities.
Failure to do so is considered malpractice and is also unethical.

Nurses
Even though nurses customarily work under the supervision of
physicians, a nurse can be found negligent.

Pharmacists
Pharmacists who dispense drugs other than those specifically
prescribed by authorized professionals such as physicians also can be
charged with malpractice if the incorrectly dispensed drugs cause injury
to the legal user.
Pharmacists are also liable if they dispense multiple medications that,
when taken together, cause injury.

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34-9

Liability of Accountants

Accounting professionals are liable to their clients

and to third parties when they fail to observe
established standards for their profession and if
such failure has caused clients or third parties to
suffer a loss.
An accountant is liable to a client when as a result
of his or her negligence, the accountant fails to
discover or conceals evidence that a clients
employee has been embezzling funds.
Similarly, an accountant is also liable if he or she
fails to file appropriate and timely tax returns with
the result that penalties are assessed against the
client.
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Liability of
Financial Planners

34-10

Financial planning: A profession in which

practitioners attempt to advise their clients, who

can be either individuals or businesses, of the
best ways to manage their financial affairs.
The work of financial planners involves an initial
analysis of the clients personal and financial
situation.
The analysis leads to recommendations that typically
involve insurance, investments, and pensions.
When the client relies on the financial planners
recommendations and suffers a loss, the financial
planner can be sued for negligence, but each of the
four elements of negligence must be proved.
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Lawsuits against
Financial Planners

34-11

Most lawsuits against financial planners involve one or

more of the following:
Churning: Unreasonably excessive buying or selling of securities to
generate commissions.
Unauthorized trading: Exceeding his or her authority as agreed to by
contract between the financial planner and the client.
Unsuitability: Recommendation of investments that are inconsistent
with the clients particular situation, needs, and desires.
Fraud or misrepresentation: Intentional or negligent misstatement or
nondisclosure of a material fact relating to an investment.
Transfer of account problems: Deliberate obstruction of the clients
desire to transfer one or more accounts to another professional.
Failure or delay in processing: Neglect in complying with the clients
wishes to purchase or sell securities in a timely fashion.

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Liability of Architects
and Engineers

34-12

Architects design and supervise the construction of

buildings and other large structures.
Engineers usually design devices or installations of a
complex nature, such as bridges and power-generating
stations.
The engineering profession includes a number of
specialties, including mechanical, electrical, and civil
engineering.
Each specialty involves work that, if done negligently, could
result in injury to others.

Architects and engineers are subject to lawsuits for

negligence if their work results in injury to parties with
whom they have contracted or to third parties.

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Example: Liability
for Professional Malpractice

34-13

Facts:
Kane hired the architectural firm of Williams and Co. to
design and supervise the construction of a fourbedroom house.
Three years after the house was built, a consulting
engineer determined that the house had been built on
unstable soil, and it would gradually become
uninhabitable.

Kane can charge negligence on the part of

Williams and Co., and she may collect monetary

damages.
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34-14

Liability of Attorneys

An attorney is liable to a client if he or she fails to exercise

due care in handling a clients affairs.
If the attorney is in general practice, the standard of performance
is that of other attorneys engaged in similar practices in the area.
If the attorney is in a specialized practice, such as real estate,
family law, or immigration law, it is the performance of other
attorneys engaged in similar practice by which he or she will be
judged.

An attorney can be found to have committed malpractice if he

or she fails to act in a timely fashion in filing claims or bringing
suit before the statute of limitations expires.

Malpractice also can be established if an attorney fails to

properly investigate matters related to a clients case,
such as seeking clear title to property in real estate
matters.
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Liability of Insurance Agents

and Brokers

34-15

Insurance agents and insurance brokers are deemed to

possess superior knowledge of insurance and to have
the ability to use their expertise to protect buyers against
various kinds of losses.
When an agent or broker fails to recommend appropriate
insurance and the buyer suffers a financial loss that could have
been prevented or reduced, the agent or broker can be charged
with negligence.

Malpractice on the part of insurance agents and brokers

generally relates to either their failure to recommend the
purchase of the right kind of insurance to protect against
a specific type of loss or their failure to recommend
appropriate amounts of coverage.
Example: The agent or broker must be able to distinguish whole
life insurance from term insurance.

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Example: Liability
for Professional Malpractice

34-16

Facts:

Saul consulted with Tokarev, a life insurance agent.

Tokarev recommended a whole life policy, with a face value
of $100,000. Saul named his wife the beneficiary.
At the same cost, Saul could have purchased a term
insurance of $700,000.
Saul later died in an automobile accident.
Sauls wife realized the benefit was absurdly low and sued
Tokarev, along with insurance company.
It was revealed that Tokarev earned a higher commission for
selling the whole life policy than he would have received for
selling the term policy.

Both Tokarev and the company may be found liable

for negligence.

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34-17

Other Professionals Liability

Most other types of professionals are subject to lawsuits

for negligence when they fail to perform according to the
standards expected of them.
Educators and their schools have been sued for failure to
educate students to an expected level.
Travel agents have been sued for selling substandard hotel
accommodations and tours.
Directors and officers of corporations have been successfully
sued for breach of their duty of loyalty and duty of care, resulting
from negligence, error, or omission.
Shareholders of corporations have sued directors and officers,
demanding reimbursement from the company for financial losses
resulting from an action or inaction by the director or officer.

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Reducing Professionals
Risk of Liability

34-18

Professionals need to consider additional

precautions.
Many professional groups conduct workshops and
training sessions to help members of the profession
reduce the risks that lead to negligent actions and the
lawsuits that frequently result.
To minimize the risk of negligence, associations of
insurance agents instruct their members on how best
to conduct themselves in dealing with clients.
Many states require continuing education for certain
professionals in order for the individuals in the
professions to retain their licenses.
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