health care law and legislation week 6

Chapter 20

Professional Liability Insurance

LEARNING OBJECTIVES

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

• Explain the elements and conditions of an insurance policy.

• Describe the investigation and settlement of claims.

Insurance Policy

• Insurance 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.

Liability Insurance

• Purpose of liability 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.

Elements of Insurance Policy

1. Identification of Risk Covered

2. Specific Amount Payable

3. Specified Occurrence

Risk Categories

1. Property loss or damage

2. Personal injury

1. illness

2. accident

3. Liability

1. professional

Insurance: Policy Types

1. Occurrence

2. Claims-made

3. Tail coverage

4. Umbrella

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.

Insurance Policy Conditions

• Notice of Occurrence

• Notice of Claim

• Cooperation of the insured

• Co-insurance

• Assignment

• Subrogation

• Cancellation

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

Investigation and Settlement

• Duty of insurer to defend insured

• Insurer can settle claims

• Plaintiff/s sign a general release upon settlement

REVIEW QUESTIONS – I

1. Describe the elements of an insurance policy 2. Describe the conditions of an insurance policy as

described in this chapter. 3. Under what circumstances do you think a health

care professional be self-insured? 4. Why do insurance carriers require “timely”

notice of a claim? 5. Describe what occurrences an insurance policy

does not cover.