Today's Practice: Changing the Business of Medicine TP2018Q2DigitalEditionWeb | Page 46

L E GA L
A Best Practices Guide
Legal Defense costs are the other major exposure
covered by your malpractice insurance policy. This
coverage is responsible for providing you with a defense
and obligated to pay for it. This is a significant part of
your coverage as defending a malpractice claim can
easily cost tens if not hundreds of thousands of dollars.
Regardless of whether you’ve done anything wrong, the
cost to defend a claim can be very significant. This expo-
sure is usually the second largest expense for a malprac-
tice insurer.
What do medical malpractice policies
not cover?
Medical malpractice insurance policies usually contain
very important exclusions. These exclusions are put in
place to make sure the insurance carrier doesn’t pay for
claims that originate from conduct or situations outside
the intention of the policy terms and conditions. An
insurance carrier will usually not defend and/or
compensate on the insured’s behalf if the claim involves
an applicable exclusion.
Common coverage exclusions include intentional acts,
sexual misconduct and harassment, illegal activities such
as theft, patient or hospital record alteration, and
misrepresented or misconstrued information on an
application. This point particularly emphasizes the
importance of correctly filling out an insurance applica-
tion and giving accurate information to carriers and
carrier representatives. Also of note, there may several
specified procedures and treatments written into a
particular policy form of which will not be covered.
How much coverage should be
obtained?
Determining your level of coverage is an important part
of your decision to protect your patients, practice and
personal assets.
Third party payer contracts also generally require
malpractice insurance with certain limits of liability. Be
sure to ask the provider relations department of any
network in which you participate about their require-
45
Russ Madio
ments. State statutes may also require coverage limit
minimums as well as the obligations within obtaining
and retaining hospital privileges.
It’s important to keep in mind that lower policy limits
can affect the outcome of a case. Lawsuits are often a
process of negotiation and compromise, and if your
policy limits are inadequate to negotiate a settlement,
they can become a barrier to reaching a successful
outcome. Moreover, low policy limits can also expose
your personal assets if a judgment exceeds policy limits.
The participation in various state patient compensation
funds may also dictate limit minimums and norms.
Obviously, the issue can be complex, so it is wise to
consult with your accountant, lawyer, or another
business advisor to assist in determining how much
coverage you need. You should re-evaluate your
malpractice coverage annually to make sure you have
adequate protection as your practice grows or changes.
Malpractice insurance policies offer a wide range of
limits for both single claims and total claims per year
known as single claim limits and policy aggregate
limits. Normally coverage limits consist of a maximum
amount your policy will pay for any one claim and then
a maximum amount your policy will pay during each
annual policy period. The annual aggregate limit is
usually three times the per claim limit. Consideration
“Legal Defense costs are the
other major exposure covered
by your malpractice insurance
policy. This coverage is
responsible for providing you
with a defense and obligated
to pay for it. ”
TODAY ’ S P R A C T I C E: C H A N G I N G T H E B US I NES S OF M EDI C I NE