DCMS

Medical Professional Liability

Regardless of whether you will be practicing as a solo physician or joining a medical group, you should consider hiring a competent healthcare attorney to help guide you through the process. Solo practitioners should also consider using a practice consultant. Many new physicians are reluctant to spend the money on these professionals, but our experience tells us that successful physicians and medical practices have either a good healthcare attorney, practice consultant or both guiding them through this process. “Sometimes you need to spend money to make money”.

The following should be considered as you launch your professional career.

What is a Claims Made Policy Form vs. an Occurrence Policy Form

A Claims Made policy offers coverage for a claim arising from a healthcare event that not only occurred on or after the retroactive date (as set forth in the Declarations Page of the policy), but also was first made against an insured during the policy period. Claims-made coverage is generally inexpensive at first, and gradually increases or “steps up” over a period of time (commonly five years) to a “mature” claims-made premium. An Occurrence policy offers coverage for claims arising from an event that took place during the policy period.

What is the Claims-Made step process?

  • Coverage Trigger: A claim must be both made (i.e., asserted by the patient) and reported to the insurance company during the policy period to be covered.
  • Retroactive Date: Many claims-made policies have a retroactive date. Incidents occurring before this date are generally not covered.
  • Tail Coverage: To ensure continued protection after a policy expires, you typically need to purchase a separate “tail” policy. This covers claims made after the policy ends, but that arise from incidents that occurred during the policy period.

What are the Statute of Limitations on Claims Made policies?

  • Time Limit: This is a legal deadline within which a patient must file a lawsuit against a healthcare provider for medical malpractice.
  • Varied Timeframes: The specific time limit varies by state.
  • Impact on Claims-Made: The statute of limitations can impact when a claim is considered “made” for purposes of a claims-made policy.

What is a "tail", or an "Extended Reporting Endorsement"

Applicable to claims-made policies, this coverage allows the insured to report claims first made after a policy termination date. However, such claims must result from an event that occurred on or after the retroactive date, but prior to the policy termination date. Some carriers waive the additional premium for this coverage in the event of an insured’s death, disability or permanent retirement.

Policy Coverages

Limits of Liability

Medical malpractice insurance policies have limits of liability, which are the maximum amounts the insurer will pay for covered claims. These limits typically include:

  • Per-occurrence limit: The maximum amount the insurer will pay for a single claim arising from a single incident.
  • Aggregate limit: The maximum amount the insurer will pay for all claims during a policy period, regardless of the number of incidents.

What is a Claims Trigger?

In medical malpractice insurance, a “claims trigger” determines when a claim is considered to have been “made” against the insured, which is crucial for coverage under a claims-made policy.  

  • Written Demand Trigger: This is the most common type. A claim is considered “made” when the insured receives a written demand for money or services from a patient or their representative. This can include:

    • A letter from the patient or their attorney
    • A formal lawsuit filed in court 
  • Incident Trigger: This is a broader trigger. A claim is considered “made” when the insured reports an incident to the insurance company that they reasonably believe could result in a claim. This allows for earlier reporting of potential issues and can provide broader coverage. 

What is consent to settle?

A policy provision that requires an insured’s consent before the carrier may settle a claim on behalf of the insured. An example of sample language: “Written consent of the first named insured only is necessary and sufficient for the Company to settle any claim or other matter brought against an insured facility or its agents.”

What is covered under a Medical Director Policy?

Medical director insurance covers claims arising from the medical director’s administrative and supervisory duties, such as:

  • Errors in judgment: Incorrect policy implementation, inadequate supervision, or failing to address quality of care concerns.
  • Breach of contract: Failing to fulfill contractual obligations with the facility or with patients.
  • Negligent hiring or supervision: Failing to properly screen, train, or supervise staff.
  • Regulatory violations: Failing to comply with relevant regulations and standards.

What is Regulatory & Cyber Coverage

Regulatory & Cyber Coverage is a type of insurance that protects businesses from the financial and legal consequences of:

  • Regulatory Non-Compliance: Fines, penalties, and legal costs associated with violations of laws and regulations, such as data privacy laws, environmental regulations, and industry-specific rules.
  • Cybersecurity Incidents: Losses resulting from data breaches, cyberattacks (like ransomware), data theft, and other cyber threats, including:
    • Data breach notification costs
    • Legal defense and investigation expenses
    • Business interruption losses
    • Reputation damage

What is Expert Witness/IME coverage?

Expert Witness/IME Coverage is a type of insurance that protects healthcare professionals from financial losses related to their involvement in legal proceedings as expert witnesses or Independent Medical Examiners (IMEs).

Here’s what it typically covers:

  • Legal Defense Costs: Covers the costs associated with defending themselves against claims of malpractice or negligence related to their expert witness testimony or IME reports.
  • Professional Liability: Protects against claims of professional misconduct, such as providing inaccurate or misleading testimony, breaching confidentiality, or violating ethical standards.
  • Loss of Income: Provides compensation for lost income if the healthcare professional is unable to practice due to legal proceedings or investigations related to their expert witness activities.

Who Needs It:

  • Healthcare professionals who frequently serve as expert witnesses or IMEs in legal proceedings, such as physicians, surgeons, psychologists, and other medical specialists.

Carrier Considerations

What to look for in a professional Liability Carrier

AM Best RatingsThis independent rating agency assesses insurers’ financial strength and ability to meet policy obligations. A high rating (A or above) indicates strong financial stability, crucial for long-term coverage.

Financial StabilityA financially sound carrier ensures your claims will be paid in full. Look for factors like strong reserves, consistent profitability, and a history of meeting financial obligations.

Reputation for Defense – A carrier with a strong defense team and a proven track record of successful claim defense is invaluable. Look for experienced attorneys, strong relationships with expert witnesses, and a history of favorable claim outcomes.

Risk Management – A carrier that emphasizes risk management provides valuable resources like:

  • Risk management consultations: Expert advice on improving patient safety protocols and reducing malpractice risk.   
  • Educational resources: Access to webinars, seminars, and other resources on risk management best practices.   
  • Claims prevention programs: Initiatives designed to proactively identify and address potential risk areas.

Benefits – Consider the specific benefits offered by each carrier, such as:

  • Tail coverage options: Flexible and affordable options for extending coverage beyond the policy period. 
  • Discounts: Potential discounts for factors like CME participation, risk management initiatives, or membership in professional organizations.
  • Customer service: Responsive and helpful customer service is crucial for a positive policyholder experience.
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    Tom Murphy

    Tom Murphy
    Managing Director
    p 561-459-2879  | c 561-445-9626
    tmurphy@risk-strategies.com

    Kyla Murphy

    KylaMurphy
    Managing Director
    p 561-459-2881 ext 3953  | c 561-613-9527
    kyla.murphy@risk-strategies.com