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D&O, Professional Liability Claims Against Non-Profits on the Rise

Implementing Protocols Critical in Mitigating Claims for Non-ProfitsImplementing Protocols Critical in Mitigating Claims for Non-Profits

According to a recent article in The NonProfit Times, social service organizations are increasingly the target of lawsuits. These involve claims around professional liability and directors and officers liability issues. They include challenges to nonprofit status; regulatory; antitrust; mergers and acquisitions; management of assets; claims from funders or donors (“stakeholders”) to the organization; beneficiaries of “clients” of organizations; states’ attorneys general; securities holders of assets held by nonprofits; and allegations of abuse.

With regard to non-profits that offer services to youth, according to the article, organizations that have been sued over allegations of abuse have learned that not dealing with these types of claims appropriately both in mitigating exposure and taking swift actions when an allegation comes to light have seen their reputations damaged. These allegations could also land their board of directors in the hot seat for claims that they negligently hired, trained or supervised their staff or volunteers, negligently certified foster homes, or provided inadequate oversight to the activities of clients in their care.

At a recent Nonprofit Risk Summit, the article states that Julie Novak of Big Brothers Big Sisters of America (BBBSA), Susan Woessner of USA Swimming and Susan E. Yoder of the American Camp Association (ACA) “emphasized the need to make every effort to protect children who come in contact with adults, from thorough screening to swift, decisive action. That also includes monitoring the behavior of adults working with children.”

In fact, the National Centers for Disease Control and Prevention (CDC) has issued the following recommendations for monitoring behavior at non-profits that serve children:

  • Ensure response preparedness based on clear protocols of appropriate/inappropriate behavior.
  • Consistent enforcement.
  • Defining clear roles and responsibilities of staff and volunteers.
  • Setting out a clear reporting structure within the organization.
  • Using multiple monitoring methods to observe individuals’ interactions.
  • Document that monitoring has occurred.
  • Implement additional strategies for the CDC’s Ensuring Safe Environments, such as the use of monitoring devices like video cameras.

In addition to strong having strong protocols, be sure that the organization’s insurance program is thoroughly reviewed for proper Professional Liability and Directors & Officers Liability (D&O) coverage. These policies must be evaluated by a professional that specializes in insuring non-profits to determine what it and isn’t covered, including for claims involving abuse allegations. At Axis Insurance Services, we specialize in writing D&O insurance for non-profits and would be happy to review your policies to determine how they will respond depending on the claim. Give us a call at (877) 787-5258.

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Blogged on: April 27, 2015 by Mike Smith
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