Legal and Risk Management Principles

Chapter 9

Tort Law

• The Law of Torts is a body of legal principles that govern “wrongs” done by one individual and another.

• Tortious acts can be intentional or personal injury/malpractice or governed by standards of strict liability or injuries out of the fact for which there will be absolute liability.

• A tort is an act or omission producing injury to another.

Liability in Negligence

• Liability in negligence is the failure to do what a reasonably careful and prudent person would have done under the same or like circumstances or the doing of something that a reasonably careful and prudent person would not have done under the same or like circumstances.

Negligent Behavior

• Levels of Negligence– Malfeasance (commission of unlawful act)– Misfeasance (improper performance of lawful act)– Nonfeasance (failure of the person to act)– Reckless misconduct (intent to commit an act but with no

intention to harm anyone)– Willful or wanton misconduct (intentional act of an

unreasonable character in total disregard for human safety)

– Gross negligence (failure to use even slight care)– Slight negligence (failure to exercise great care)

Standard of Care

Negligence is conduct that fails to conform tothe standard required by law for safeguardingothers or oneself against unreasonable risk ofinjury. Common law developed the "reasonableman (person) test" as the model against whichto evaluate a particular defendant's conduct forconformity with what is required at any given timeand/or place in order to avoid unnecessary danger.

Components of Negligence

• Damages

• Duty (foreseeability)

• Breach of Duty

• Proximate Cause

Professional Duty

The following are the duties for sport professionals:• To provide adequate supervision for all participants• To warn participants of the inherent risks in an activity• To provide safe facilities for participation• To evaluate for injury or incapacity prior to participation• To provide adequate and proper equipment for activities• To match participants to appropriate activities based on their

age and physical condition• To provide good, sound planning for all lessons and programs• To provide proper first aid and establish and implement an

emergency medical plan

Defenses for Negligence

• Assumption of risk– Knowledge of risk– Free and voluntary choice

• Contributory negligence– “Dirty Hands” concept

• Comparative negligence– Comparative theory, less harsh approach

• Governmental immunity– Common-law theory

Supervision

• Supervision is viewed by the courts as an important and essential legal duty for the sport management professional.

• Supervision means you are in charge of others as they perform some activity. As a sport management professional, it means you are in charge of your clients and, possibly, other sport management personnel.

• Supervision means you also have responsibilities to your clients.

Qualified Supervision

• The duties commonly assigned to a coach or strength training coach regarding supervision consist of the following:– supervise exercise testing and/or exercise– plan appropriate exercise programs– present clear warnings of inherent risks within exercise testing

and/or exercise programs– assist in providing a safe testing and exercise environment– be able to evaluate injury or incapacity – properly match participants to appropriate exercise programs– administer first aid and CPR and activate the emergency medical

system.

Proper SupervisionWhen providing in-service training and developing a supervisory plan,the professional must take into consideration the following aspects:

– what should the supervisor look for– what should the supervisor listen for– where should the supervisor stand– how should the supervisor move around– what should the supervisor do if a problem arises– identify all potential dangerous activities– how close should the supervisor be to the activity– understand the warning signs of impending trouble during an activity or in a

client– establish a "stop signal" that can be used when the supervisor must

immediately suspend activity

Components for an Adequate Exercise Plan

There are a few key points to be considered:– Are your goals realistic and attainable?– Have you considered aspects such as

• client's medical background,• client's ability level,• client's interest,• client's attitude(s) toward health/fitness/recreation/sport and you, and

your own interest and enthusiasm for the plan?

– Does your plan provide for• an initial level of difficulty with an appropriate sequence of increasing difficulty,• did you make allowances for variety in the program, and• is the program interesting and meaningful for the client?

– Did you consider the following organization and administrative aspects for implementing the program:• were your explanations and directions clear and concise,• did the client understand exactly what was expected of him/her,• do you have emergency plans in case of a medical emergency, and• is all equipment ready and in good repair when needed?

Exculpatory Agreement

• An exculpatory agreement is an agreement signed by a participant in an activity in which the participant agrees not to hold the people in charge of the activity responsible for any injury that might result from participation in the activity.

• The common types of exculpatory agreements are – waivers and – informed consent.

Waiver

• A waiver is a form of an exculpatory of fault-free agreement between parties.

• The purpose of an exculpatory clause is to relieve one part of all, or a part of, its responsibility to another.

• It is considered a contract and, as such, is in conflict with the fundamental principle of negligence law that states that one should be responsible for negligent acts that cause injury to others. – Contract law states that all persons with contractual capacity

should have the freedom to contract as they wish; therefore, a professional should not rely too heavily on these waivers for protection for a number of reasons.

Value of the Exculpatory Clause

There are a number of factors that make the value of anexculpatory clause questionable or even nonexistent. They are as follows:

– a strong public policy that prohibits such a clause– one party being in a clearly dominant position, such as an employer–

employee relationship– the presence of any fraud or misrepresentation in the clause– any agreement which is signed under duress– the clause or the conditions it creates are unreasonable– the agreement is ambiguous– the signature for such an agreement does not immediately follow the

agreement– presence of wanton, intentional, or reckless misconduct

Warning(s)

• A warning is any device that informs one in advance of impending or possible harm/risk. Before a person can assume a risk, he/she must be made aware of that inherent risk.

• The person must be aware that improper, dangerous techniques, if used, increase the risk of injury.

• There are three levels of comprehension:– knowing– understanding– appreciating the risk

Warning(s)

• A warning should– specify the risks presented by the activity or test– be consistent with the activity or test– provide a reason for the warning– attempt to reach foreseeable participants– be specific and clear so that it creates knowledge,

understanding, and appreciation in the participant's mind

– be written and explained orally if possible

Warning(s)

An adequate warning is– conspicuous , so it attracts the user’s eye– specific, so it is understood by the user– forceful, so it convinces the user of the range and

magnitude of the potential harm

Warning(s)When developing a warning the sport management professional needs to take intoconsideration the following points:

– Estimate the physiological demands– Request medical certification– Encourage safe performance– Emphasize any major standard warning(s), if present– Highlight any major unique inherent risk(s)– Underscore other common risks ranging from major to minor and frequent to rare– Explain any inherent safety rule(s)/protocol(s)– Clarify equipment recommendations and use– Describe necessary etiquette– Solicit and encourage questions– Summarize the know, understand, and appreciate statement– Request that the warning statement be signed and dated (Do not require that the form be

signed)– File the warning statement

Standard of Care for Facility Participants

The standard is based on whether theparticipant is an invitee (i.e., a person who goesonto another's premises by the specific or impliedinvitation of the owner or operator) or a licensee

(i.e., a person who comes on the premises for his own purposes but with the owner's or operator's

consent) or a trespasser (i.e., a person whointentionally and without consent or privilegeenters another's property).

Notice

• Notice

• Actual Notice

• Constructive Notice

Safe Facility and Equipment Duties• Conduct regular and thorough facility and equipment inspections and record the

results in written form and file for future reference• Maintain current standards for the appropriateness of facility and equipment for

the activities being implemented• Develop a regular preventive maintenance schedule for the facility and

equipment• Advise all personnel of the "shared responsibility doctrine" that states that all

parties share in the responsibility for conducting programs safely by fulfilling their shared responsibilities in a manner that is consistent with preventative maintenance

• Purchase the best equipment affordable for the activity that meets league or conference requirements

• Be aware of changes in equipment and standards of safety relating to equipment• Take care when adjusting, fitting, or repairing equipment• Be wary of new untested equipment

Safe Facility and Equipment Duties

• Avoid "illegal" equipment• Present necessary warnings for equipment as specified by the

manufacturer• Avoid "home-made" equipment• Teach proper technique for using equipment• Avoid hand-me-downs• Be certain insurance reflects the current status of equipment• Include equipment in sport center's safety program• If equipment is not used, keep it inaccessible• Equipment is used for intended purposes only

Pitfalls to Avoid With the ADA• Each person must be treated as an individual and must not be treated based upon some

general stereotype or concept concerning type of apparent disability.• An employer cannot avoid responsibility by contracting or otherwise having a third party

provide a service. (For example, if an employer contracts with a health club to supervise and operate a health/fitness/recreation/sport program, the same restrictions apply against the employer, and the employer may well be held liable for any actions by the health/fitness/recreation/sport club in violation of the ADA).

• A disabled person does not need to prove intentional discrimination. An honest, unintentional mistake that is discriminatory and prohibited by the ADA can result in sanctions provided by the law.

• The ADA generally prohibits preemployment medical examinations as well as questions about disabilities but specifically permits voluntary medical examinations in wellness programs.

• Any information gathered through voluntary medical examinations must be confidential and the medical examination requirements must apply to all employees.

• The ADA does not supersede or preempt any other federal or state law. Therefore, it is theoretically possible for an employer to subject itself to liability under another law or laws.

• The greatest pitfall of all would be to do nothing.

Contract

• An agreement (or promise) between two or more persons that creates an obligation to do or not to do a particular action. A contract is a promise or set of promises for the breach of which the law gives a remedy or the performance of which the law in some way recognizes as a duty.

Contract

• Components:– Offer– Acceptance of offer– Consideration– Legality– Capacity

Offer

• An offer is a conditional promise made by the party offering (offeror) to the party accepting (offeree). Most often, an offer is in writing outlining a few essential bits of information including, but not limited to (a) the involved parties names, addresses, and phone numbers; (b) the subject matter; (c) the time, day, and place for the subject matter to be performed; and (d) the agreed upon price to be paid.

Acceptance

• The only person who can accept an offer is the party (offeree) it was offered to by the offeror. No one else can accept the offer made unless the offer was made to more than one party. In that case, all parties involved must accept the offer.

Consideration

• Consideration involves an exchange of value wherein one party agrees through a bargaining process to give up or do something in return for another party doing the same. The courts most often view consideration as the glue in the agreement. Consideration makes the contract legally enforceable. Without consideration, there may be a promise to do something, but it may not be legally enforceable as a contract in court.

Legality

• Legality means that the underlying bargain of the contract is for a legal action(s). The courts will not enforce contracts for illegal actions such as prostitution, gambling, drug deals, loan sharks, and so forth.

Capacity

• Capacity is the ability to comprehend the nature and effects of one's acts. Generally speaking, anyone who has reached the age of 18 (sometimes referred to as the age of majority in many states) has the capacity to enter into a contract. There are conditions that invalidate a contract including intoxication, mental incompetence, fraud, and illegal acts.

Discharging a Contract• A contract is usually discharged by the performance of the terms

of the agreement, but termination may also occur by later agreement, impossibility of performance, operation of law, or acceptance of breach. Contracts are commonly discharged by performance.

• A contract discharged by performance includes when (a) payment is required by the contract, performance consists of the payment of money or, if accepted by the other party, the delivery of property or the rendering of services; (b) the date or period of time (time of performance) for performance is stipulated, performance should be made on that date or in that time period; and (c) a tender (an offer to perform is a tender) has been completed or refused.

What Makes a Contract Void?

• An offer gives the offeree power to bind the offeror by contract. This power does not last forever and the law specifies that under certain circumstances the power shall be terminated. Offers may be terminated in any of the following ways: (a) revocation (offeror revokes the offer before it is accepted), (b) counteroffer by offeree, (c) rejection of offer by offeree, (d) lapse of time, (e) death or disability of either party, and (f) subsequent illegality.

What is a lease?

• A lease exists whenever one person holds possession of the real property of another under an express or implied agreement.

• The essential elements of a lease include (a) the occupying of the land or property must be with the express or implied consent of the landlord, (b) the tenant must occupy the premises in subordination to the rights of the landlord, (c) a reversionary interest in the land must remain with the landlord (i.e., the landlord must be entitled to retake possession of the land upon the expiration of the lease), and (d) the tenant must have an estate of present possession in the land (i.e., must have a right that entitles him to be in possession of the land now).

Common Contracts in Sports

• Merchandise• Services• Concessions • Game contract• Officials contract• Broadcast contract• Organization agreements• Facility agreements

Independent Contractor• An independent contractor is one who renders service in the

course of an occupation representing the will of his employer only as to the result of the work. Independent contractors include attorneys, concessionaires, dance exercise instructors, physicians, professional trainers, sport officials, and companies (e.g., insurance companies, custodial service companies, fitness equipment maintenance companies). The general rule, relating to independent contractors, has been that liability can be shifted from the employer to the independent contractor. However, the employer must exercise reasonable care to select a competent, experienced, certified, and careful contractor with proper equipment who follows appropriate safety precautions to protect employees and the invited public.

Reasons for Increased Litigation

• There are generally three reasons for the increase in litigation: (a) sport is a reflection of society, and we have resorted to the courts system as a means of resolving our disputes; (b) when the stakes are higher, people and sport organizations are more willing to pursue litigation; and (c) sport organizations are being run as businesses, and wherever business is involved, people are aware of their rights and consequently will protect those rights in a court of law.

Risk Management

• Risk management is a total program that analyzes where and why accidents occur and how the hazards might be controlled. At the same time, a good program will determine which calculated risks are acceptable. A risk management program is a proactive approach to establishing safe activities, facilities, and equipment. Once the program is established, it should prevent most accidents. However, if an accident should occur and a lawsuit is initiated, the risk management program will be evidence of having acted responsibly.

Risk Management Consists of …

• Program feasibility • Risk identification • Risk treatment• Risk implementation• Risk evaluation

Committee Tasks

The committee needs to complete the following tasks: (a) develop a philosophy and policy statement, (b) complete a needs assessment identifying the strengths and weaknesses of the organization, and (c) establish objectives that are Specific, Measurable, Attainable, Realistic, and Time framed (SMART).

Aspects of Program and Facility Management

The risk management committee should be concerned with the following aspects of program and facility management:

(1) site and facility development (2) program development (3) supervision (4) personnel policies (5) testing procedures(6) establishment of rules, regulations,

and procedures (7) facility and equipment inspection

procedures (8) facility and equipment maintenance

procedures(9) accident reporting and analysis

(10) first aid and emergency procedures

(11) releases, waivers, agreements to participate

(12) methods of insuring against risk (13) in-service training (14) public relations (15) contract procedures (16) outside specialists,

legal/insurance/CPA/Medical (17) signage (18) risk management audit(19) periodic review

Benefits of Risk Management

A risk management program is valuable in the event of legal action against any organization. A strong risk management program shows intent. A risk management program serves as a deterrent to being sued and, if sued, as evidence of intent to act as a reasonable and prudent person. Other benefits include (a) increased safety for the customers, (b) reduced losses to the organization, (c) more effective use of available funds, (d) identification of exposure you can cover through an alternative to insurance, (e) increased attractiveness of the organization to insurance companies, (f) reduced uncertainties associated with future projects, and (g) easier monitoring of claims, losses, and insurance coverage.

Risk Treatment

Once a risk has been identified, it can be treated one of four ways:

1. Avoid [A] - making a conscious decision not to accept the specific risk present at that time and, therefore, not run the program.

2. Transfer [T] - informing participants of high-risk activity situations and having them assume the risk of participation and seeking appropriate liability insurance coverage.

3. Reduce/Modify [M] - the use of additional safety equipment and/or procedures that are designed to reduce potential accidents.

4. Retain [R] - intentional continuation of the program with planned consideration of the risk.

Insurance Coverage AreasThe risk management program manager should be prepared to cover four main areas of possible liability: (1) building and premises, (2)

motor vehicles, (3) activities (i.e., from incidents due to the nature of the activity engaged in), and (4) employee conduct (i.e., out of actions of employees).

Here is where the legal and insurance consultants can be very helpful to the risk management program manager. The risk program manager should become familiar with some basic insurance "jargon" before trying to engage an insurance consultant. Furthermore, the risk program manager should know what insurance the organization currently has and its limits. A survey of companies specializing in this type of insurance shows a wide variety of coverage available including the following:

1. Professional teams, athletes, and events - liability and accident medical coverage, high-limit accidental death and disability insurance, contractual bonus and performance incentive programs

2. For amateur athletes and events (e.g., Olympic Festivals, USOC, National Governing Bodies, Pan American Games, World Games)3. For college and high school teams, athletes, athletic associations, club/recreational sport activities, sports camps, facilities - sports liability

and accident medical coverage, disability insurance, play-practice coverage, transportation insurance, catastrophic injury coverage4. For your youth/adult recreational teams and leagues - liability and accident coverage5. For health clubs, fitness centers, and sports clubs - property, accident, and liability insurance for participants/members and staff, day care

facilities, tanning beds, diving boards, whirlpools, weight rooms, trampolines, food and liquor services6. For venues (stadiums, arenas, recreational facilities, water parks) - spectator and participant liability, property insurance, casualty

insurance7. For promotions and special events - event cancellation, sponsorship/prize guarantee, special events liability, weather and non-

appearance insurance8. For general public liability - products liability, watercraft liability, saddle animal liability, liquor liability, personal injury liability,

independent contractor's liability, advertisers’ liability, and adventure and tripping program liability9. For employees, directors, and officers - liability coverage10. For vehicles - bodily injury liability, property damage liability, business auto policy, user of other autos, employers non-owned and hired

autos, camp bus coverage, medical payments, comprehensive, and collision insurance11. For protection of finances and operations - loss of income, discrimination or civil liberties violations, advertising liability, or contractual

liability by endorsement (hold harm less agreement or indemnification)

Insurance ChecklistIn the following checklist are recommendations for managers, instructors, coaches, volunteers, and

staff when securing insurance:

1. Never assume you are covered. Always check your insurance coverage.2. Check your insurance policy at least twice a year for changes and to be sure you still have

adequate coverage.3. File a report on an incident as soon as it happens and submit a proper claim to the insurance

company.4. Anyone involved in an activity outside their job's jurisdiction or areas of control may seek to

secure more personal liability coverage.5. Be aware of potential hazards and report them to the necessary people or group.6. Secure a short-term group accident policy to cover special activities when risk is foreseeable.7. Analyze the liability aspects of your program or area and ensure adequate coverage in these

areas.8. Have release forms. They may solve small liability problems that the participants acknowledge

the risk they are assuming and their voluntary participation in the program, but do not rely on them to solve any negligent actions.

9. Have participants in events obtain medical releases and pre-participation physicals.

Insurance Companies’ Concerns

What do insurance companies consider before determining if a facility or event is insurable? The insurer reviews information regarding five basic areas: (a) security, (b) maintenance and housekeeping, (c) emergency services, (d) parking and traffic control, and (e) concessions. The company is concerned as to how these areas are managed. Premiums are based on how these areas are managed.