Regular readers of “Malpractice Chronicle” know that all types of cases—from instances of clear-cut negligence to those of obvious noncompliance by the patient—find their way into the legal system. It often seems that there is no rhyme or reason to how a verdict is decided or how high the judgment or settlement is. In light of this unpredictability, protecting yourself—with liability insurance acquired through your practice or on your own—seems like a no-brainer.
Always There for You
It’s hard to imagine any clinician “going bare” and having no liability coverage at all. At the very least, most will be covered by their employer’s policy. But there are advantages to having your own malpractice insurance.
For one thing, it’s portable—wherever you practice, the policy goes with you—and it covers all aspects of professional liability. “It protects you 24 hours a day, so if you’re moonlighting, if you’re volunteering, you’re protected,” says Rebecca S. Crosby, Vice President of Marsh, the insurance brokerage for the American Academy of Nurse Practitioners (AANP). “It also protects you if you give advice—friends and family sue, too.” The policies offered through AANP and the American Academy of Physician Assistants (AAPA) also provide coverage for policyholders who are called before their state licensing board.
The policy is also 100% yours. “You are the only named person on the policy, so the limits are not shared,” says Ellen Rathfon, Senior Director of Professional Affairs for AAPA. “If you’re covered by your employer, the limits may be shared among several people—or a lot of people, depending on what kind of policy it is.”
In the event of a lawsuit, you will have your own legal representation. “There can be conflicts of interest between an employer or a supervising physician and the PA; they could be pointing fingers at each other,” says Gary M. McCammon, President of Professional Risk Advisors, Inc, the AAPA’s insurance broker. “And when a case is ultimately settled, or maybe it even goes to trial, the apportionment of liability can be greater if the PA is not in a position to negotiate his own liability.”
This can be important, because settlement information is reported to the National Practitioner Data Bank. Cases are often settled because it is ultimately less costly than taking a case to trial. Even a successful defense costs money, after all. But if a group of providers is named in the settlement, and they are covered by a single employer policy, the individual clinician may not be in a position to decide what portion of the settlement is his or her responsibility.
“Now, it doesn’t come out of their pocket, it comes out of the insurance,” Rathfon acknowledges. “But in the Data Bank, that clinician might have a high payment value.”
ow Risk, High Cost?
You may think that PAs and NPs don’t get sued. Actually, they do. Not as often as physicians do, certainly, but even a small risk can carry a big price tag.
An analysis of data from the National Practitioner Data Bank, published earlier this year in the Journal of Medical Licensure and Discipline (a publication of the Federation of State Medical Boards), indicated that approximately 3% of active PAs and at least 1.5% of active APNs made a payment during the 17-year study period. However, while PAs and APNs accounted for 0.003% and 0.007%, respectively, of the $74 billion in malpractice payments made from 1991 to 2008, the mean/median payments for these providers were $173,128/$80,003 and $350,540/$190,898, respectively. The risk may be small, but is it one clinicians can afford?
“If you look at the spread of payments, some of them are really high,” Rathfon says. “And I think most people look at that and say, ‘I don’t want to take that risk.’”
In some cases, verdicts are exceeding even the limits of the defendant’s insurance, says Michele Kauffman, JD, PA-C, Chair of the Physician Assistant Department at Gannon University in Erie, Pennsylvania. This can open clinicians up to personal liability; while this hasn’t really happened yet, it’s a sobering possibility.
“Some states—Pennsylvania is one of them—now require PAs and NPs to have a minimum insurance, whether it’s through their employer or on their own,” Kauffman says. “In order to get their license, they have to prove that they have that insurance.”
Oh, and that old “deep pocket” argument—the idea that having liability insurance will just make you a target for litigation—is “a fallacy,” according to Crosby. “They’re going after everybody who even said ‘good morning’ to the patient. They don’t know if you have insurance until you’re in the discovery phase of the case.” By then, it’s too late to think about obtaining malpractice coverage.
Know Your Limits
Whether or not you opt for your own policy, know what coverage you do have. If you’re covered through your employer, make sure you have (at the very least) a copy of the declarations page, which will provide the name of the insurance company, the policy number, and the terms of coverage. McCammon suggests making it a condition of your employment that your employer will provide this information every year.
“People need to know their limits and know that they are individually named under those limits,” Rathfon says. “And they need to feel confident that there’s enough coverage, whatever the policy is, whether it’s their own or through their employer.”
Familiarize yourself with the type of policy you have: Is it occurrence-based or claims-made coverage? The former applies to any incident that occurs during the period of coverage, even if the claim is made years later. The latter covers claims filed during the life of the policy; people with this type of policy often purchase tail coverage to close any gaps that may occur. McCammon, who has authored a series of articles on liability insurance that can be found in the “Advocacy and Practice Resources” section on the AAPA Web site (www.aapa.org), says one type is not better than the other.
Occurrence-based coverage may be easier to manage; you file a copy for your records and hope you never need it. As Crosby says, “You can be retired and lying on the beach in Florida, and if there’s a lawsuit over something that happened in your last year of work, you would be covered.”
However, the economic downturn has highlighted one drawback to occurrence-based coverage: The company that covered you 10 or 20 years ago may not be in business by the time you have a claim. “Ten or 20 years ago, that was not a real issue,” McCammon says, “because companies just didn’t go under. But in this day and age, companies are getting out of the business or going out of business.”
That doesn’t mean you should avoid occurrence-based policies. But you might do a little extra homework on a company’s financial stability and longevity.
Rates depend on a number of factors, including geographic location and specialty of practice. AANP members can find information at www.proliability.com. AAPA members can contact AAPA Insurance Services at (877) 356-2272.