Learning from Incidents - Objections from Lawyers and Insurers

After an accident, serious incident or near miss, it is in the interests of everyone connected to it and affected by it to:

• Understand what happened,

• Understand why it happened, and

• Identify ways to prevent reoccurrence (or at least make it less likely)

Conducting a learning centred investigation* is important to achieve these aims, but to do so, it is vital that one purpose is explicitly excluded from the investigation, to assign fault or blame. To fully understand what happened and why, we need people to be as open and candid as possible. They won't do this if they worry that what they say will get themselves or others in trouble.

Associated with learning investigations are reporting systems that give people an avenue to report hazards they've encountered, near misses, mistakes they've made, or incidents that have occurred. Like learning investigations, they encourage disclosure by having protections against blame or punishment being imposed from a report they've made.

Protections under learning investigations and reporting aren't without limit. There are circumstances where making a report should not shield a person from just accountability for their actions, such as where they have acted maliciously or with gross disregard for serious risks that cannot be justified. If evidence emerges during a learning investigation of such behaviour, a disciplinary investigation should be undertaken separately from a learning investigation.

Reporting systems and learning investigations are therefore an important tool for organisations and individuals to improve their future performance, to avoid making the same mistakes over and over again. However, sometimes they are prevented by the organisation's lawyers or insurers, particularly where an incident being reported or investigated may give rise to legal claims against the organisation or its staff.

Lawyers and insurers may worry that information uncovered by the organisation may reveal failures by the organisation or its staff and give rise to legal liability. For example, an investigation may discover that critical risk controls were not being followed, and that the organisation had not been effectively monitoring them, or that the organisation had been warned of a weakness in their systems through a reported near miss but hadn't taken any action to fix it. The prior report or the results of the investigation might have to be disclosed in litigation, compromising the organisation's defence.

Thus, the organisation's lawyers may advise against such reporting systems and against conducting internal investigations to protect the organisation against that risk. Similarly, insurers looking to reduce potential payouts may prevent reporting and investigations by threatening to revoke their insurance coverage. Investigations might be able to be done after any litigation has concluded, but this usually means waiting years, by which time any meaningful learning opportunities have largely evaporated.

So, if an organisation wants to be able to learn effectively, are there ways to overcome this issue from their lawyers and insurers? It is a tricky issue, but I do have a few suggestions, which I outline below.

Long-term vs Short-term Gain

Engage in a discussion with your lawyers and insurers where you consider not the potential costs arising out of the present incident, but of future incidents. After all, what has happened once can happen again. Unless the organisation can understand what happened in a deep way and learn from it, the risk of reoccurrence is high. Preventing reporting or internal investigations might save the organisation in the short term by avoiding or limiting liability, but the long-term cost from repeat future incidents may be significantly higher. By looking at risk more holistically, it may become apparent that it is better to risk increased liability now, to learn effectively and reduce future risk. Doing so will protect the organisation much better in the future, no claim at all is better than a successfully defended one and will make the organisation a better ongoing insurance prospect.

Gently challenge excessive caution and fear

Lawyers and insurers tend to be cautious creatures. They are trained to see the glass as half empty and see all the ways things can go wrong. They can be a useful brake on management's excitement with a bright new idea which they want to implement immediately, with the slight flaw that it turns out to be highly illegal. But this mindset can also lead to excessive caution and fear of anything outside the norm. It could be risky; easier just to say no. In these instances, this instinct needs to be gently but assertively challenged. I hear you're concerned an investigation might hurt our legal position. How might that happen in this specific case? Where precisely does the risk lie, and how significant is it? Where has an internal investigation caused a problem for others in the past, and how did this come about? In this case, is the organisation going to be/not be liable anyway, therefore does it actually make a difference whether we investigate or not?

It is also important to remember that the organisation's lawyers work for the organisation. (Although sometimes the organisation will be relying on lawyers engaged by their insurer, and yes, they are lawyers for the insurers first and foremost.) Nevertheless, it is entirely reasonable to ask the lawyers to put their thinking caps on and be creative, ok, recognising this concern, how can we manage it in a way that will still allow us to investigate this incident? It doesn't always have to be an all-or-nothing proposition, there may be ways of conducting the investigation or designing the reporting system in a way that will manage liability concerns. We shouldn't forget that incident reporting systems and internal learning systems are normal parts of many industries, such as aviation and oil & gas, and these are not leading to regular catastrophic litigation losses for operators; these issues can be managed. In fact, insurers in those industries have recognised the value these systems have for reducing risk.

Point to any legal obligations to facilitate reporting and conduct investigations

Depending on the jurisdiction the organisation operates in, there may well be legal obligations to facilitate incident reports and to conduct internal investigations. Work Health and Safety ('WHS') is a common source of these, requiring employers to identify hazards and incidents, and in the case of injuries, notify regulators. Meeting these obligations will require a reporting system of some kind. Further, as mentioned above, learning investigations are an important way for organisations to manage risk, including WHS risks. An organisation that isn't investigating incidents and near misses could well be in breach of their WHS obligations. Similarly, there are often obligations on employers to prevent and investigate harmful behaviours such as sexual harassment. Unless an organisation is able to receive reports, investigate and learn, there may be legal compliance consequences.

If the organisation is providing training, then understanding incidents that occur is important for identifying any areas of training which been ineffective, insufficient, or absent. This knowledge can then be used to improve the training system. For example, airlines are increasingly adopting evidence-based training, where incident and other data from the safety management system is fed into the training system for continuous improvement, allowing the training system to focus on those issues which are causing problems out in the field. An organisation that is not looking at their effectiveness of its training systems through reports and investigations is also potentially at legal risk.

Point out the benefits of forward accountability

It can be useful to point to the benefits of forward-looking accountability. Forward-looking accountability in this context is when an organisation, rather than looking backwards to assign blame, looks forward to asking, who is hurting/what is broken, what needs to be done to restore the situation, and can we learn to prevent reoccurrence? An organisation that commits itself to that process (which usually involves gathering reports and learning investigation) can significantly reduce conflict post-incident, akin to restorative justice processes.

After a safety accident, it is common for victims to want reassurance that actions are being taken to ensure that someone else doesn't have to go through what they did. An open and transparent investigation based on learning can go a long way towards meeting that need. Studies in healthcare have shown that after a medical error has occurred, hospitals that apologise, investigate to learn and show what they are doing to improve their systems to prevent reoccurrence significantly reduce the chance a patient or their family will take legal action.  Indeed, one of the factors that drives people to resort to the legal system is because they don't feel heard and want to make sure there is accountability for their loss or suffering. Accountability need not be expressed in that way, but refusing to admit mistakes and learn from them leaves victims with few other options.

If a regulator takes interest in some adverse event, an organisation that conducts a comprehensive and transparent learning investigation and puts the subsequent recommendations into action is more likely to avoid enforcement action or prosecution. In these circumstances, the regulator can be more confident that the event is unlikely to represent an ongoing risk to the public or regulatory non-compliance. Going to a regulator and saying, We got a report from a staff member, investigated, found we were non-compliant, and here's how we're fixing it is a much better position to be in than that regulator finding out directly from the staff member because they had no internal options.  If a prosecution does occur, organisations which have taken proactive steps to learn and improve are going to be treated a lot more favourably in sentencing than those who have buried their head in the sand.

Have the organisation's lawyers commission an investigation report from an external provider

Having an investigation conducted by an external provider on instructions from the organisation's lawyers can usually (but not always) shield the investigation report from disclosure in litigation because it will be protected by legal professional privilege. This allows the investigation to cover sensitive areas which could give rise to liability. However, one downside is that it muddies the purpose of the investigation. Rather than about learning with the aim of making recommendations to prevent reoccurrence, officially, the purpose is to assist the lawyers in providing legal advice to the organisation. This is not ideal, but sometimes the only available option and better than nothing.

Advocate for legal reform for the protection of reporting and investigation data

It is clearly in the public interest that organisations hear about hazards, mistakes, and incidents that occur in their operations, and if necessary, investigate, learn, and put in place measures to improve performance. If the working of the law is discouraging organisations from doing that, then we should advocate to change it. There are certainly precedents available for the protection of that kind of information.  In Australia, if the Australian Transportation Safety Bureau ('ATSB') investigates an aircraft incident and produces a report, that report and the investigation material behind it are inadmissible in court, both in criminal and civil proceedings. This allows people to speak to ATSB investigators and hand over material without fear that it will be used against them. In principle, there is no reason why such protections couldn't be extended to internal investigations as long as those investigations were conducted and used solely for the purpose of safety and/or learning. There would be many details to work through, but it's an idea at the very least worth exploring as a way to encourage organisations to practice forward-looking accountability.

Take Back Control

At the end of the lawyers may advise, and insurers may decline coverage, but it is up to the organisation whether or not to acquiesce. An organisation might, I think quite reasonably, say, "In this case, the risk of liability is tolerable and something we can cover even without insurance. We think the learning opportunities are significant, such that it is worth taking that risk and running that reporting system or conducting that internal learning investigation". This will not always be the case, of course, but it is worth being open to the possibility. Quite often, it is possible to find a way to resolve the liability/reporting/investigation issue with lawyers and insurers through ongoing dialogue and trust, but on occasion, keeping your eyes open and going it alone is a viable way forward, for all the benefits I describe above.

The Moral Dimension

Finally, there is the moral dimension. Some might think me hopelessly naïve for raising this, or at best overly optimistic, but surely the most important reason to have reporting systems and learning investigations is because it's the right thing to do. We should want to know what's happening in our operations, particularly the issues, problems and mistakes, understanding why it's happening, learn and act to improve it. If we have the power to do this, to prevent future harm befalling others from our operations, choosing not to so as to avoid accountability and save money is immoral.

Further, as a point of principle, if due to failures in our organisation, harm or damage has been caused to others, why shouldn't our organisation be liable? If we have stuffed up and caused harm, albeit unintentionally, should we not make what recompense we can? Some might say, yes, well, we have a fiduciary duty to protect the organisation and its resources, to ensure its survival. There is some force to that, although I would argue that it's reasonable for the public to expect organisations to examine themselves, learn and act to improve, as they expect it of their fellow citizens. The long-term character, social licence, and ability to learn are likewise important for the survival of an organisation.

Closing

This was a long one, but I hope helpful in navigating this very difficult issue. If you are currently struggling with this in your organisation, please don't hesitate to reach out, whether it's for a casual chat or something more formal.

*I actually prefer the term "review" to investigation, as the word investigation can have a lot of negative connotations associated with it, "you're being investigated!" etc. However, I use the term here because it is familiar to most people.

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DISCLAIMER: This blog provides general information only, and is not intended as advice (legal or otherwise) specific to your circumstances. Please contact us if you have any particular questions.