Environmental exposures

Any medical facility is going to have chemicals, medicines, and biological waste onsite at some point during a typical day. How are these materials stored? Could a patient or client be exposed during the course of a visit? Was any hazardous substance poured down the drain and into the local water supply? Is all piping in the building new and inspected regularly; could there possibly be a leak? While many healthcare campuses are relatively new, there are still thousands that have been operating for decades. In an aging facility, maintenance is constant for piping, drainage systems, storage units, and boiler rooms.

Another environmental exposure commonly found at medical offices and hospitals are storage tanks which are often used to support emergency generators or boilers. Tanks may be aboveground or underground and must be properly registered with the respective state if applicable. How old are these tanks? Is proper containment in place? A leaking tank will impact soil and groundwater at the facility and may migrate onto neighboring properties.

Waste generated at these facilities may be treated onsite via an incinerator. Are proper environmental permits in place for emissions? Has the waste been completely burned or does residue remain onsite or impact a neighboring property? If the waste is transported and disposed of offsite, there could be a spill in transit or a release at the waste facility. These released materials can impact nearby properties, streams and wildlife. Even if the medical facility isn't directly responsible for the spill or release, they can easily be dragged into any legal action. It is possible that self audits/inspections catch potential issues that are above ground level, but many other exposures exist below the surface and away from the medical facility itself.

Indoor air quality issues

Indoor air quality is an enormous concern for healthcare facilities, especially hospitals or any location where a third party could be affected. How old is the HVAC system at the facility? Are there any signs of water damage or leaks? Mold and legionella can be spread throughout an underperforming/broken system, posing a danger for immune-compromised patients. Indoor air quality is also affected by equipment and any chemicals used during the course of normal business or construction activities. Should a facility suffer from a mold or legionella outbreak, the consequences would be severe.

Pharmaceutical disposal is an emerging risk that is leaving facility owners and environmental law enforcement agencies perplexed. Many impacts from disposal are not yet known, but more and more damage is being done to the water supply because of improper pharmaceutical disposal. This waste is also being discovered in soils and even the food we eat. While not yet fully regulated, it is still an environmental exposure that will burden a medical facility should it be determined the facility has caused a pollution event to occur.

Waste transportation and disposal

One way healthcare facility owners can address their environmental exposures is by purchasing a site pollution policy, also known as a premises pollution or environmental impairment insurance policy. Generally, environmental issues are excluded from most general liability or property insurance policies, including defense costs. If any coverage is provided via the insured's current insurance portfolio, it is most likely very limited, and would not put a dent into paying for a true environmental claim. Even if the facility is not at fault, they can still be brought into a claim from a neighboring property, an offsite disposal company, or a contracted waste hauler. The medical facility owner will have to pay out of pocket to defend the case since protection is not provided in a standard insurance policy.

Site pollution policies can be tailored to meet the needs of a specific healthcare facility. These policies provide coverage for on-site cleanup costs and third-party bodily injury, property damage, and cleanup as a result of pollution at, on, under or migrating from a covered location. Defense costs are also covered. Coverage is provided for all locations scheduled onto the policy. For example, should chemicals be disposed of improperly and soils on the insured's property as well as a neighboring site are impacted, the site pollution policy will respond to this pollution event.

Many enhancements exist for a site pollution policy, especially one crafted for healthcare facility risks. Coverage for aboveground storage tanks is built into the policy form; underground storage tanks may be added via endorsement. Transportation coverage for medical waste hauled by the insured or by a contracted carrier can be offered, addressing any over the road spills. Quite often a spill during transit results in contaminants escaping into surrounding lakes, streams or natural habitats, impacting natural resources that cannot be replenished. Coverage for natural resources damage is generally built into a site pollution policy form. Non-owned disposal site coverage is provided for waste disposal at offsite, approved facilities.

Should this offsite waste facility have a release or an environmental event, many times all parties sending their waste to the disposal site will be brought into the claim. Coverage for mold and legionella addresses potential indoor air quality exposures and any resulting remediation necessary due to contamination. Some policy forms also provide coverage for crisis management. Should a hospital have to address an environmental emergency, they may have to deal with a tarnished reputation. Crisis management coverage provides outside public relations/crisis management assistance to the policyholder.

A site pollution policy is always a claims made form. Policy terms can vary from one to 10 years; flexibility is a key feature of all site pollution policies. Limits of liability can be as low as $500,000 and as high as $50 million. Even higher limits can be assembled if necessary, depending on the needs of an individual risk.

Most insurance carriers will request the completion of a proprietary application along with current GL/Property loss runs. A schedule of properties will be needed. If any environmental regulations or permits affect the site, the carrier will want to review these along with any published audits or environmental assessment reports. Facility maintenance and risk management procedures should also be provided as part of the submission process.

The healthcare industry is constantly growing and with development come additional environmental exposures. Environmental regulations, which constantly change, must be addressed by a facility owner. Even if a site is well maintained and managed, accidents can occur, leading to catastrophic results. A site pollution insurance policy will protect against daily environmental mishaps and allow the facilities to care for the communities in which they serve.

Claim Scenarios for Healthcare Facilities:

• A fuel oil tank at a medical office leaks, releasing oil into the soil and groundwater, affecting neighboring properties. Local authorities require the hospital to clean up the contamination. The cost for cleanup exceeds $400,000.
• A landfill used by a hospital is a source of contamination to a drinking water well located down-gradient from the facility. The hospital is found to be a responsible party as their waste has been disposed of at the landfill for many years. The insured contributed over $100,000 to settle the claim.
• A medical waste transporter hired by a doctor's office overturns and waste is spilled into a stormwater drain, contaminating a nearby stream. The cost of cleanup exceeds the transporter's policy and as the party responsible for generating the waste, the insured is required to pay the remaining costs associated with the cleanup.
• Indoor air quality issues stemming from a damaged air conditioning system in a local hospital sickened several patients. There were two fatalities and several patients were in critical condition. Claims for bodily injury exceeded $1,000,000.

Pollution exposures can be quite significant for healthcare facilities and any response to a pollution event can become expensive. However, the environmental insurance marketplace offers several affordably priced, quality solutions for proper coverage.