Claims Retrospective: A Licensing Proceeding Can Be a Precursor to a Claim
It is hard to think of anything that could be more detrimental to an engineer’s practice than losing his or her engineering license. Therefore, suspension or revocation of one’s license is often (and rightfully so) an engineer’s first concern upon receipt of a licensing complaint.
However, engineers should also recognize that a licensing proceeding may be a precursor to a claim and should be treated as such.
Unfortunately, a disgruntled client, contractor, or even another design professional may file a licensing proceeding against an engineer if they are unhappy about the way a project has progressed. Moreover, the client, contractor, or design professional initiating a licensing proceeding may be contemplating initiating litigation as well. In those situations, the party pursuing the licensing proceeding may use it to collect information and documentation that can be used later to support a legal claim in filed litigation.
Given these motives, an engineer should always seek counsel before responding to a licensing claim. While seeking counsel prior to responding to a licensing proceeding may seem like common sense, many engineers find themselves rushing to respond to the licensing proceeding. Engineers often believe that if they only explain themselves, the licensing board will see that they acted appropriately and ethically at all times. Thus, engineers often respond prior to seeking counsel from an attorney and only seek counsel after the investigation has expanded or they are facing some sort of disciplinary action.
While this delay in seeking counsel can cause problems for an engineer in the licensing proceeding, it can also cause problems in later litigation. The party that initiated the licensing proceeding will certainly use any adverse admissions and/or adverse findings by the licensing board as evidence against an engineer in future litigation. Therefore, even if an engineer can salvage his or her defense before the licensing board, they may have damaged their defense in any future litigation. Accordingly, if faced with a licensing proceeding, an engineer should seek counsel as early as possible to assist in responding to the board.
Upon receipt of a licensing complaint, an engineer should also immediately report the matter to their insurance company who may assist in finding defense counsel to aid in defending the complaint. It is also important to report so that defense fees and costs will be reimbursed under an engineer’s policy if it is a covered expense.
The professional liability coverage offered through the American Society of Civil Engineers (ASCE) issued by Those Certain Underwriters at Lloyd’s London (“Underwriters”) provides reimbursement of defense fees and costs in defending against a licensing proceeding. The policy deductible does not apply to this reimbursement coverage. Furthermore, when a licensing proceeding is reported under an ASCE/Underwriters policy, the matter is recognized and acknowledged as a potential claim. If an actual claim is asserted arising out of the same alleged wrongful acts that serve as the basis for the licensing proceeding, the claim would relate back and attach to the policy. Notification of the licensing proceeding and coverage would be evaluated as if such claim had been made on the original date of the notification. For these reasons, it is very important that an engineer provides notice to their insurer of any correspondence they receive from a licensing board immediately upon receipt.