Are You Properly Insured?
Expert witnesses face many of the same risks other businesses face; from first-party losses such as damage to property, to third-party losses from legal liability. While the nature of a business dictates specific insurance needs, most businesses carry a portfolio of insurance that includes property and business interruption, commercial general liability and excess liability, automobile liability and physical damage, and workers compensation insurance. Professionals such as doctors, lawyers, accountants, and yes, expert witnesses, face special risks from their performance of â€śprofessional servicesâ€ť for third parties, and thus have the need for professional liability insurance which is often called errors and omissions insurance. This article discusses the coverage options available to expert witnesses.
Expert witnesses face many of the same risks other businesses face; from first-party losses such as damage to property, to third-party losses from legal liability.Â While the nature of a business dictates specific insurance needs, most businesses carry a portfolio of insurance that includes property and business interruption, commercial general liability and excess liability, automobile liability and physical damage, and workers compensation insurance.Â Professionals such as doctors, lawyers, accountants, and yes, expert witnesses, face special risks from their performance of â€śprofessional servicesâ€ť for third parties, and thus have the need for professional liability insurance which is often called errors and omissions insurance.
Commercial General Liability versus Professional Liability Insurance
It is important for any insured, in this case an expert witness, to understand the differences between commercial general liability and professional liability insurance (a.k.a., errors and omissions insurance).Â Commercial general liability insurance covers claims against the insured arising out of bodily injury, property damage, personal and advertising injury.Â Examples of claims falling within the scope of this coverage include slips and falls on premises, injury caused by manufactured products, and libel or slander.Â Commercial general liability policies issued to professional service businesses generally contain a specific â€śprofessional services exclusionâ€ť to eliminate the possibility of having to defend or indemnify an insured for claims arising out of professional services.Â Professional liability insurance provides coverage for claims arising out of â€śwrongful actsâ€ť which are generally defined as actual or alleged negligent acts, errors, or omissions in the performance of professional services for others.Â The policy is designed to defend the insured against claims and allegations of negligence, and to pay on behalf of the insured any damages and/or defense expenses.
Professional Liability Insurance for Expert Witnesses
Doctors, lawyers, engineers, and accountants rely upon policies specifically designed for their professions and unique professional liability exposures.Â Most other professionals fall in the realm of miscellaneous professional liability (MPL) and utilize a professional liability policy that is tailored to a specific profession.Â An MPL policy has a generic definition of wrongful act and ties the definition of professional Service to the services disclosed in the application for insurance, which forms a part of the policy and in most cases, acts as a warranty.Â An expert witness purchasing a stand-alone (not in conjunction with another professional service) professional liability insurance policy would purchase an MPL policy and disclose in the application the type of expert witnessâ€™s services offered, the revenue derived from these services, and the types of litigation to which they pertain.Â Certain areas of expertise, such as securities or M&A work, are considered high risk and may require additional underwriting information.Â Many professionals mistakenly believe that a professional liability policy purchased for their primary professional occupation would provide coverage for expert witness work.Â This is generally not the case.Â For example, medical malpractice policies cover claims arising out of the practice of, or delivery of medical services, or for a medical incident.Â Other professional liability policies may limit coverage to claims arising out of the practice of the specific professional skill.Â Providing expert witness services may not be considered within the scope of coverage.Â Without a specific endorsement or other affirmative grant of coverage, a separate expert witness professional liability policy would be needed.
Playing the â€śWhat Ifâ€ť Game
Before addressing the legal landscape for expert witnesses as it exists today, and in particular, the doctrine of witness immunity, consider a number of â€śwhat ifâ€ť scenarios. Â The purpose of which are to raise awareness of the issues, questions, and potential pitfalls related to proper and adequate insurance coverage for expert witnesses.Â What if:
- You are an individual expert witness and a negligence claim or civil lawsuit is brought against you. Who will pay to defend you and potentially pay for damages?
- You are insured as a professional under your employerâ€™s professional liability policy. Does the policy cover expert witness work not directly related to the employerâ€™s core services?
- You are covered for expert witness work under your employerâ€™s policy. Is your engagement contracted through your employer or are you â€śmoonlightingâ€ť and therefore not covered?
- You are covered for expert witness work under your employerâ€™s professional liability policy and your employer has other claims that exhaust the policyâ€™s limit of coverage. Will, or can, your employer indemnify you for your legal costs and expenses?
- You are a college professor supplementing your income by acting as an expert witness. Will the college or universityâ€™s insurance protect you, and if not, who will?
- You, as an expert witness, rely on hold-harmless or indemnity agreements to protect and indemnify you for the costs and expenses associated with a claim. What happens if there is a dispute with the indemnifying party or that party is unable or unwilling to indemnify you?
- A disgruntled client sues the law firm for whom you are working, and you are named as a co-defendant in the civil lawsuit. Who pays your defense costs?
- A disgruntled client sues the law firm with whom you are working, and the law firmâ€™s errors and omissions insurer attempts to mitigate its expenses by subrogating against you. Who will pay your defense costs and damages?
Each of these scenarios presents a situation that could result in uninsured, direct costs and a stand-alone professional liability insurance policy would provide the needed protection.
Expert Witness Liabilityâ€”The Legal Landscape
It should be clear by now that an expert witness engagement can expose a retained expert to legal liability even though they have no stake in the outcome of the litigation.Â Liability claims may arise from any number of scenarios.Â For example, a court may preclude an expertâ€™s opinion on the basis of what it deems to be faulty or unsupported methodology in exercise of its gatekeeping function.Â See Daubert v. Merrell Dow Pharmaceuticals, 509 U.S. 579 (1993).Â Similarly, a court may determine that a given expert lacks the specific qualifications to offer the proffered opinion testimony without which the case becomes significantly weakened or vulnerable to dismissal.Â Failing to complete a report in a timely fashion, appear or prepare for deposition or trial, even the failure to request retaining counsel to obtain essential information during the discovery process, are all allegations giving rise to potential liability.Â Beyond these circumstances and allowing for the narrow exception of court appointed expert witnesses who often enjoy broad privileges of expert witness immunity, experts hired by one side or the other may be forced to defend themselves in a civil lawsuit.
The decision to serve as an expert witness is voluntary and may offer significant financial reward while also aiding the important judicial function of assisting the trier of fact to reach a just determination of a given controversy.Â Indeed, for that reason, experts providing opinions and testimony on matters outside the realm of a jury or the courtâ€™s ordinary knowledge and experience are generally granted immunity for the statements they make in court or those contained within their written work product, even if defamatory.Â W. Prosser, Handbook of the Law of Torts, Sec. 114 (4th edition 1971), The Restatement of Torts Sec. 588 (1981).
However, a review of the law concerning expert witness liability across multiple state jurisdictions is not so reassuring when it involves claims that experts performed their assignments in a negligent manner.Â There are two circumstances of expert witness retentions that help define the nature and scope of oneâ€™s liability for serving as an expert witness.Â A claim brought against a friendly expert, one hired by the lawyer to support or defend the clientâ€™s case is a first-party liability claim.Â For example, in the case of Pollock v. Panjabi, 47 Conn. Sup. 179 (2000), a PhD and professor at Yale University, conducted a biomechanical study in support of Mr. Pollackâ€™s personal injury case.Â The court rejected the methodological basis of Professor Panjabiâ€™s findings and precluded its admission at trial, which resulted in Mr. Pollack suing him for breach of contract and professional negligence.Â Professor Panjabi attempted to have those claims dismissed on the basis of a witnessâ€™s testimonial immunity which attaches to statements made as recognized by the Connecticut Supreme Court in the case of Kelley v. Bonney, 221 Conn. 549 (1992).Â However, the Pollock court noted that the public policy reasons underlying the privilege did not apply since the essential claim against Mr. Panjabi was that he failed to perform his work in a competent manner in accordance with generally prevailing scientific principles.Â Delving into leading decisions from other states, the common thread in support of the rejection of this line of defense is that the involved experts chose to voluntarily assist a party to litigation in exchange for financial compensation.Â That, in essence, â€śthey function as paid advisors and as paid advocates,â€ť and as such, should not be shielded from civil liability.Â The court also noted that because the expert witnesses allegedly performed their work outside the courtroom in a professionally incompetent manner, any rule immunizing expert witness communications had no application to the claims being asserted.Â At least nine other state courts have similarly held when the issue of witness immunity was raised.Â Therefore, in the absence of countervailing opinions on this precise issue, it would be prudent to assume that for purposes of first-party liability, experts whom engage in such work voluntarily, and are not appointed by the court, are amenable to suit and may be found liable for damages.Â The next circumstance of expert witness retention, which may give rise to a liability claim, may be referred to as third-party lawsuits.Â This occurs when one of the opposing parties in a lawsuit initiates suit against the expert witness retained by the other side.Â An example of a third-party lawsuit against an expert witness, that had actually been court appointed, is found in the annals of the Texas Supreme Court jurisprudence, in the case of James v. Brown et al., 637 S.W. 914 (1982).Â The three involved defendant physicians were participants in a mental health and guardianship proceeding and were subsequently accused of false imprisonment, negligent misdiagnosis, and professional malpractice.Â The physicians attempted to rely on prevailing principles of expert witness immunity under Texas Law.Â The court held that while the doctorsâ€™ communications to the court of their diagnoses, regardless of how negligently made, cannot serve as the basis for a defamation action, the diagnoses themselves may be actionable on other grounds.Â In this instance, the other permissible grounds included a cause of action for medical malpractice for failure of the psychiatrists to exercise that degree of care and skill ordinarily employed under similar circumstances by similar specialists in the field.Â Notably, Texas law is less supportive of third-party expert witness immunity than many other states that do provide at least a qualified immunity in regards to third-party claims.Â However, the immunities may not be absolute and do not prevent the initiation of a lawsuit in the first instance.
Expert witnesses provide a valuable service to our legal system and offer analysis and testimony that aids legal counsel in representation of client interests.Â However, expert witnesses have a responsibility to provide objective, thorough, experienced and fact-based analysis and testimony, and to meet contractual obligations.Â A duty of care is created with any expert witness engagement, and any failure to meet a reasonable standard of care that results in damages to the attorney or client could result in a negligence claim or civil law suit against an expert witness.Â Professional liability insurance is specifically designed to protect expert witnesses from negligence claims and should be a key component of any expert witnessâ€™s insurance and risk management program.
This article was previously published in the Expert Witness Exchange, September 27, 2017, and is republished here with the permission of the authors and Expert Witness Exchange.
Hal Smullen is president of Smullen & Associates, LLC, a boutique insurance brokerage and risk management consulting firm based in West Hartford, CT. He has served as a consultant on insurance related litigation, as a risk management consultant, and as an insurance broker. Jeremy Levin and Micah Hardy are legal interns currently attending the University of Connecticut. The opinions expressed in this article are the authorsâ€™ and do not constitute, nor should be relied upon as legal or insurance advice. Legal counsel or an insurance professional should be consulted to evaluate your specific insurance, legal, and risk management needs. This article may not be copied or reproduced without the express written authorization of the authors.
Mr. Smullen can be contacted at (860) 882-9154 or by e-mail to firstname.lastname@example.org.