It's Not My Fault

By Martin Ween, Esquire
June 2004

No one wants to think that the call center services they offer on a daily basis might eventually result in a claim for negligent business practices.  But like it or not the telemessaging industry, like all other American businesses that deal with the public, are going to be subject to complaints from discontented clients.  As a result, the prudent call center manager should implement and follow a risk management plan to help reduce the probability of a loss.

To help illustrate the liabilities that telemessaging companies face and the need for risk management plans, following are two claims scenarios involving various aspects of telemessaging services.  These scenarios are not actual claims, but are a combination of facts and situations from actual claims and additional issues that can be instructive as to the nature of possible claims and how they can be handled to avoid or mitigate liability and exposure to damages.  Included are some observations and suggestions as to the issues and the lessons that might be derived from these scenarios. 

Scenario Number 1 – The Telemessaging Service That Had a Contract – Somewhere!

Old Answering Service ("Old") was retained a number of years ago by a client to provide phone answering services for a mail order business, Widgets & Gizmos Co. ("WGC").  Old executed a short, one page contract for only after-hours telephone answering services.  The contract did not include any order-taking services, but did include a damage limitation clause, restricting the liability of Old to the price of one month of the services provided to WGC.

Over the course of time, Old merged into Message Company, which took over the work for WGC.  No new written contract was prepared or executed.  After a number of years, the files of Old were put into storage and the earliest files were destroyed, to save on storage costs.  WGC, in the interim, expanded its business and started marketing by telephone, with Message Company receiving and processing orders to certain credit card companies for approval.

Because of the failure of its equipment and the backup systems, Message Company was unable to process calls for two hours during the Christmas season, the heaviest marketing time for WGC.  As a result, orders were not received.  WGC asserted a claim against Message Company for what it alleged was a loss of sales of $100,000 for the two-hour period.  Message Company asserted that it had a damage limitation clause in its contract.  However, Message Company could not locate the contract.  Further, WGC argued that any damage limitation clause related only to the after-hours answering services and not to the order-taking services in connection with credit card approval.  Ultimately, after contending that the damages were excessive for the limited period of time, Message Company and its insurer negotiated a settlement at a substantial figure, before litigation was instituted.

Suggested Ways to Avoid or Mitigate the Claim: This claim scenario points out the importance of reviewing contracts on a periodic basis, especially where the contracts may have been inherited from other entities.  The type or extent of services provided may have changed.  The names and even the identities of the parties may be different and the terms of the contract may have to be changed to conform to the current practices and requirements of the telephone answering service.  This can be particularly important in the situation where an existing contract has certain protections for the outsourcing call center, but may be lost if the contract is not maintained or there are opportunities for the client to argue that it does not apply to new or different services.  In this scenario, if the contract had been preserved, there may have been the opportunity to argue that the limitation clause applied.

It is recommended that the contracts be preserved, either physically or electronically, so they can be readily retrieved.  In addition, the contracts should be periodically reviewed and updated, including having the client either execute the updated form, or reaffirm in writing that they are being bound by the contract.

Scenario Number 2 – The Question of Language: The teleservices company, "Doctors On Call" ("DOC"), performed call processing and dispatching services for a group of physicians, pursuant to a written contract.  This contract contained no damage limitation provisions, nor any restrictions on liability.  DOC had only recently obtained this account, but knew that the medical group was located in a predominantly Spanish speaking area.  Further, in the first few days of its contract, DOC answered a number of calls from patients who initially responded in Spanish, but switched to English, as DOC's call center agents spoke only English.

A call came in one evening from a patient who was experiencing some severe chest pains.  This patient, however, spoke only Spanish and had only a limited understanding of the English spoken to him.  DOC's agent spoke only English and, as a result, could not understand the symptoms being described by the patient.  After some minutes of trying to elicit information, the agent understood a name of one of the doctors and paged that doctor.  It turned out that the doctor who was paged was not on call, but rather referred the patient to the "on call" doctor.  A delay occurred before the on call doctor could talk with the patient.  Ultimately, the patient was hospitalized for a serious condition that became chronic.  The patient sued the medical group for negligence in failing to respond to the call in a timely manner, contending that if treatment could have been provided earlier, the condition could have been prevented or mitigated.  The medical group, in turn, filed a third party action against DOC, asserting that it breached its contract and acted negligently in failing to promptly respond to the call and in failing to have staff who understood Spanish, when DOC knew that the patients of the medical group were predominantly Spanish speaking persons.

DOC was defended in the action by its insurer, which reserved its rights on the basis that any interpretation services were not within the scope of the policy, as no endorsement had been requested.  Ultimately, the matter was settled, but DOC was required to contribute to the settlement, on the basis it could have acted more promptly if it had understood and been able to forward the proper message.

Suggested Way to Avoid or Mitigate the Claim: In this scenario, the most important lesson to be learned is to "know your client."  Here, DOC knew, or should have realized, that its client required "special" types of services, specifically bilingual staff.  DOC could have either had agents handle the account who were bilingual, with possibly an additional charge, or had an exception in its contract as to any responsibility for improper translation.

It is also important to note in this scenario that the insurer reserved its rights, based on the apparent lack of coverage for translation services.  The teleservices company should review its insurance coverages periodically, especially where new or different services are being added or assumed.  In many cases, coverage for these services can be obtained by endorsement after discussion with the insurer, if the coverage is not already in the policy.

In conclusion, we may all think this could never happen to us.  But in reality, it is happening all around us.

Martin Ween, Esquire, is with the law firm Wilson Elser Moskowitz, Edelman and Dicker.  This article was written in conjunction with Hays Companies, the program administrator for the ATSI Errors and Omissions Program.  For more information, contact Laura McCormick at 866-303-4297 or lmccormick@hayscompanies.com.

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