Directors and officers working in the nursing home industry, whether for a public, private or nonprofit company, are entrusted with the management of corporations and their assets. It is vital that they exercise due care and diligence in managing any and all corporate affairs. Acts of negligence by an officer or director that results in losses to the corporation or its shareholders can result in their being held personally liable.
You should inform your clients in such a position, that to properly protect themselves in the event of a lawsuit, they, along with the organization itself, should purchase nursing home insurance coverage specifically under a directors & officers (D&O) policy. D&O insurance covers the corporation’s loss from indemnified directors and officers and the personal liability of directors and officers who are not indemnified by the corporation.
Types of claims that are covered by a D&O policy
There are a number of allegations that directors and officers working at assisted living facilities, nursing homes, medical facilities, or companies performing home healthcare, could potentially face. Claims and lawsuits are brought about by many different parties, including shareholders, physicians, creditors, employees, and patients.
Allegations can range from conflict of interests to fraudulent conduct. In addition, claims stemming from financial statements, a breach of contract, violation of articles or by-laws, improper self-dealing, and other wrongful acts can be filed. These institutions also come under fire for allegations of financial mismanagement, mistakes or errors in judgment, and negligence, which are all risk areas for directors and officers at healthcare organizations. Any covered loss will include payment for defense costs and indemnification if a settlement, up to the policy limits, is reached.
The important thing to remember for anyone assigned to a position as a director or officer is that, in the absence of D&O coverage, individuals, as well as the company itself, can be held personally liable for a number of allegations. These are exposures that can and should be covered by a comprehensive nursing home insurance coverage program that protects both, the entity, and the assets of the individuals on the board.