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Letters to the Editor
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Indemnity insurance
NPA position clarified
From Mr G. J. P. D’Arcy, MRPharmS
Brian Threlfall is right to highlight the shortcomings of a “claims
made” insurance policy under which indemnity cover will only apply
if a claim is made while the policy is in force (PJ, 3 April, p413).
National Pharmaceutical Association members — and those they employ
or engage — will be reassured to learn that their policy is offered
on a “claims occurring” basis through an NPA subsidiary:
the Chemists’ Defence Association. Under this policy, cover is
maintained and claims will be met after the policy ceases to have effect.
So members do not need to worry about claims arising after they have
sold the business or retired. Consequently, they do not face the hassle,
cost and worry associated with taking out the additional “run off” insurance
referred to by John Murphy (PJ, 1 May, p541). It is our view that to
offer anything less than a “claims occurring” policy would
not be giving our members the level of service they are entitled to expect.
It also gives out a valid and powerful quality assurance message to pharmacy’s
patients and customers.
Mr Murphy seeks to imply that the cover provided by the NPA cannot be
relied upon by employees because the NPA will seek to pass claims involving
employees on to another body. This is not so. I wish to make it crystal
clear that in settling a claim, we have never, nor will we ever, seek
to reclaim any costs from an individual pharmacist or other member of
pharmacy staff. However, where we discover that liability attaches to
an individual who carries his or her own personal professional indemnity
policy, we will look to that individual’s insurer to deal with
the claim and/or make a contribution towards damages and costs. This
is standard insurance practice.
Notwithstanding the comprehensive level of cover offered by the CDA,
we do recognise fully that individuals may wish to have the added security
of their own policy. It is for this reason that the NPA offers individual
pharmacists policies through PPI. These bespoke policies are specially
tailored to meet the professional indemnity needs of individual pharmacists
employed or engaged in community pharmacy, whether working for NPA members
or not.
John D’Arcy
Chief Executive
National Pharmaceutical Association
Increasingly important in “compensation culture”
From Mr G. Southall-Edwards, MRPharmS, Barrister-at-law
The letters from Brian
Threlfall (PJ, 3 April, p413) and John
Murphy (PJ, 1 May, p541) regarding professional
indemnity insurance make interesting reading on a topic which is of increasing
importance in our “compensation culture”. The number of personal
injury claims has risen to a level where (some) lawyers and politicians are
at last starting to question the wisdom of the legislation which introduced
the “no win, no fee” contingency fee system that has fuelled
and driven the rise since the late 1990s. In the light of these letters,
I would like draw a few points to your readers’ attention.
First, I wonder where Mr Threlfall gets his “six years” from. I
ask this because nearly all claims for dispensing errors will be based on non-contractual
liability for negligence in tort (there being no contract between the patient
and the chemist contractor, except in the case of a private prescription and
generally no contract at all between the patient and a locum in any event);
accordingly, section 11 of the Limitation Act 1980 will apply to time-limit
nearly all claims to three years. However, this period runs either from the
date on which the cause of action accrued (section 11[4][a]) or from the claimant
first having knowledge of injury (section 11[4][b]). So in the great majority
of cases the time will be three years from date of dispensing, or maybe a few
weeks later, since most errors are discovered within this time. However, in
a small number of cases, where the error or its effects do not come to light
for a number of years, the three-year period will run from that point, so that
a claim could arise long after Mr Threlfall’s six-year point.
Therefore in claims-based, as against incident-based policy cases, a run-down
period of even more than six years may have to be contemplated by those wishing
to feel secure in their retirement. However, the costs of this security should
of course reflect the much smaller risk after three years and one would hope
that underwriters would reflect this fact in premiums levied in the future.
For clarity, incident-based insurance is like motor insurance: if you are insured
to drive your car on 1 April 2004 and cause damage on that day when the insurer
is on risk, it matters not that the policy may lapse or be cancelled the following
month — the insurer is still liable, regardless of when the claim is
made. But, in claims-based insurance, you need to be insured on the day a claim
is brought against you, even if the damage was done years earlier; the fact
that you were insured when the damage was done will not help you if the claim
is not made until the policy has lapsed, ceased or otherwise terminated.
Secondly, turning to the reasons for individual pharmacists having insurance,
the most important reason is that, even in cases where the chemist contractor
has insurance which covers its locums and employees, there is in fact nothing
more than a gentleman’s agreement to prevent the contractor or its insurer
bringing a claim against a self-employed locum or an employee, if the contractor
sustains a claim as a result of the negligence of one or other of these persons.
Locum pharmacists seem to have generally come to understand this fact — and
interestingly, by section 5 of the Limitation Act 1980, the contractor who
suffers a claim in tort from a damaged patient who must usually claim within
three years, has six years to sue his locum in contract, for breach thereof.
What employees do not seem to realise is that, as a matter of contract law,
it is perfectly possible for the employer or its insurer to sue an employee
who has caused damage for which his employer has been held vicariously liable.
Only a gentleman’s agreement, made to avoid possible legislation in the
wake of the decision in Lister v Romford Ice and Cold
Storage Co ([1957] AC 555), has so far meant that employers and their insurers
have not done so; but in the light of the Civil Liability (Contribution) Act
1978 and the burgeoning costs of civil
litigation, and the general desire to hold professionals personally accountable
for their acts, how much longer will this be the
case?
So the message to locums and employees in particular is: how much longer are
you prepared to risk your house, your possessions or bankruptcy for the sake
of avoiding an annual payment of around £150?
Graham Southall-Edwards
Tirol,
Austria
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