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Appeal Court confirms insurer liable to indemnify insured for failure to assess the risk of a schizophrenic prison inmate (Australia)

13 September 2017 Sandra Sithole, Norton Rose Fulbright
Sandra Sithole from Norton Rose Fulbright.

Sandra Sithole from Norton Rose Fulbright.

The New South Wales Court of Appeal upheld the decision of a lower court, holding an insurer liable to indemnify its insured, a prison detention centre for failing to assess the risk of a chronic schizophrenic prison inmate. The inmate threw himself from a building and suffered serious brain and other physical injuries.

The issue was the scope of the insuring clause in the policy covering the insured against civil liability for compensation and claimant’s costs and expenses in respect of claims resulting from the conduct of ‘healthcare services’.

Healthcare services was defined in the policy as ‘the provision of medical services and treatment provided by psychologists and counsellors’.

The insurer argued that the basis of the claim was failure by the insured’s staff to refer the inmate for psychologist assessment, not the provision of the medical services themselves as required by the policy.

The Appeal Court upheld the decision of the earlier court holding that the insured’s claim was one resulting from its conduct of healthcare services and that the claim against the insured was a direct result of the faulty operation of the insured’s system in managing and assessing patients in the provision of the healthcare services for which the insured was covered.

A discussion of the earlier judgment is here.

The case is AAI Limited t/as Vero Insurance v GEO Group Australia (Pty) Ltd.

First published by Financial Institutions Legal Snapshot.

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