Liability Insurance Inquiry

[Avalon]

Good Morning,

 

I have a concern about a malpractice issue, so I am coming to what I have learned is the best place for guidance on complicated professional issues.  Here's the situation:

 

I have been insured by the same company since becoming a PA four years ago.  I have been completely satisfied with this company based on customer service, on-line support, and affordability.  I have an occurence policy that uses a class system (three classes of job descriptions, based on increasing risk).  As a family medicine PA, I have always been considered as Class 1.  I have now transitioned to an OB/GYN position, where my class will change to class 2 because I will now have pre- and post-natal exposure (but no deliveries).  I spoke to my carrier  week and was in the process of making this modification to my policy when...all hell broke loose.

 

My current SP employer informed the practice in late December that he has sold the practice to a management company.  As a side note which may be relevant, I am not an employee per se but a 1099 contractor with this SP. The new company will now be managing all business aspects of the practice, including liability insurance.  My SP and his NP/CNM partner have changed carriers, effective January 1st, and I am now being asked to do the same.  Here are my concerns:

 

The new policy is a claims made policy that covers all "para-medicals" (mid-levels, I am assuming?) on a shared limit basis.  I have been told by the agent (who was clearly annoyed that I would question any of this) that I did not require a tail upon departure from this position, and that I have no premium to pay.  She further "explained" that this was because, if and when I left the policy, a new "para-medical" would assume my place. 

 

My current policy covers me for work as a PA in multiple sites (I was in both family medicine and in this OB/GYN group simultaneously) and covers me anywhere in the world (I'd like to do some tarvel work in the future).  I asked if I could instead keep this policy and was originally told that I could not, because, if there was a claim made in the future, "we would not want any finger pointing between carriers."  I asked if the new policy would cover me in other settings, and of course I was told,  "Absolutely not!"  I was then advised that I should keep my former policy (wait - what about that finger-pointing concern you had three minutes ago?), but of course no one in the new management group would be willing to pay for it.  I requested a copy of the terms of the new policy so that I could make an informed decision and I was told, "Dr. (So-and-so, new practice manager) would not release that."

 

I can't make any sense of this mess.  All of you out there who are far more savvy than I am in these negotiations, please lend me some clarity.  I am clearly being perceived as difficult and demanding, but I just don't get it and I feel quite vulnerable.  Many thanks.

 

[GetMeOuttaThisMess]

I would keep my own personal occurrence based policy, if I could afford so, since the policy provided by the management company would have the interests of the company first in mind and not necessarily yours.  Claims-made is the type of policy that requires tail coverage, not occurrence based policies (if occurrence took place while you were covered, regardless of filing date of claim, you're covered).  Now, with regard to their having an umbrella liability policy for all their providers, that's fine and dandy and I'd get a copy of the declaration page or a statement showing that you are in fact covered (I did so with my last employer but kept my own personal occurrence based policy on the side), or better yet, both.  Bottom line, you, in my opinion, need to have someone looking out for your best interests first and foremost.  With your 1099 status, you should be able to write off the policy anyway as a business expense.  In my mind, there is no reason as to why your employer needs to know about your own policy.  I would also get the minimum coverage so as to cover potential legal costs but also to not put a target on your back.  Just my opinion....

 

Out of curiosity, how much of a premium hit would you take by jumping up one category grade?

[ventana]

I have had situations where I am only a listed insured as an addendum not actually listed as one of the policyholders.

 

What they are referring to with not needing a tale is the fact that the Corporation is still in place in therefore the policy is still in place.  In these cases it would take the Corporation dissolving or becoming uninsured for you to have liability.

 

Never believe an insurance agent on whether you should or should not have a policy, you can have multiple policies in the each should exclude each other's workplace.  I.e. I work in the emergency room in that policy only covers my ER time.  My primary job as internal medicine does not cover my ER time and is illicitly excluded.

 

It sounds like you need to go talk to a local independent insurance agent will advocate for you and spend some time educating you.

 

 

as a side note, if you are seeing patients in their office, and using their staff, you are positively not a 1099 contractor and will lose every single time to either the IRS or unemployment boards.  The liability for this mostly falls with your employer and not with you.

[GetMeOuttaThisMess]

Claims-made policies, once coverage service dates are broken, require a tail.  It doesn't matter whether you drop the policy or the employer changes insurance companies (and if management or the risk manager doesn't understand this basic point then it opens a great deal of exposure).  Once there is that break, regardless of reason, you're exposed without a tail.  That's why I recommended you having your own occurrence based policy.  Ventana is correct in that regardless of how it's explained to you, most 1099 medical situations don't pass muster with the IRS, but the heat is on the employer and not the 1099 employee.  Off the top of my head, the only thing that you have to do is make sure that you are current on your employment taxes, and don't take squirrelly deductions.

[Avalon]

Thanks for your input.  I do understand very well the difference between claims made and occurrence policies, as I have had liability insurance as a psychologist for over two decades (always occurrence, by the way, despite most of my colleagues eventually opting for claims made).  I've had a hard time wrapping my mind around the no-tail issue; thanks for the clarification.

 

The 1099 issue is yet another sore spot for me with this position.  When I was originally hired (with no contract, by the way, which I let slide because I was only working 12 hours weekly for this group and had another more extensive position in family medicine), I did not know I was being paid as a 1099 consultant.  I learned this only when I got my first paycheck.  I adressed it immediately, as this arrangement disadvantages me financially. I was told that the decision was made in order to save the SP from the approximately 10K it would have cost to make a me an employee and to put me on his liability policy.  All of this was before the buyout by the new management company. 

 

I am now told that I will be made an employee, but still there is no contract and no discussion.  I am growing increasingly frustrated. In October I was told that the group was going to hire another PA if I could not increase my hours, and that she would eventually become full-time and would likely limit my opportunity to grow with this practice.  Since this is my preferred specialty (OB/GYN), I agreed to increase to full time work with the group, and then resigned over six weeks from my family practice position.  I'm regretting this now.

 

To answer the question regarding Class 1 versus Class 2 coverage, the difference in premiums is approximately $2000 per year with my current carrier.  Since the new owner is requiring my coverage to be with this shared risk, claims made policy, the premium for my former policy will now no longer be considered a part of my compensation package (as it was when my family medicine SP paid for it).  I now have to pay for it myself if I want the additional coverage (which I do, as I see myself doing some volunteer or per diem or travel work).  I'm frustrated.  Wait - did I mention that I'm feeling extremely frustrated?

[cbrsmurf]

I don't know if anyone above mentioned already, but you are entitled to a copy of your liability/malpractice insurance.

 

Furthermore, I hope you signed a contract/agreement before you gave notice to the other FP job, just in case this ob/gyn place screws you over.

 

It does sound messy.  I, too, was an independent contractor at a couple small clinics for a while and it can be very frustrating sorting out insurance issues.

[burnpac]

Good Morning,

 

I have a concern about a malpractice issue, so I am coming to what I have learned is the best place for guidance on complicated professional issues.  Here's the situation:

 

I have been insured by the same company since becoming a PA four years ago.  I have been completely satisfied with this company based on customer service, on-line support, and affordability.  I have an occurence policy that uses a class system (three classes of job descriptions, based on increasing risk).  As a family medicine PA, I have always been considered as Class 1.  I have now transitioned to an OB/GYN position, where my class will change to class 2 because I will now have pre- and post-natal exposure (but no deliveries).  I spoke to my carrier  week and was in the process of making this modification to my policy when...all hell broke loose.

 

My current SP employer informed the practice in late December that he has sold the practice to a management company.  As a side note which may be relevant, I am not an employee per se but a 1099 contractor with this SP. The new company will now be managing all business aspects of the practice, including liability insurance.  My SP and his NP/CNM partner have changed carriers, effective January 1st, and I am now being asked to do the same.  Here are my concerns:

 

The new policy is a claims made policy that covers all "para-medicals" (mid-levels, I am assuming?) on a shared limit basis.  I have been told by the agent (who was clearly annoyed that I would question any of this) that I did not require a tail upon departure from this position, and that I have no premium to pay.  She further "explained" that this was because, if and when I left the policy, a new "para-medical" would assume my place. 

 

My current policy covers me for work as a PA in multiple sites (I was in both family medicine and in this OB/GYN group simultaneously) and covers me anywhere in the world (I'd like to do some tarvel work in the future).  I asked if I could instead keep this policy and was originally told that I could not, because, if there was a claim made in the future, "we would not want any finger pointing between carriers."  I asked if the new policy would cover me in other settings, and of course I was told,  "Absolutely not!"  I was then advised that I should keep my former policy (wait - what about that finger-pointing concern you had three minutes ago?), but of course no one in the new management group would be willing to pay for it.  I requested a copy of the terms of the new policy so that I could make an informed decision and I was told, "Dr. (So-and-so, new practice manager) would not release that."

 

I can't make any sense of this mess.  All of you out there who are far more savvy than I am in these negotiations, please lend me some clarity.  I am clearly being perceived as difficult and demanding, but I just don't get it and I feel quite vulnerable.  Many thanks.

 You are entitled to a copy of the declarations page of any policy under which you are covered. That they won't give it to you is a major red flag.

 

This doesn't constitute legal advice, but when a group is covered, and the policy remains in force, there is no need for tail insurance when an individual leaves the group. I had this exact experience when I left a large ER group. I talked with the carrier directly, and they assured my that as long as the group remained insured, any claims would be covered. I decided not to get tail even though is was covered in my contract. It has been five years, so I feel pretty safe at this point.

 

No group policy is going to cover you with outside employment. You need to maintain liability insurance specific to each practice, whether you buy it yourself, or if you are covered under their umbrella. One of the down sides of practice umbrella coverage is that the limits of liability spread among all providers. This means that it there has been a claim that was paid, the limits are now lower. We are also at the mercy of the carrier in this situation, as they are going to do what is in the best interest of practice, and you may get thrown under the bus. That said, I feel that is is better for PAs to maintain their own occurrence liability insurance, and just make it a point of negotiation. You will then have an advocate in any malpractice claim that is working only for you.

 

Keep a separate policy. They don't want any "finger pointing" so that they have more control of any malpractice situation. Your best interests are not being looked after by these folks.