Philadelphia Insurance Companies-sponsored Business Insurance Risk Perspective

Keeping risks top of mind in mental health services

By Lorri King, Assistant Vice President of Underwriting and Product Manager, and Jeffrey Collins, Vice President  of Underwriting, Philadelphia Insurance Companies


Millions of people in the United States suffer from mental illness. According to the National Alliance on Mental Illness, one in five adults will experience mental illness, and one in 25 adults will have a serious mental illness. As a result, thousands of mental health organizations — both for-profit and non-profit — exist to treat these conditions and provide recovery resources. These organizations have significant, complex exposures that call for careful risk management strategies and comprehensive insurance programs.

Lawsuits alleging negligent supervision are a frequent source of claims in mental health care. Sadly, mental illness is often implicated in suicide and self-harm. Suicide is the 10th leading cause of death in the United States, and it is the second-leading cause of death for individuals between the ages of 10 and 34, according to the Centers for Disease Control and Prevention.

But suicide is not the only source of liability claims. Other risks include abuse, whether by staff or other patients; inappropriate administration of medication; property damage; and automobile accidents, which may occur when facilities transport patients.

Mental health facilities themselves are diverse; some are residential, offering inpatient treatment, while others deliver services on an outpatient basis, and still others provide care remotely through telehealth. Each setting carries its own unique set of exposures, which may vary depending on location, staffing and types of services provided.

Risk mitigation steps

With so much variability in mental health care, organizations that provide treatment should adopt consistent practices to mitigate their risks. Recommended practices include:

Well defined policies and procedures. Having good policies and procedures in place is one thing; ensuring they are followed consistently is another. Policies and procedures that are important for mental health organizations include thorough vetting of staff, both before hiring and periodically during their employment; maintaining reasonable staff-to-patient ratios; and conducting regular bed-checks if a facility offers residential treatment. 

Compliance with licensing and other regulations. Federal, state and local authorities may impose standards and other specific requirements for mental health organizations to operate. This is particularly important when an organization is providing telehealth services to patients in other states, because health care laws and regulations will also apply where treatment is being delivered, not only where the provider is based. Ensuring compliance with the various state regulations and maintaining the proper licenses to deliver services are critical steps.

Documentation and recordkeeping. Compiling and protecting the personal health information of patients is not only a legal requirement under the Health Insurance Protability and Accountability Act (HIPAA), but it also is an important practice in delivering quality care. Documentation and communication can be especially important during transitions of care, such as staff shift changes, if a patient has shown signs that he or she is suicidal.

Training. An unfortunate reality in mental health care is a high turnover in staff, making training an ongoing need for many organizations. In addition, mental and behavioral health organizations face a looming shortage of qualified workers in the next decade. The National Center for Health Workforce Analysis, in a 2019 report, noted that "The shortage of an educated and seasoned behavioral health workforce is exacerbated by high turnover rates, a lack of professionals, aging workers, and low compensation." Documenting training for all direct service providers is highly recommended.

Analyzing losses. Data on an organization's loss history can provide valuable insights that help strengthen its risk management practices and reduce the likelihood of future claims. To obtain a complete picture of their claims history, mental health organizations should work with trusted risk advisers and insurance partners.

What to look for in insurance

Even though many insurance companies offer policies for health care entities and nonprofit organizations, mental health services are a specialized class with unique risks. Mental health organizations should work with a knowledgeable agent or broker and look for the following when seeking insurance:

  • Broad coverage. Mental health organizations may employ nurses, social workers, counselors and therapists, and contract with psychiatrists, psychologists, and others. A broad definition of who is covered by the policy, encompassing medical malpractice and professional liability, is a valuable feature.
  • Risk management services. Expert risk management and loss control services, available from agents and brokers or with an insurance company, can assist mental health organizations in implementing best practices.
  • Claims insights. An insurance company that has deep experience writing mental health organizations will have extensive data on claims, which it can analyze to identify loss trends and make recommendations to its agents and policyholders.
  • Commitment to mental health organizations. Partner with an insurer that is committed to the mental health sector. Philadelphia Insurance understands this business and has been underwriting the property and liability risks of mental health organizations for more than 20 years.

To learn more about managing risk and resources for mental health organizations, please visit

 LoriKing_761 Jeff Collins

Lorri King is Assistant Vice President and Product Manager, and Jeffrey Collins is Vice President of Underwriting at Philadelphia Insurance Companies.

The information and suggestions presented by Philadelphia Indemnity Insurance Company is for your consideration in your loss prevention efforts. They are not intended to be complete or definitive in identifying all hazards associated with your business, preventing workplace accidents, or complying with any safety related, or other laws or regulations. You are encouraged to alter them to fit the specific hazards of your business and to have your legal counsel review all of your plans and company policies.