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Only on SkinInc.com: Sound Risk Management for Medical Spas and Day Spas
Posted: May 11, 2011
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As the services become more invasive and sophisticated, the severity of claims can escalate. Patients may be exposed to hepatitis from injectables delivered with previously used needles, burned by lasers during hair removal or left with facial malformations from off-brand botulinum toxin. The claims can be very emotional; consider a young woman left with lifelong scarring. Plaintiff's attorneys eagerly cast medical spas as profit-mongering at vulnerable people's expense. These cases may allege deceptive trade practices and seek treble damages and awards of attorney fees.
There is one higher level of risk: Facilities that perform procedures such as liposuction, face-lifts, hair-lifts, chin implants and breast implants. However, while these procedures may be done in a medical spa, they are surgeries and hence are considered in the underwriting class of surgery centers, not medical spas.
At both the lower and moderate levels of the spa/medical spa risk spectrum, there may be underwriting considerations beyond the standard professional and general liability coverages. Facilities may contract to have spa- or third party-branded products available on-site, raising the specter of product liability. The close physical contact inherent in many spa services, and the prevalence of showers and locker room facilities make these businesses vulnerable to sexual abuse claims. Another consideration, requiring more extensive underwriting, is coverage for physicians if their presence is required on site.
Although many spas and medical spas are marketed as part of hotels, resorts, cruise ships, health clubs and the like, these luxury-oriented businesses typically do not provide the services themselves, but outsource the operation to a third party, which leases their space and operates independently on their premises. Consequently, “premises legal” or “fire legal” liability exposure -- arising from things such as flood, chemical, fire or water damage a spa causes at the property -- is often a consideration. The outsourcing relationship also raises "additional insured" issues.
How insurance can help
Insurance for these risks must be as dynamic and diverse as the risks themselves. Central to the approach to underwriting this class for insurance should be asking the right questions to assess the full range of a facility's services and discern the particular coverages needed—whether it’s commercial general liability, professional liability, products liability, fire legal liability, sexual abuse liability and/or umbrella insurance—for an insured’s foreign and domestic exposures. It's also important to ensure that all of the professionals involved with a facility are considered. Some medical spas, for example, have medical directors who are independent contractors or employed physicians; neither should be overlooked.