I must confess. I have an Apple iPhone and have never read Apple’s user or licensing agreement. Have you? I assume that most of you have not read Apple’s agreements. Like most of you, I ain’t got time for that. I scroll to the bottom and “Agree” to the terms, not knowing what is truly in those documents. Is that a problem?
Right or wrong, I presume that by using Apple’s iPhone, they have access to my contacts, emails, and location. I also believe they listen in on every conversation and bad joke I tell. I assume that since others have signed it, I probably should follow their lead. Come on now, am I really going to call Apple’s lawyers to have the agreement edited?
Because none of us read the Apple agreement, it does not mean that we should behave similarly regarding other legal documents requiring our review. In a highly litigious and high-stakes environment like medicine, we should review each document we sign and agree to. If not reviewed by us, it should be reviewed by an attorney. When agreeing to a new contract with a hospital, it is wise to read it ourselves and have a professional look over it. Why is it that we don’t do the same when it comes to reviewing our malpractice policies? Shouldn’t we know how well we are protected if we are involved in a malpractice suit?
It is safe to say that most practitioners have never read nor considered reading their actual malpractice policy documents. We are busy practitioners; we ain’t got time to read that. Instead, we are handed a certificate of insurance (COI) that confirms that we are covered and never take the time to read the actual policy documents. The COI makes us feel warm and toasty on the inside, knowing that we are covered for malpractice, but are we? The COI can be misleading. It is a single-page document demonstrating proof of insurance. That’s it! The COI tells us the name of the malpractice carrier, the policy number, and the dates the policy is active. It also tells us if it is a claims-made or occurrence-based policy. That is it! Don’t you think there is more to a malpractice policy than those items-alone?
As with most things in life, the devils are in the details. In this case, the details are in the policy documents, not the COI. Knowing that you have a claims-made or occurrence-based policy from the COI is not enough. There is more to these policies, much of which is hidden in the policy documents. Not all claims-made policies are the same, and neither are the occurrence-based ones. The policy documents highlight how well the malpractice carrier will protect you if there is an error, mistake, or frivolous claim.
Have you ever called a broker for an auto insurance quote? You likely have, and you might recall them asking about different options, coverage amounts, and deductibles. There are many layers to an auto policy and many options. Similar, malpractice policies are complex and have many clauses and provisions you might not be aware of. Don’t you think we should know more about our malpractice policies than if it is a claims-made or occurrence-based policy?
We briefly review some items found within documents of a malpractice policy. This is meant only as an overview. Each practitioner should research these items further.
#1. Individual vs. Group Policy. Individual policies generally benefit the practitioner. The more expensive the policy, usually the better it is. Group policies are often written to benefit a facility or malpractice carrier over the practitioners. This is what allows the group policies to be cheaper.
#2. Claims-made vs. Occurrence-based malpractice policies. Occurrence-based is best and usually does not require tail insurance. An occurrence-based policy provides a new $1/3 million policy each year, so after 20 years, you really have a $20/60 million policy. A claims-based policy requires you to purchase tail insurance if you cancel the policy. You also have the option of keeping the policy active to avoid having to get tail insurance. Claims-made policies are cheaper and only provide a $1/3 million coverage for the length of the policy, unlike an occurrence-based.
#3. Exclusions. Each policy will have exclusions stating which procedures and medical treatment they do not cover.
#4. Deductibles. Some cheaper policies will require the practitioner to pay a deductible before the carrier pays to defend you.
#5. Hammer Clause. This clause is found in cheaper policies, especially cheaper group policies. This clause is built so the malpractice carrier can limit their legal fees and potential losses. The malpractice carrier can inform the practitioner that they would prefer to settle a claim for an “X” amount of dollars. Suppose the practitioner does not agree to settle, and a judgment is made against the practitioner. In that case, the practitioner will be on the hook for the additional losses beyond what the carrier initially wanted to settle for.
#6. Deems Expedient. This clause is where the malpractice carrier can elect to settle a malpractice suit without the practitioner’s consent. It is preferred that the policy has a “pure consent to settle”clause, which requires the practitioner to decide if they are to settle or go to trial.
#7. Legal Fees. Ensure that no policy verbiage requires the practitioner to pay for legal fees. More so, ensure the carrier covers legal fees and that the legal fees do not count against your $1/3 million policy. In other words, make sure that $1 million is reserved to settle a claim, not to pay the carrier’s lawyers
#8. Admitted vs Non-admitted Carriers. It is preferred that you work with “admitted” insurance carriers that offer standard market malpractice policies. “Admitted” carriers must follow state guidelines and are backed by the state’s “guaranty fund” if they become financially insolvent. There are many different types of “non-admitted” carriers. These carriers are not required to follow state guidelines, nor do they have access to the guaranty fund.
This is only the start. There is much more to learn about malpractice policies and how well they protect you. It would benefit practitioners to educate themselves about the details of a malpractice policy. At the beginning of a new policy, ask for the policy documents. Unlike your iPhone agreement with Apple, take the time to read this. You never know what might be lurking in the policy documents that you would not have known by only looking at a COI.