Rethinking Professional Liability for Sober Living Homes
By Krista Mayes, ATP Program Director
In the wake of a growing substance abuse epidemic, the need for sober living homes and recovery residences has surged. This is a segment of the treatment and recovery industry that has become more organized and “official” with standardized business models and operating procedures. While they are not traditional businesses, they are commercial risks and it’s important to ensure these operators are appropriately insured.
If you assess the exposure presented by a business of this nature, the obvious property, general liability and sexual/physical abuse coverages apply. What’s less obvious is that professional liability coverage should also be presented to the operator for serious consideration, even though they don’t provide any medical or psychiatric services. Why? The potential for accidental overdose or suicide are unfortunate outcomes for some who are just beginning their recovery. If a family brings a wrongful death suit to the operator of the sober living home, a general liability policy typically won’t respond to this type of loss.
Most general liability policies include a professional liability exclusion — meaning the policy won’t respond with even a defense for the insured if the claim or lawsuit alleges any type of professional negligence on the part of the insured. Savvy plaintiff’s attorneys can shape a case into a professional liability circumstance citing that the operator was providing the professional service of delivering a safe, sober environment for the decedent to live in and was ultimately responsible for their safety. While this tact is a stretch, it is a real possibility. Educating sober living home clients about this reality will help you better protect them … and protect your own reputation.
A Cautionary Claim Story
Think about this example: ABC Sober Living provides a recovery residence for individuals starting their recovery. The home has a live-in resident manager who ensures everyone follows the house rules. During the day, the residents are expected to either participate in an outpatient treatment program or work. The home has a curfew of 9 PM. No treatment services are provided by ABC Sober Living. They strictly provide a safe, structured and sober environment for the residents.
While out during the day, a resident decides to purchase heroin and bring it back to the home. The resident and their roommate end up using the heroin that evening and the roommate is found unresponsive the next morning. The cause of death is ruled a heroin overdose. The deceased roommate’s surviving family sues ABC Sober Living, asserting the provider’s negligence in allowing a resident to obtain and bring illegal drugs into the home and failure to monitor the decedent. The complaint states that ABC was responsible for providing a safe, sober environment for residents and their failure to do so was the proximate cause of the decedent’s death.
ABC has a commercial insurance policy, which includes property, general liability and sexual/physical abuse coverage. The general liability coverage included a clear professional liability exclusion. ABC was presented with an option for professional liability at their renewal but ultimately declined, believing it wasn’t necessary since they weren’t providing any type of treatment or traditional professional services.
The plaintiff’s attorney was ultimately successful in making the case that providing a safe, sober environment was a professional service that ABC failed to provide. Without professional liability coverage as part of their insurance package and given the professional liability exclusion within their general liability coverage, ABC’s carrier did not owe ABC a duty to defend or indemnify them in this matter. Instead, ABC was left to handle this matter on their own, incurring thousands in legal fees and settlement.
Unfortunately, the likelihood of this scenario happening is only growing as demand for sober living homes and recovery residences grows. The bottom line? Make sure your clients don’t pass up professional liability coverage prematurely. Investing in coverage proactively can easily prevent a catastrophic loss.
Let our team at ATP help you navigate the complexities facing sober living homes and other behavioral healthcare organizations. Please feel free to contact us at any time!