The need for professional liability insurance has increasingly become a front-and-center issue for many professional industries, including in real estate, law, technology, insurance and allied health. In the medical profession, perhaps more so than others, it has always been a top-of-mind concern due to the nature of the services provided and the litigious environment physicians, surgeons, dentists often face. Today, with recent reforms and new regulations, these professionals are even more vulnerable to alleged wrongdoings and potential violations. As with other professional liability lines, the coverage needed is complex and requires the knowledge of a specialist who understands the exposures and the type of products available.
We turned to Frank Coble, National Account Executive at Axis Insurance Services, LLC to discuss the Professional Liability landscape for the medical profession. Founded by Mike Smith in 1999, Axis Insurance Services is a Professional Liability insurance brokerage, with licensed agents nationwide, providing custom coverage for Errors and Omissions, Directors and Officers, Employment Practices, Commercial Crime, and Privacy/Network Security.
Frank joined the company in 2010, bringing with him a wealth of experience in the medical malpractice arena. Prior to working for the company, Frank owned an insurance agency and was CMO of a medical malpractice insurance company in New Jersey called MIIX (Medical Inter-Insurance Exchange). He also negotiated to help AMMI, a risk retention group reinsured by MIIX, become the endorsed medical professional liability provider of osteopaths in New England. Frank works strictly with management liability coverages and manages the medical malpractice professional liability department.
Annie George (AG): Let's discuss what makes the medical profession unique in terms of writing Medical Malpractice insurance
Frank Coble (FC): "There are many factors to consider when writing coverage for the medical profession. It seems obvious that the coverage needed for this industry should protect them as a medical professional, but what is equally critical is customizing the right insurance program for the type of medical specialist they are and the specific exposures they may face.
For example, if an individual is an internist, you will find 15 subcategories for internal medicine. Each category is rated differently depending on the type of exposures. Therefore, it's not enough to say ‘I need coverage that covers an individual in internal medicine.' An allergist is rated differently from a gastroenterologist who is rated differently from a rheumatologist.
"What's more, it's not unusual for a physician, surgeon, dentist or other degreed medical professional to take time-off [for a vacation, etc.], and require insurance coverage for the person temporarily taking over for them. They need to have what is known as Locum Tenens coverage, which insures the temporary substitute of the insured.
"Due to the nature of their work, physicians and surgeons usually have to carry split liability limits. They will carry $1 million per claim/$3 million aggregate per policy. The hospital where a physician or surgeon is on staff will require this and, many individuals will carry even higher limits. Whereas attorneys, for example, may only have $1 million of coverage per claim and $1 million aggregate under their policy."
AG: What are some of the common claims that physicians face?
FC: "Failure to diagnose is one common claim, and with managed care we expect to see a spike in the frequency of these types of claims. Abandonment is another common claim in which a patient alleges that a physician has stopped treating him or her. Too often what has occurred in this case is that the patient has refused to do what the physician has suggested/ordered. He or she has become non-compliant and as a result the physician advises the patient that he can't help if instructions and advice are not going to be followed and appointments not kept."
"A recent study revealed that on average, over the lifetime of a medical practice, a physician will spend four hours a week involved in some type of medical malpractice litigation - whether it's a pending or current open claim that has to be dealt with. There is no other career where a professional goes into the office on a Monday morning and thinks, ‘at some point this week I am going to spend four hours dealing with claims. While many medical malpractice claims are dismissed or found in favor of the physician, the cost to defend them can still be enormous. There are hours of depositions, discovery, court appearances, peer reviews - all to find out that the physician didn't even deviate from the standard of care. These expenses have a real impact on a physician's financials."
AG: How have recent regulations and reforms over the years affected the medical profession?
FC: "With the advent of changes in healthcare regulations, even preceding the Affordable Care Act, there is an enormous amount of pressure on medical and surgical practices and groups. The days of physicians having a receptionist who answers phones and schedules appointments, along with an assistant or nurse are long gone due to these regulations and the various third-party payers with whom they work. There is a great deal of work to keep up with and this all adds to the cost of the delivery of healthcare. The profile of the medical practice has changed from being medicine-driven to being business-driven. Today, it's not uncommon to have as many people working in non-medical areas of the practice.
"Cyber Liability has become a tremendous exposure as a result of regulations and new compliance requirements. Ten years ago, no one worried about data breaches or unauthorized use of data. In the last four to five years, it has become a real issue. Moreover, with an increase in cyber-attacks coupled with the potential for hefty penalties under HIPAA and the HI-TECH Act for violations, physicians will get hit hard if they don't have the appropriate coverage. A physician needs cyber/privacy liability coverage to pay for forensics to vet the problem, defense costs, patient notification, credit monitoring, reputation and PR management, etc. - not to mention the need for spyware or malware protection on their networks."
AG: Is Cyber liability coverage available with a Professional Medical Malpractice policy?
FC: "Cyber is available as a standalone product or via endorsement to the Professional Liability policy. Depending on how one's practice is set up, the physician may want the Cyber endorsement added to the practice policy. For example, if I'm part of a five-person practice and each of us has our own Professional Liability policy in addition to having a vicarious liability policy for the practice, it would make sense to have the practice's liability policy endorsed with Cyber Liability coverage as opposed to putting it on one of the physician's policies."
AG: Do most medical Professional Liability policies include coverage for physicians after they retire?
FC: "Most policies today are trending towards claims-made as opposed to occurrence based. When you have a claims-made policy and you change carriers, there usually isn't a gap in coverage. However, if a physician retires or becomes disabled or dies, he or his estate needs to be protected, should someone file a suit years later. What many companies do in this case is add a provision stating that if the insured has been covered with them for X number of years, reaches a certain age and fully retires from the practice, a tail or reporting endorsement at no charge will be provided. The same will also apply in the event of disability or death. This practice is more common with physicians-managed insurers than commercial carriers."
"With a commercial carrier, this issue would be addressed when the physician withdraws from practice. The reporting endorsement won't be triggered until the physician retires. If the policy is written on a claims-made basis and the physician doesn't qualify for a free tail, the insurer will offer the tail coverage for one, two, three, or five years, or provide a lifetime tail for $X amount. In exchange for the tail premium, the carrier we will cover any claims resulting from treatment before retirement and reported after the policy expiration date. This will typically take place with one proviso: the physician must have $1 million/$3 million in limits before retirement with no claims made against him in the last year. The tail coverage will then be $1 million/$3 million. As claims are reported after retirement, those limits may be diminished. So if there is a $1 million paid after retirement, the insured still has $1 million per claim in coverage but only a $2 million in aggregate. Medical professionals mostly likely at risk for this are pediatricians or obstetricians because they have the longest exposure.
"With respect to policy limits, there is one issue that may not be widespread, but may have a significant impact when a claim arises, either pre- or post- retirement. Every medical professional with individual coverage should verify that their medical malpractice policy provides defense costs in addition to the per claim/annual aggregate limit. Otherwise, the cost of defending a claim will erode the policy limit, and may severely impair the ability to defend an action that should not be settled."
AG: Do you see rates going up for medical malpractice like other professional and management liability lines?
FC: "Rates haven't increased significantly yet. But, we will see rates begin to creep up...and it's time that they do. Insurers have been stable and frequency and severity levels have been under control, but the cost of defense has risen along with indemnity payments. The market will get tight again."
Axis Insurance Services provides custom Professional Liability insurance programs for medical professionals - from physicians, surgeons, dentists and other specialists to doctors' offices, occupational health clinics, and surgical clinics. They also support hundreds of other allied health positions including technicians, health officers, certified health consultants, therapists, administrators, inspectors, educators, researchers, and assistants - all who require special training, degrees, or certifications to practice in the field. For more information about Medical Professional Liability insurance products from Axis Insurance Services, LLC, please contact Frank at 201-847-9175, ext 124, or at 757-638-0373 (cell). You can also email him at email@example.com.