No Good Deed Goes Unpunished: Protecting Your Ministry from Malpractice Claims
Our words and actions can have unintended consequences. Even when we’re innocent, legal defense is costly.
We take all comers.
That’s the practice of houses of worship and nonprofits.
Homeless? Troubled? Broke? To all of these, we say, “Welcome!”
In order to live worthy of our cause, there’s no other option. But this openness can also lead to vulnerability: Serving people in crisis can put us in the hot seat.
This risk is illustrated in a landmark case, “Nally vs. Grace Community Church” (California Supreme Court, 1988). Kenneth Nally, a member of the congregation, received pastoral counseling from church staff for several years. Tragically, his life ended in suicide. Nally’s death led to a lawsuit from his parents, alleging “clergy malpractice.” Prior to the lawsuit, the concept of ministerial malpractice was virtually unknown in the legal system.
A nine-year legal battle ended in the church’s favor. But even so, nearly a decade of litigation could have bankrupt the congregation. Instead, special liability coverage* protected the church’s financial wellbeing as it defended itself in court.
Should we become wary of doing good because of the threat of litigation? Never.
Instead, common-sense guidelines, coupled with Errors & Omissions Insurance (E&O), can help ministries and nonprofits avoid unnecessary risks while being assured they have coverage if they are sued.
What is clergy malpractice?
Malpractice, in lay terms, is the failure of professionals to serve their clients according to industry standards. It’s normally associated with lawyers, doctors, engineers and related professions. But no one’s off limits – not even a pastor, rabbi or food bank director. The good news: All of these professions can find protection through E&O insurance.
What is an error or omission?
When houses of worship and nonprofits provide a service – but do it poorly – this could be considered an error. Conversely, failing to provide a promised or mandated service could be considered an omission. This does not mean a church could be successfully sued over a boring sermon, or that a food bank could end up in court because of a limited selection of canned goods. Malpractice litigation, to be successful, is usually related to mismanagement, carelessness or incompetence that harmed others. It claims someone relied on an organization’s advice, administration or service and was harmed for doing so.
Are you vulnerable to malpractice litigation? Here are a few questions to consider:
Do you give advice that people act on financially or legally?
Do you screen, match or place people in paid or volunteer roles?
Do you pledge aid or services on a designated timeline?
Do you maintain sensitive data?
Affirmative answers indicate risk. The premise of E&O Insurance is that litigation – in an of itself – is punishing and costly. A three-year trial that ends in victory is actually a crushing defeat for all parties. Even the winner must fork over thousands of dollars in legal fees. While fees vary by location and firm, a client can expect to pay hundreds of dollars per hour for representation. With E&O liability coverage, legal defense costs and judgments are paid by insurance.
E&O differs from standard liability insurance, which generally covers injuries to people and property that occur on your premises.
The counseling conundrum
Pastoral counseling is at the heart of ministry. The A to Z of the human condition is shared with the clergy, who do their best to provide compassion and insight. But, as in the legal case cited above, even the best counseling sometimes ends in tragedy. In addition, people can allege that pastoral advice resulted in divorce, job loss or financial distress. Most of the time, this simply isn’t true. But, true or not, defending yourself is costly.
Giving advice is essential, but can be dangerous
Pastors often wonder if anyone’s listening. Some people, however, are taking their advice seriously. This should be celebrated. But, given the wrong circumstances, it can lead to litigation:
A member applies principles taught in a church’s financial management class and ends up bankrupt.
Pro bono lawyers or accountants offer to serve the congregation and community. But those served say the advice caused them legal and financial harm.
Pastors are often asked to give opinions on matters for which they are not credentialed experts. For example, a congregant may ask about the wisdom of dissolving a business partnership. If a pastor’s advice backfires, litigation could follow. This also relates to contents of sermons, newsletters or online programming that advocate risky propositions. For example, a pastor could promise “blessings” of financial return to those who give to a building campaign. If these don’t materialize, parishioners may demand to be compensated for their losses.
Failure to carry out the mission
Although tax-exempt, churches and nonprofits have obligations under the law. When these are not fulfilled, people can be harmed and lawsuits filed. Examples include:
A church leader fails to run mandatory criminal background checks on staff or volunteers, resulting in abuse or neglect.
An unsupervised support group, under the auspices of a church, is led by someone who is abusive or manipulative.
Administrators fail to provide charitable giving receipts or related documentation in an accurate or timely manner.
An organization entrusted to manage designated funds instead comingles money from multiple accounts.
Omissions: “We meant well.”
Promises made but not fulfilled are also ripe for litigation. Examples:
A ministry pledged financial support (such as paying rent or a utility bill) and failed to do so. This action leads to an eviction or utility shutoff.
A church official promised to send a letter of recommendation for admission, a scholarship, or a job, but never did so.
An organization pledged funds to another ministry or community organization, but withheld them.
A pastor’s failure to maintain confidentiality from counseling session triggers a malpractice claim.
The truth, and nothing but
Pastors and nonprofit leaders don’t generally like to say unkind things about people – even when they’re true. While circumspection is admirable, sometimes the unvarnished truth is necessary. Commonly-sought letters of recommendation include those for:
A candidate for employment
An adoptive family
A prisoner seeking parole
A fellow clergy member seeking a new role
If a glowing letter leaves out known misconduct or serious reservations, this could lead to consequences and a lawsuit.**
Make a difference without making a mess
For difference makers, there is no risk-free path. But there is a road with fewer self-inflicted errors.
It starts with common-sense guidelines that consistently direct interaction with parishioners and clients. These are more formally known as policies and procedures. These guardrails help organizations treat people uniformly, provide written records of promises made, and reduce idiosyncratic actions that may be incongruent with the church’s mission and practice.
Recommended policy examples include:
Counseling protocols, such as when to refer someone to a mental health professional, a suicide hotline, or medical personnel.
The use of disclaimers about personal finance or business advice (“We are not financial planners, accounts or attorneys; consult a professional.”).
Screening and training staff and volunteers who serve children (whether this screening is legally mandated or not).
Requiring people using the services of pro bono professionals (legal, tax or immigration advice) to sign waivers of liability protecting the sponsoring organization.
Consistent written documentation of commitments for financial, material, or practical support.
Organizations with updated bylaws, policies and procedures have a strong start in protecting themselves from litigation, complaints and general disruption. While these administrative functions can seem like a distraction from ministry, they serve to undergird and protect it.
Get a free consultation about ministry malpractice insurance
Want to learn more about protecting your church or organization from malpractice litigation? Contact us for a free consultation via the form below or call us directly at 1.866.870.2700.
*The church’s insurance, at that time, was known as Counseling Liability Insurance. Today, this is usually part of a broader coverage called Errors & Omissions (E&O) Insurance.
**At the same time, clergy and nonprofit leadership must refrain from slandering candidates for employment, adoption placement and other opportunities. If a leader is ambivalent about whether to endorse someone, they can consider not writing the letter or seeking legal counsel about the matter.