Background Check Issues in Home Care: Insurance Insights – Technologist

Home care providers often face challenges when background checks reveal past felonies or theft charges for non-skilled caregiver applicants. This article addresses potential insurance implications and offers guidance on managing these situations while ensuring compliance with insurance policies and state laws.

Potential Insurability Issues

1. Impact on Hiring Practices

The insurance industry carefully crafts policy language to avoid influencing hiring practices to prevent discrimination claims. However, specific exclusions in crime policies, such as the ISO Crime form CR 0021 05 06, can impact coverage related to employee acts known before the policy period.

2. Relevant Exclusions

Under Exclusion D1(a), theft incidents are excluded from coverage if committed by an employee with known past theft or dishonest acts. The term “dishonest act” is not defined in the policy, raising concerns about its interpretation. This vague definition could theoretically exclude many employees if interpreted broadly​ (The National Law Review)​​ (Business Insurance)​.

Managing Background Check Results

1. Requesting Exceptions

Employers can request exceptions from their insurance carriers for candidates with past felonies or theft charges, especially if the candidate has demonstrated honesty and a change in behavior. Dennis Powers, Senior Commercial Insurance Specialist at Inszone, emphasizes the importance of candidates being forthcoming about their past before background checks. A transparent and honest candidate is often viewed more favorably by insurers​ (Huff Insurance)​​ (Hinshawlaw)​.

2. Documentation

If an insurance carrier grants an exception, it is crucial to obtain written confirmation and keep it in the employee’s file. This documentation can protect the employer in case of future disputes or claims related to the employee’s past​ (The National Law Review)​​ (Business Insurance)​.

Understanding Punitive Damages

1. State Regulations

In many states, punitive damages are uninsurable, meaning insurance carriers cannot reimburse policyholders for these damages awarded to claimants. Employers must understand their state’s laws regarding punitive damages to avoid unexpected financial liabilities​ (Hinshawlaw)​​ (Huff Insurance)​.

2. Case Examples

Dennis Powers shares a case where a transportation company faced punitive damages after hiring a driver with a poor driving record, resulting in a fatal accident. This highlights the importance of making informed hiring decisions and understanding the potential consequences of ignoring background check results​ (Business Insurance)​​ (The National Law Review)​.

Frequently Asked Questions (FAQs)

Q: What is the ISO Crime form CR 0021 05 06?

A: This is a standard crime insurance policy form that includes exclusions for theft incidents committed by employees known to have a history of theft or dishonest acts before the policy period.

Q: Can employers hire candidates with past felonies or theft charges?

A: Yes, but they should request exceptions from their insurance carriers and document any granted exceptions in the employee’s file.

Q: Are punitive damages insurable?

A: In many states, punitive damages are uninsurable, meaning insurance carriers cannot cover these damages. Employers should check their state laws for specific regulations.

Q: How should employers handle background check results?

A: Employers should consider the context of the past offense, request exceptions from insurers if needed, and document any exceptions granted to ensure compliance and protection.

Conclusion

Home care providers must navigate the complexities of background checks and insurance exclusions carefully. By understanding the relevant policies and state laws, and by requesting necessary exceptions, employers can make informed hiring decisions while maintaining compliance and protecting their business.

Sources and Citations

1. National Law Review. “PFAS Regulation and Insurance Coverage Implications.” Accessed May 13, 2024. National Law Review
2. Business Insurance. “Federal PFAS Changes Open Floodgates to Liability, Exclusions.” Accessed May 13, 2024. Business Insurance
3. Huff Insurance. “PFAS Insurance Exclusions: How Can They Affect Your Business?” Accessed May 13, 2024. Huff Insurance

By staying informed and proactive, home care providers can effectively manage the risks associated with background checks and ensure the continued success and protection of their business.

Executive VP – North American Health Care Practice Leader

Amy Hieatt is an Executive VP – North American Health Care Practice Leader at Inszone Insurance Services, joining Inszone in September 2023. In her role, Amy is responsible for overseeing the strategic direction and day-to-day operations of Inszone’s national healthcare liability vertical, with a strong emphasis on maintaining a customer-centric approach.

Over the past 20+ years, Amy has dedicated her career to the property and casualty insurance sector, focusing extensively on the Medical Professional Liability and Professional Liability sectors. Prior to her role at Inszone, she served as the Managing Director at Connected Risk Solutions (formerly ABRisk Solutions), a national wholesale brokerage. Before that, Amy led Business Development efforts for NORCAL Group’s Admitted and E&S business lines, managing teams across four regional offices nationwide. She initially entered the insurance field on the retail side, holding the position of Executive Vice President at a regional retail agency that specialized in healthcare liability insurance.

 

Amy’s remarkable journey in insurance, spanning over two decades, is marked by her commitment to servant leadership, her impressive track record of achieving growth and retention, and her dedication to mentoring high-performing collaborative teams. Her expertise in the medical professional liability sector has earned her the admiration of her peers, recognizing her as a visionary leader and expert in the field.

 

In her time off, Amy is passionate about outdoor activities, advocating for animal rights, and finds joy in traveling and reading.

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