One of the most important decisions a rehabilitation facility owner must consider is protecting the practice against potential malpractice lawsuits by securing professional liability insurance coverage. When choosing this important insurance, a variety of factors must be taken into account, such as finding a company to write the ideal clinical and business policy that will include professional liability coverage, license protection, and personal injury coverage among its benefits.
In selecting an insurance company, look for one that specializes in the coverage of health care professionals and, preferably, one that provides a niche for occupational and physical therapy. The company should be financially stable, and highly rated and recommended by rehab industry associations. It is also important to know the extent of coverage limits that are offered by the policy, as well as its flexibility and availability. (For example, will the insurance company draft a policy that will meet the unique features and specific services offered by an individual practice or facility, and will it cater to changes within that practice in the future?)
“It is essential that rehab clinic owners and practitioners work carefully with their insurance companies to better understand all aspects of their coverage, as well as potential liability risks,” says Michael Murer, JD, of Murer Consultants Inc, Joliet, Ill, a practice specializing in legal-based health care management. Murer, who sets up and coordinates administrative functions—including insurance coverage—for health care practices, says clear language is essential to ensure complete coverage. Practice owners should always read the policy carefully, and have no question of what is covered, since coverage can vary from company to company. “Don’t be caught between clinical and common language,” Murer advises. “You want no question of what is covered. Also, it is advisable to make sure that the policy and company literature be accessible by the facility supervisor.” Practice owners should also be aware of Medicare coverage mandates, as well as state-to-state issues.
THERE ARE OPTIONS
One option for coverage is an umbrella type of policy covering malpractice, accidents, and injuries based on the structure of the premises and facility itself. Many rehab facility owners hold liability policies through providers that have an arrangement or discount for association members. Some of these policies will cover multiple staff members with different positions. Even if they are specifically covered by clinical insurance, most therapists will likely want to carry their own professional insurance, as the two policies don’t usually run parallel.
The two primary types of malpractice insurance are claims-made and occurrence coverage.
Claims-made insurance policies cover malpractice that takes place during the policy period. For a claim to be covered, it must also be reported to the insurance company during the active policy period.
An occurrence policy insures for any covered incident that occurs while the policy is in effect, regardless of when a claim is filed, even if the policy has been canceled since the act of malpractice occurred. Occurrence policies take into account current and future claims of malpractice, although the limits of liability are those in effect when the incident occurred.1
“The most common type of policy form in the physical therapy/rehabilitation market is occurrence,” says Coleen Kelly, assistant vice president of Aon’s Affinity Insurance Services Inc, Hatboro, Pa (of which Healthcare Provider Services Organization [HPSO] is a division; HPSO has provided insurance solutions for physical medicine professionals for 19-plus years). “For small to midsize practices, occurrence is the preferred policy type,” she say, while noting that claims-made could also be just as beneficial—depending on the needs of the practice. “The agent/broker should assist policyholders in choosing which policy best fits their needs.”
As the owner of Northwest Rehabilitation Associates in Salem, Ore, Mike Studer, PT, carries a per-occurrence umbrella policy to protect his practice. “My policy covers multiple staff of different professions,” says Studer, who purchases his coverage through a company that offers a group discount for association members.
Practice owners and rehab professionals in their employ who engage in work-related activities while off duty should be aware of the coverage provided in a shared limit policy, which is a blanket policy that covers owners and employees of a practice under one policy and one policy limit, subject to policy exclusions. “If an employee is working for a practice and performs moonlighting or ‘off duty’ activity not associated with their employer’s practice, then the professional would need to purchase an individual policy or ensure the off-duty work is covered through the facility where they are providing services,” says Kelly. “Under the HPSO program, if a business owner moonlights outside of their practice, they would be protected for their moonlighting activities only. It would not cover the employees.”
In addition to professional liability coverage, policyholders should be certain that defense costs are outside policy limits, and that other coverages are included, such as license protection and sexual misconduct. The coverage recommendation for the physical therapy/rehabilitation market is an occurrence policy with limits of $1/3 million with defense costs outside of limits of liability.
“License protection is not a stand-alone policy; it is a coverage feature included in most of the major physical therapy/rehabilitation professional liability policies. The coverage is for legal defense reimbursement should a professional be involved in a disciplinary action,” says Kelly. “Most employers would not cover the employee for the legal expense,” she says. “Another benefit of having license protection coverage under the professional liability policy is if a claim does arise after the decision from the board, then the legal defense team already knows and has information on the issue.”
SOME GUIDELINES FOR PRACTICE OWNERS
For rehabilitation facility owners seeking professional liability insurance, choosing the best policy involves a number of factors. Kelly offers the following tips:
— Know what the policy covers or excludes; ensure that all professions and procedures are covered under the policy. For example, are wellness activities covered? Are dual professions such as physical therapist/certified athletic trainer (PT/ATC)?
— Policy limits. Make sure you have equal or lower limits if in a collaborative practice. Look at contractual agreements; if they require higher limits, make sure this is included in the contract.
— Policy form (occurrence versus claims made).
— What is the histor y of the company/agency providing the insurance in this market? Are they financially strong and experienced in paying claims? Do they have a strong affiliation with the profession?
— Do not base your decision on the premium alone.
Murer recommends seeking out a secure insurance company with a high rating. Company ratings are best determined by a consulting company that rates insurance companies; financial strength is determined by looking at the company’s Web site and its stock ranking, as well as searching for individual comments on the Internet, he says.
He also suggests researching how insurance coverage is delivered by state. “Malpractice can be political and cantankerous insurance,” he says. The types and number of malpractice suits in a state often affect the type of coverage offered by a company.
When choosing an insurance company, Peter T. Prescott, CRIS, MLIS, of Prescott Insurance in Lansdale, Pa, urges facility owners to go through their industry association. “The association can help therapists find the highest-rated insurance provider in their area,” says Prescott, adding that it is important to find a provider that is state licensed. Prescott says “must-have” coverage for the rehab facility owner should include professional liability, general liability, workers’ compensation, and employee practices liability. He believes it is also important to carry directors and officers (management) liability, as well as privacy liability protection (in the event of HIPAA or secure data violations). Also, it is good to know policy limits and the policy’s deductible.
DUE DILIGENCE: PLANNING AHEAD
Professional liability insurance policies should be reviewed periodically, says Kelly. Practice owners should annually review their policy with their insurance provider, inquiring to see if there are coverage changes. Separately, the practice owner may want to “shop” the market and see if there are better options available. “The practice owner may want to consider if a new competitor is offering similar/same coverage but at a lower premium—err on the side of caution,” Kelly says. “Often, new competitors will enter the market with lower premiums that will eventually rise once the program matures. This competitor may not be able to handle the claims and either increase premiums or exit the marketplace.”
As we live in litigious times and medical malpractice claims are on the rise, rehab professionals need to protect their practices from the potential damages that a lawsuit can bring to their business, reputation, and livelihood. Murer suggests maintaining constant communication and transparency with employees; encouraging therapists to keep comprehensive records of clients’ conditions, regimens, and progress; and maintaining regular dialogue with referring physicians. “Examine your practice, and be aware of everything that it offers,” Murer says. “Also, be sure to keep your insurance agent abreast while your practice is expanding.”
Rogena Schuyler Silverman is editor of Rehab Management. She can be reached at .
REFERENCE
- Nathkin G. Types of medical malpractice insurance. ezinearticles.com/?Types-of-Medical-Malpractice-Insurance&id=4877028. Accessed March 4, 2011.
