Counselor Professional Liability Exposure Claim Report

3rd EDITION
The American Counseling Association (ACA) leads the counseling profession by supporting counselors in their role within the mental healthcare community for the support, protection and well-being of clients. ACA does this through advocacy, education, practice tools, and resources for counselors to engage and learn from each other.
ACA is proud to contribute and support the Counselor Professional Liability Exposure Claim Report: 3rd Edition. We thank the CNA insurance companies (CNA) and Healthcare Providers Service Organization (HPSO) for their work. ACA believes this report will assist our members in enhancing their client safety practices that advance the profession and helps counselors deliver the highest quality client-centered care.

Shawn Boynes

Chief Executive Officer, American Counseling Association

Read More

Key Findings of the Counselor Professional Liability Exposure Claim Report

The average total incurred for professional liability claims has increased almost 40 percent from $113,642 to $157,492.
There was a significant increase in the number of claims with paid indemnity greater than or equal to $500,000 which increased from 1.4 percent of the 2019 dataset to 7.0 percent of the 2024 dataset.
The percentage of private practice-related claims increased from 10.1 percent in the 2019 dataset to 21.9 percent of the closed claim distribution in the 2024 dataset.
A notable change from the prior report has been an increase in the number of claims that occurred outside of the “traditional” office setting using virtual technology. 3.9 percent of claims in the 2024 dataset involved instances in which counseling was rendered via telebehavioral health.
Claims involving the telebehavioral health location demonstrated the potential for high severity loss exposures in the 2024 dataset with an average total incurred of $317,516.
Claims asserting violations of The counseling relationship (ACA Code of Ethics, section A) remained the top allegation category in the 2019 and 2024 datasets.
A notable change from the prior report is the rise of claims involving allegations in the Evaluation, assessment, and interpretation category (ACA Code of Ethics, section E), which represents 9.4 percent of the claim distribution in the 2024 dataset and an average total incurred loss of $460,671.
Subpoena assistance matters represent nearly two-thirds (66 percent) of the claims that closed with payment.
The average payment per paid license protection matter has remained relatively flat with an increase of 1.3 percent from $5,454 in the 2019 dataset to $5,524 in the 2024 dataset.

Introduction

In collaboration with our business partners at Healthcare Providers Service Organization (HPSO), and as part of our ongoing effort to provide informative and impactful educational resources to the healthcare community, CNA is pleased to present the 2024 Counselor Professional Liability Exposure Claim Report: 3rd Edition. The report presents a unique perspective of professional liability closed claims, subpoena assistance matters, and license protection matters involving state licensing board actions.
The COVID-19 pandemic has affected the healthcare industry in a number of ways. With court system and licensing board closures, as well as litigation delays, readers may contemplate the potential impact of the COVID-19 pandemic on the 2024 dataset and comparisons to past reports. A review of the 2019 and 2024 datasets revealed no significant impact in the 2020-2022 years compared to prior years. Notably, the majority of closed professional liability claims in the 2024 dataset occurred prior to 2020. The variation in claims closed and average total incurred by year during the pandemic was similar to non-pandemic years overall. This result may change in the upcoming months, or years, as additional claims from the pandemic period are asserted and closed.
Recognition and understanding of the types of risks that are specific to the profession of counseling will provide a foundation for enhancing risk assessment and risk mitigation strategies that apply broadly to all types of counseling settings. Throughout the report we will be referring to the 2014 ACA Code of Ethics for categorization of allegations and as a source of professional and risk control guidance. Our goal is to help counselors enhance their practice and minimize professional liability exposures by identifying loss patterns and trends. We believe that the summary of exposures and resources, included and referred to in this report, will benefit our insureds and the profession at large. We hope you find this resource to be a useful tool for improving counseling practices and mitigating risk exposures.

PART 1

Overview

Dataset and Methodology

Within this report are two datasets that are used to illustrate changes in the distribution and severity of claims between reports. Since the prior report published in 2019, there have been a total of 7,770 adverse incidents and claims affecting counselors.
The 2024 dataset includes professional liability, subpoena assistance and license protection closed claims that met the following criteria:
  • Involved a CNA-insured counselor, counseling student or business/corporate entity;
  • Closed between January 1, 2018, and December 31, 2023, regardless of when the claim was first reported or initiated; and
  • Resulted in a payment or expense of at least one dollar.
The 2019 dataset followed similar criteria, with claims closed between January 1, 2013, and December 31, 2017.

Limitations and Considerations

  • Indemnity and expense payments include only monies paid by CNA on behalf of its insureds.
  • Other possible sources of payment, such as payments by co-defendants in response to the claim, are not considered.
  • The data reflects the “per claim” policy limits, which are typically $1,000,000 for CNA primary professional liability insurance and applicable $25,000 sub-limits for sexual misconduct-related claims.
  • All incurred cost and expense amounts are attributed to the year in which the claim closed, regardless of when the claim was first reported or when the alleged injury occurred.
  • Because of the uniqueness of each individual claim, the average total incurred amounts displayed within this report may not necessarily be indicative of the severity attributed to any single claim.
  • As some elements of the inclusion criteria in each dataset and in this report overall may differ from that of the previous CNA/HPSO counselor claim analyses and claim reports from other organizations, readers should exercise caution about comparing these findings with other reviews.

Spotlights on Risk Management

To supplement the Counselor Professional Liability Exposure Claim Report: 3rd Edition, CNA and HPSO will publish seven Spotlight documents, which will highlight specific topics and provide greater detail on key risk management strategies and client safety practices.
The following Counselor Spotlights include resources such as case studies, risk control considerations, and self-assessment checklists designed to help counselors evaluate and mitigate risk exposures associated with current practice:

Terms

For the purposes of this report only, please refer to the following terms and explanations.

2019 dataset

A reference to the prior CNA report, entitled “Counselor Liability Claim Report: 2nd Edition” which included claims that closed from 2013-2017.

2024 dataset

A reference to this CNA report, entitled “Counselor Professional Liability Exposure Claim Report: 3rd Edition” which includes claims that closed from 2018-2023.

Distribution

Refers to a specific group of closed claims with categories expressed as a percentage of the total.

Expense payment

Monies paid in the investigation, management or defense of a claim, including, but not limited to, expert witness expenses, attorney fees, court costs and record duplication expenditures.

Total paid indemnity

Monies paid on behalf of an insured counselor in the settlement or judgment of a claim.

Total incurred

The sum of total paid indemnity and expense payments.

Average total incurred

The costs of total paid indemnity and expense payments, divided by the total number of claims with payment.

Our goal is to help counselors enhance their practice and minimize professional liability exposures by identifying loss patterns and trends.

Distribution and Average Total Incurred by Coverage Category

There are three categories of closed claims included in this report: Professional Liability (PL), Subpoena Assistance and License Protection. Figure 1 reveals the overall distribution of claims with payment for these coverage categories, with an additional breakdown of the PL claims that closed with indemnity and those that were categorized as expense only.
Although PL claims represent only 6.9 percent of the overall claims in this report, their total incurred severity is significantly higher than other types of incidents, as highlighted in Figure 2.
Furthermore, while representing only 3.0 percent of the claims in the overall dataset, PL claims with indemnity payment represent 59.6 percent of the total incurred losses discussed in this report.
Subpoena assistance claims have continued to increase as a portion of the total distribution but have not seen any change in their average incurred severity compared to prior datasets

Professional liability claims with indemnity payment represent 59.6 percent of the total incurred losses.

1

Distribution of Claim Counts by Coverage Category

2

Distribution of Total Incurred by Coverage Category

Coverage Category Definitions

Professional Liability

Provides coverage for defense costs and legally obligated payments to third parties as a result of a claim arising out of a covered medical incident.

Subpoena Assistance

Provides coverage for attorney’s fees and other administrative costs to respond to a subpoena to produce counseling records and/or prepare you for a deposition or court testimony related to a lawsuit in which you are not named.

License Protection

Reimburses you up to the applicable limit for your defense of disciplinary charges arising out of a covered incident, covering expenses such as legal representation, lost wages and travel.
While this section of the report focuses on PL claims with indemnity payments, it is important to note that more than half of the total PL matters resulted in expense payments only. Overall, these claims resulted in an average payment of $13,125 that includes attorney fees, investigation and expert witness fees, record duplication expenditures, court filing costs, and other administrative matters. Some reasons why claims may incur expenses without an indemnity payment include:
  • The claim was successfully defended on behalf of the counselor.
  • The claim may have been abandoned by the complainant and/or the statute of limitations period expired.
  • The court may have determined that the named counselor should be removed or dismissed from the lawsuit.
  • The adverse event was investigated and a claim file was opened; however, the counselor was never named in the lawsuit, resulting in the claim being closed.

3

Average Total Incurred by Coverage Category
Professional liability with indemnity payment
$157,492
Professional liability expense only
$13,125
License protection
$5,524
Subpoena assistance
$1,725

4

Average Time to Close by Coverage Category
Professional liability with indemnity payment
3.5 yrs
Professional liability expense only
2.7 yrs
License protection
2.1 yrs
Subpoena assistance
0.4 yrs
In addition to the higher costs incurred for PL claims with indemnity payments, the complexity of these claims resulted in a longer resolution time, with the average time from occurrence to closure in this dataset being 3.5 years and the longest being more than 12 years.
The time from when an incident occurs to when a claim or lawsuit is closed varies depending upon multiple factors including, but not limited to, the applicable statute of limitations, court calendars and the complexity of the matter. The fact that a PL claim with indemnity payment may take, on average, 3.5 years to close underscores the importance of comprehensive documentation to preserve relevant client information. Documentation of the counselor’s assessment and treatment plan along with the client’s response may be utilized to demonstrate that the standard of care was met by the counselor. Concise and thorough documentation is also critical in defending license protection matters and preparing the counselor for a deposition.

The average total incurred for professional liability claims has increased almost 40 percent from $113,642 to $157,492.

How Courts Define Malpractice

Four elements must exist for an incident to be considered malpractice:

Duty

A counselor-client relationship must exist

Breach

Standard of care was not met.

Causation

Injury was caused by the counselor’s error.

Harm

Injury resulted in damages.

Get in the know with HPSO

Stay up to date on industry insights, trends, and tips when you sign up to receive risk management materials from HPSO - all conveniently delivered to your inbox.