Errors and omissions (aka malpractice) claims are complaints people file when they feel your small business has not provided services to an acceptable professional standard. You may have already read in our post "What Is Malpractice?" that you don't actually have to make a mistake or violate a professional standard in order to be sued. So who are the people behind these complaints?
In short, anyone who doesn't work for your business can file an e and o claim against your business if they feel they've been negatively affected by your work. Read on to learn more.
Patients, Clients, & Customers: The Faces of E and O Lawsuits
Because errors and omissions claims revolve around the type of work that you do, it makes sense that the people who pay for your services are the ones filing these claims. Take a look:
- Patients. If you are a doctor, massage therapist, nutritionist, or another healthcare professional, the people you treat and / or advise can file a malpractice claim against your practice. Here's a real-life example involving a physical therapist and a woman receiving treatment after an ankle surgery. In order to relieve pain, the physical therapist placed a hot pack on the patient's ankle. Although the patient did not complain of the temperature during the session, she later reported a small burn on her ankle. She claimed the burn was inhibiting her ability to move, keep her daily exercise routine, and visit the beach. She sued the physical therapist for malpractice. The two parties came to a five-figure settlement out of court. The therapist's legal defense fees are estimated to be around $34,000.
- Clients. If you are an engineer, real estate professional, or someone else who uses contracts and / or provides services, your clients can file E&O claims against your business. Take a look at this recent case, reported by silive.com, involving a famous architecture firm and the New York City borough of Staten Island. The city Construction Authority filed a $1.4 million lawsuit against Ennead Architects (the firm that designed former President Clinton's presidential library), alleging that their "defective" design has caused a recently constructed playground to crumble.
- Customers. If you own a business that provides services to customers, know that they can sue you if they feel your work is not up to par. The Huffington Post recently reported on a lawsuit against PetSmart regarding a grooming incident. An English bulldog puppy was allegedly strangled during a grooming session at the store. The business called the dog owners to report that the dog was vomiting blood. The pet owner took the dog to the vet, but it died shortly thereafter. The pet owner rejected a $2,000 check from PetSmart and filed a $25,000+ lawsuit instead.
Learn more about these types of lawsuits by reading our post "Understanding Errors & Omissions (Malpractice) Lawsuits."
And remember: adequate Errors & Omission Insurance can help you pay for these claims — even if they turn out to be unfounded.