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Insurance Issues Medical Device & Life Science Companies Face Using Sales Reps

When it comes to insurance coverages for Medical Device & Life Science distribution companies, products liability coverage is needed, even if they aren’t the actual manufacturer, because there is little doubt everyone will be pulled into a lawsuit if you are involved with the product in any way.

Don't think so?  Then check out this litigators perspective on "how to identify all potential defendants" in a product liability case: 

“As a general principle, you want to include any and all parties involved in the chain of distribution (the path that the product takes from manufacture to distribution to the customers) of the injury-causing product.

Since sales reps often go into operating rooms, company execs often ask if their reps are a possible cause of a professional liability claim should there be a claim if a patient has a bad outcome? 

Though sales reps do sometimes say things that may cause problems for their companies later under a deposition,  a sales rep in the operating room or doctor’s office to observe the use of the product does not mean they are providing any kind of medical services.  They aren’t licensed physicians and are prohibited from direct patient contact.

For an expert view from an underwriter of a leading insurance carrier that focuses on this sector, and how sales rep activities are indeed still covered under a company’s products liability policy, I want to share the following explanation from Medmarc's Chief Underwriting Officer, Francis A. Stockwell:

“A products liability policy is meant to cover anyone acting under the direction, control or supervision of the named insured, whether it’s an employee or independent sales rep (i.e. a “1099 contractors”). The personal acts or omissions connected with the sale, lease, or delivery of any medical device or drug sold, handled, distributed or disposed of by the company are not construed to be medical professional services, but fall instead within the products liability policy’s definition of the “completed operations hazard” and “your work.”

Remember, you can never control who will sue you and for what type of claim.  Which is why having the defense costs covered so important. 

Medical Device and Life Science companies are specialized and don't have the same insurance needs as say a restaurant.   Make sure you address all of your needs when putting your insurance program in place. 

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