If a client perceives that they have been injured, and further perceives the injury is the result of a physical or occupational therapist providing—or failing to provide—professional services, the client could lodge a lawsuit. “This doesn’t mean the PT or OT has been negligent. It means the client perceives negligence,” says David Griffiths, VP, marketing, Affinity Insurance Services Inc, Hatboro, Pa. Coverage provided by the facility’s policy may be limited, and will focus on the employer’s interests first. You may be vulnerable in some instances, should a malpractice lawsuit be lodged.

The Basics

There are two types of professional liability insurance: a claims-made policy and an occurrence policy.

The claims-made policy typically costs less. It is in force at the time the claim is made. For example, if a client was hurt in January 2009, and you have a policy that provides coverage for a calendar year and a claim is made against you in November 2009, the policy is in force at the time the claim is made. Using the same example, say you decided to drop the coverage on December 31, 2009, and a claim is made in February 2010. You are no longer covered by that policy. The policy is not in force at the time the claim is made, even though the incident occurred while it was.

The premium outlay for the occurrence policy may be a bit more expensive, but it provides long-term protection for any covered claim that may arise at any time in the future—up to the limits of the policy in force at the time of the incident that triggered the claim. Say you retired on December 31, 2009, and terminated your policy. Then in February 2010, a patient makes a claim for an incident that occurred in January 2009. An occurrence policy would cover you, because it was in force at the time the incident occurred. The company underwriting the policy at the time of the incident would be responsible for paying any covered claims.

Long-range vision could pay off. Take the example of a pediatric physical therapist. In many jurisdictions, a claim can be made 2 years beyond the age of majority, says Stuart Platt, PT, MSPT, who runs his own consulting firm, Appropriate Utilization Group LLC, Atlanta (www.augreviews.com). You may be working with an infant who has a problem such as cerebral palsy or muscular dystrophy, and an incident occurs when they are 2 years old—and the age of majority in that state is 18. They have until they are 20 years old to file a claim. “If you were 64 when you started working with the patient and now it’s 18 years later and you’re 82, a claim could be made, theoretically,” says Platt, who has directed the PT review division of a national physical medicine and rehabilitation consulting firm and served as an expert reviewer for the American Physical Therapy Association (APTA) Task Force on Practice Parameters. Platt works with independent contractors—PTs, OT, SLPs, and chiropractors—who carry their own coverage.

For therapists who want to terminate a claims-made policy, Platt suggests buying tail coverage. You would pay an extra fee at the end to cover straggler items that may occur at the “tail” of a regular claims-made policy. “The tail could be an addendum for the policy,” he says. “When you pay your tail and add up the premiums for the claims-made policy, it’s probably equivalent to the occurrence policy to begin with.”

Employer- Versus Self-Owned Coverage

Your employer’s professional liability policy may cover you only up to a point. “Your employer’s policy is designed to fit their own needs and protect their interests first,” says Erin L. Wendel, associate director, media relations, APTA, Alexandria, Va. “If you have your own personal protection, if necessary, you will have the benefit of your own representation that is concerned specifically with your interests.”

If an employer owns the coverage and a claim is made, the employer is in control. Platt notes: “If the employer says, ‘This is a nuisance suit. Whether we were right or wrong, we want to settle this thing,’ and if the employer goes ahead and settles it for a small amount of money, a stain still goes on the PT’s license and the PT has no decision-making because they don’t own/control the policy.” In this instance, the therapist who disavows fault and owns an individual policy, may decline to settle, attempting to avoid being named in a national practitioner’s database that shows a claim was made against them.

Some eschew individual coverage, seeing it as a deep-pockets bull’s-eye should an incident occur. This reasoning could be risky. “If they do decide to come after you, can they, depending on what state you live in, come after your retirement?” Platt says. “Can they come after your assets? Can they come after garnishment of your wages in the future? If you’re married, can they come after your spouse’s assets?”

The American Occupational Therapy Association (AOTA), Bethesda, Md, recommends that practitioners carry their own insurance to protect themselves against unexpected expenses—such as attorney fees, says Christina Metzler, chief public affairs officer. As professionals who furnish services licensed or regulated by the state and paid for by a variety of sources, “occupational therapy providers can provide extra coverage for themselves if they are employed, or coverage for themselves as a private practitioner,” she says. The state may have different rules and requirements, so those must guide decisions, she adds.

While laws vary by state, a general rule of thumb is—the younger the client, the longer the statute of limitations, says Griffiths. (HPSO, which has a large market share in physical therapy liability insurance, is a division of Affinity.)

Therapists need to be aware of these ramifications when moving from carrier to carrier and/or facility to facility, says Amanda Whitted Sedliak, CIC, VP, Capitol Special Risks Inc, Atlanta. “It is very easy to lose continuity of coverage,” she says.

Asking the Right Questions

Therapists who rely on their employer’s coverage may want to ponder:

—Who would the lawyer represent under an employer’s policy—the employer or the practitioner?

—Is the employer’s policy large enough to cover all of the practitioners under it?

Facilities are sometimes bought, while others are closed. Many professionals are leaving their employers and establishing their own practices.

—What happens if you are named in a lawsuit for an incident that occurred some time ago and you no longer work at that facility—or if it’s now closed? Where would you turn? Would you be afforded the same rights and protections as current employees?

Your employer’s policy probably covers you only while you are at work. It may not protect you if you give advice to someone after hours, perform volunteer work, or moonlight outside of your full-time job.

—Does your individual policy shield you for these activities?

—Does the policy provide coverage over and above your employer’s, even if you change jobs?

—Are you protected against allegations of professional malpractice, on or off the job, 24 hours a day?

—Do you have endorsements that enhance and/or endorsements that limit the basic coverage form?

—Is it a claims-made policy or an occurrence policy?

—Does it offer other coverage features in addition to professional liability? Are there extra costs for these additional coverages?

—What are the limits of liability?

Coverage Limits and Costs

Most health care professionals will seek $1 million in coverage per covered claim, says Griffiths, adding that employers who require employees to carry their own individual professional liability policy often require $1 million in coverage per covered claim. Your state association or a professional liability insurance carrier Web site can help find the exceptions.

Professional liability insurance offered to members by AOTA covers items such as an attorney to represent the therapist and funds for any judgments against the practitioner, says Metzler. It may also cover medical services, other legal fees, and property damage. Metzler says premiums for most practitioners are under $100 a year for around $2 million in coverage.

Annual premium costs and per claim/aggregate coverage limits also vary among carriers, and premiums are typically rated on patient visits, the class PTs and OTs are rated in, and loss history, says Sedliak.

Facilities that have expanded beyond offering pure rehabilitation services should consider additional coverage such as commercial general liability insurance, recognizing their increased exposure.

Choosing an Insurer

You need to know how long a company has been providing insurance services to health care professionals. Is it new to the business? Does it have experience and expertise in defending OTs and PTs?

Assess the company’s service and level of professionalism, says Griffiths. “Talk to their service representatives. Be certain that you partner with a company that will be there for you, offering their knowledge and help in a timely manner, whenever you need it,” he says.

Evaluate the financial strength and stability of a company. Businesses such as AM Best, Standard and Poor’s, and Moody’s offer in-depth reports and financial ratings about financial organizations. Look for strong ratings.

Choose an insurer that is used by others in your profession, says Metzler, adding that AOTA recommends a particular provider to its members for top-notch protection and cost containment.

Practitioners strive to empower patients on the path to independence. “We too, as professionals, should be able to empower ourselves with our own professional liability and not be dependent on our employer,” says Platt.

Judy O’Rourke is associate editor of Rehab Management. She can be reached at .