Spa Management: Proper Legal Documentation

Proper documentation can protect your day spa from harmful costs to your business and reputation.

ISTOCKPHOTO.COM

As a spa owner you know that the unexpected can happen. That’s why you take the time and effort to provide a safe environment, manage your risks and get ahead of any potential hazards, thereby protecting your clients from injury and yourself from insurance claims. But the truth remains that, without good documentation and effective record keeping, you can still leave yourself open to a range of unforeseen legal consequences.

Three of the most common and troubling legal claims experienced by day spa owners are those involving: 1) simple “slip-and-falls”; 2) former employees; and 3) the “invisible client.” Let’s take a look at how these claims become potentially disastrous when proper documentation hasn’t been established.

Minor Incidents, Major Claims

Any time a notable incident occurs on your day spa’s premises that could result in a demand for money against the spa, a staff member should complete and file an incident report. Most commonly, this is a slip-and-fall claim, but many types of minor and injurious incidents can eventually lead to claims. 
Incident reports should be ready-made and readily available, and they should ask for the following information:
• Name(s) of affected individual(s)
• Date of incident
• A detailed description of the incident
• Names of witnesses

It is also important for the staff member to note any unusual conditions (or lack thereof) that may have contributed to an accident, such as wet floors, damaged equipment or poor lighting. If spa staff members accurately document the incident while the details are still fresh, it can help to defend against claims made by customers who will probably provide testimony based on somewhat fuzzy recollections given weeks or months after the incident occurred.

Why bother with all this detail for a simple slip-and-fall? Consider this typical scenario: A client enters a spa on a rainy day, taking no care to wipe her feet on the carpeted mats provided at the doorway. She does not put her dripping wet umbrella in the stand provided at the door. Instead, she shakes off the umbrella on the hardwood floor in the waiting area, and subsequently slips on the puddle she just created, injuring her ankle. 

After helping the woman and getting her proper medical care, staff reviews the area, collects a few statements from witnesses, and documents the weather, the injury and the client’s wet umbrella in the middle of the floor. Later, the woman sues, claiming that the spa was negligent by having a wet floor in the waiting area. Fortunately, because of the careful incident reporting, the spa wins this suit.

Gone, but Still a Liability

An important aspect of good documentation is maintaining up-to-date records on past employees, regardless of the circumstances of their leaving. This is because, even after an employee has moved on, a client who received treatment from him or her may sue the spa. For this reason, spas should maintain employees’ most recent contact information for at least two years from the time of their departure.

Recently, one large spa saw the benefit of this detailed record keeping. A client claimed a bulging disk in her back due to an “overly strong and physical” massage she received, and retained an attorney. Luckily, the spa kept records of services that former employees had performed as well as contact information for them. In this particular instance, even though the massage therapist was no longer working at the spa, the staff was able to contact her because they had maintained a last known address. 

At trial, both the testimony of the therapist and her physical appearance were key in obtaining a verdict in favor of the spa. The therapist provided her extensive credentials in massage therapy. That information, combined with her diminutive size, was enough to convince a jury that this injury could not have been caused by this massage. Without this witness, defense counsel believed that the potential jury verdict would have been in excess of $100,000.

Defense Against the Invisible Client

While not an everyday occurrence, phony claims can cost your spa, in terms of money and reputation. People who claim to have received services but have, in fact, never been clients, sometimes take legal action against spas and claim they were injured during treatment. Without complete documentation of their client base, owners and staff may not be able to adequately protect themselves against false or exaggerated claims.
For example, an alleged walk-in client who claims to have received a facial chemical peel sues a day spa. She claims that she was burned—one of the most common insurance claims at day spas—and retains an attorney. Even though nobody at the spa remembers her, and the plaintiff cannot give any specifics regarding the technician or the date of her treatment, and the spa staff is sure this is a scam, they have no way to make a defense. They did not keep records of walk-in clients. The spa is forced to settle with this “invisible client,” rather than risk a jury award, and the attorneys agree to a $5,000 settlement. Add to that $12,000 in attorney’s fees.

And those are not the only costs stemming from the potentially fraudulent lawsuit. It costs the spa its entire insurance deductible and increases its insurance premiums to 15% at the time of renewal. News of this claim also damages the spa’s name within the community.

The above-illustrated claim is relatively small compared to other cases, especially those involving back injury following massage. In such instances, it is not uncommon to see claims reach in excess of $150,000. Although a fraudulent claim of this magnitude would most certainly be defended more rigorously by the spa, their insurance carrier and attorneys, the risk of a major settlement would be much greater had they not made use of good record-keeping practices.

The lesson: With proper record keeping, incident reporting and documentation, spas can defend themselves against claims that someone who never received treatment was injured in their facility.

What is Effective Record Keeping?

No matter the validity or size of the claim, day spas can protect their clients, staffs and bottom lines by carefully considering the examples above and following these best practices:
• Document all customers, whether they are walk-in or by appointment.
• Document date of service, name, contact information, services performed and any obvious signs of pre-existing injuries such as infections, casts, etc.
• Scrupulously fill out incident reports whenever something occurs that may result in injury or demand, no matter how inconsequential it may seem at the time.
• Allow and encourage all staff to fill out an incident report when a manager is not immediately available.
Additionally, spa owners or managers should make sure every staff member is aware of the top claims seen by insurers of spas. Why? The most common spa treatments can result in the most common types of insurance claims:
• Muscle injuries and afflictions (back spasms, soreness, tenderness) due to massage therapy
• Burns and scarring due to facial peels
• Infections due to manicures or pedicures
• Fungal infections underneath acrylic nails

It’s true that with this careful record keeping, files can pile up and become cumbersome, whether in a file cabinet or on the spa’s hard drive. So, before turning on the shredder, check on the statutes of limitations for common claims. Depending on the state in which the spa is located, statutes of limitations for claims range from a minimum of one year (in Kentucky, Louisiana and Tennessee) to a maximum of six years (in Maine, Minnesota and North Dakota). As a rule, add one year to a state’s statute, and purge on a yearly basis.

Plus, files can be easier to handle and store with a high-quality customer management system designed specifically for salons and spas. There are many popular software packages designed for spas, so research the one that’s best for you. Most available systems are designed primarily to assist with scheduling and invoicing, but some have built-in modules to capture the information needed for liability protection. 
Though the initial setup can be a daunting task, comprehensive record keeping is an important business practice for spas. Mishaps, accidents and injuries will happen; it is only a matter of when. By establishing the correct intake record keeping, incident reporting and file management practices, any spa owner can survive unforeseen difficulties with her business and reputation intact.

Sean Brownyard is executive program manager for SASSI, the Salon and Spa Specialty Insurance program at Brownyard Group. He can be reached at sbrownyard@brownyard.com.