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Professional Liability Insurance

Chapter 21

LEARNING OBJECTIVES

Describe the purpose of an insurance policy including risk categories & importance of professionals to carry professional liability insurance.

Explain the elements & conditions of an insurance policy.

Describe the investigation & settlement of claims.

Insurance Policy

Insurance policy is a contract that creates legal obligations on the part of both the insured and insurer.

Insurer agrees to assume certain risks of the insured for consideration or payment of a premium.

Insurer promises to pay specific amount of money if specified event takes place.

Purpose of Insurance

Purpose of insurance is to spread risk of economic loss among members of a group who share common risks.

As risks increase, premiums increase to cover associated risks.

Premiums are placed in shared risk fund

funds are drawn to cover costs of lawsuits.

Risk Categories

Personal injury

illness

accident

Property loss or Damage

Liability

possibility the insured will become legally liable to pay monetary damages to another & includes accident and professional liability insurance.

Elements of Insurance Policy

Identification of Risk Covered

Specific Amount Payable

Specified Occurrence

Policy Period Requirements

Stated in the insurance contract.

Occurrence policy, the contract provides protection only for claims that occur during the time frame within which the policy is stated to be in effect.

Claims-made policy provides coverage for only those claims instituted during the policy period.

Tail coverage policies provide for an uninterrupted extension of an insurance policy period.

Policy Period Requirements - II

Tail coverage policies provide for an uninterrupted extension of an insurance policy period.

Umbrella policies cover awards over the amount provided in the basic policy coverage.

Policy Coverage

Amount to be paid by an insurer is determined by amount of damages incurred by injured party.

Insurance company and the injured party may negotiate a settlement prior to or during trial.

Some states have mandate consent of the court must be obtained prior to settlement of a negligence claim on behalf of a minor.

Conditions of Insurance

Notice of occurrence

Notice of claim

Assistance of the insured

Other insurance

Assignment

Subrogation

Changes

Cancellation

Uninsured Claims

Intentional Torts

Criminal Acts

Child Abuse

Senior Abuse

Sexual Assaults

Fraud

Review Case: Sexual Assault

1. Does sexual assault generally constitute rendering professional services within the coverage provisions of a physician's insurance policy?

2. Should a malpractice insurer be required to indemnify a physician for liability resulting from the sexual assault of a minor?

NO!!!

Sexual assault does not constitute rendering professional services within coverage provisions of a physician's insurance policy.

The Supreme Court of Nebraska in R.W. v. Schrein held that sexual assault does not constitute rendering professional service.

Five patients claimed they were sexually assaulted during examination & treatment.

Liability of the Professional - I

Need for Insurance: All professionals

allied health professionals

insurance relatively inexpensive

Protect yourself

Don’t practice without insurance

Prepare for the worst scenario; have no regrets

Seldom occurrence, but employer could seek recovery of losses from negligent employee

Liability of the Professional - II

Volunteer at a clinic or health fair not sponsored by his or her employer

Independent contractor providing a service in a patient’s home

Worker for an independent agency or registry

Medical Liability Insurance

Coverage

Malpractice

Acts or omissions in care

Coverage varies company to company

Self- Insurance

Against malpractice risks

due to high costs of primary coverage

actuary to determine the proper level of funding

Purchase excess coverage

Protecting the Organization

Self-insurance

Trustee coverage

Mandated medical staff insurance coverage

Investigation & settlement of claims

TeleMedicine

Telemedicine can involve misdiagnosis.

Failure by a radiologist, for example, who incorrectly interprets a patient's radiology images on an offsite remote electronic device, can lead to a patient’s injury and thus a lawsuit could ensue.

Healthcare providers practicing telemedicine should confirm coverage with their insurance companies.

Investigation and Settlement

Duty of insurer to defend insured

Insurer can settle claims

Plaintiff/s sign a general release upon settlement

REVIEW QUESTIONS

Describe the elements of an insurance policy

Describe the conditions of an insurance policy as described in this chapter.

Under what circumstances do you think a health care professional be self-insured?

Why do insurance carriers require “timely” notice of a claim?

Describe what occurrences an insurance policy does not cover.