Before we begin, a brief reminder: Medical Justice provides free consultations to doctors facing medico-legal obstacles. We have solutions for doctor-patient conflicts, unwarranted demands for refunds, online defamation (patient review mischief), meritless litigation, and a gazillion other issues. We also provide counsel specific to COVID-19. If you are navigating a medico-legal obstacle, schedule a free consultation.

"Can Medical Justice solve my problem?" Click here to review recent consultations...

We’ve been protecting doctors from medico-legal threats since 2001. We’ve seen it all. Here’s a sample of typical recent consultation discussions…

  • Former employee stole patient list. Now a competitor…
  • Patient suing doctor in small claims court…
  • Just received board complaint…
  • Allegations of sexual harassment by employee…
  • Patient filed police complaint doctor inappropriately touched her…
  • DEA showed up to my office…
  • Patient “extorting” me. “Pay me or I’ll slam you online.”
  • My carrier wants me to settle. My case is fully defensible…
  • My patient is demanding an unwarranted refund…
  • How do I safely terminate doctor-patient relationship?
  • How to avoid reporting to Data Bank…
  • I want my day in court. But don’t want to risk my nest egg…
  • Hospital wants to fire me…
  • Sham peer review inappropriately limiting privileges…
  • Can I safely use stem cells in my practice?
  • Patient’s results are not what was expected…
  • Just received request for medical records from an attorney…
  • Just received notice of intent to sue…
  • Just received summons for meritless case…
  • Safely responding to negative online reviews…

We challenge you to supply us with a medico-legal obstacle we haven’t seen before. Know you are in good hands. Schedule your consultation below – or click here to visit our booking page.

 

A storm is brewing in the med mal world – and one of the best professionals to educate us on the gathering clouds is Teddy Gillen. Who is he? Teddy is a principal at EPIC Insurance Brokers & Consultants. He’s been in the med-mal space his entire career. He has a gift for turning medical malpractice insurance, a subject most perceive as dry and dreary, into a whirlwind narrative that is fascinating and informative. Doctors frequently call us after a crisis has hit. If you spend even a modest amount of time with us today, you’ll walk away with wisdom that will help guard you against the worst med-mal outcomes.

Teddy can be reached via email at teddy.gillen@epicbrokers.com and by phone at 404-550-5561. Teddy can also be found on LinkedIn.

The malpractice landscape is changing. Here’s what doctors must know. Listen to the podcast on the embedded player below – or click here to read the episode transcript.

Episode Transcript

Automatic transcript provided by Happy Scribe. Click here to jump to the post-episode discussion…

Jeff Segal, MD, JD

Greetings everyone. I’m your host, Jeff Segal. The podcast is the Medical Liability Minute, and as our listeners are aware, we will be speaking for more than a minute.

And today, we’re fortunate to have Teddy Gillen speaking with us. So, who is he? He’s a principal who works for EPIC Insurance Brokers and Consultants. Teddy has been in this business for many years and is an expert.

And I know everybody at home is saying, “Oh, insurance is boring. I don’t want to talk about it.” Let me tell you something. This is going to be a whirlwind analysis of a rapidly changing landscape. We’re discussing everything you need to know about professional liability coverage, as well as the other types of coverage that many people do not have – but need.

Many doctors call us up after a crisis hits and ask, “What do I do now?” My answer to that question is, at least for today, listen to our advice, get on board, and at least learn about this stuff before there’s a crisis. That way, you will have your life preserver on before the waves start getting rough. Anyway, without further ado, let me welcome Teddy Gillen. Thanks for joining us.

Teddy Gillen

Thank you for having me.

Jeff Segal, MD, JD

So, the first thing I want to cover is your background. Who are you? What do you do? Introduce yourself to the audience.

Teddy Gillen

Thank you. My name is Teddy Gillen. I’m a principal at EPIC Insurance Brokers & Consultants. I went to the University of Georgia and majored in risk management and insurance. And at the time, we were the number one program in the country. I don’t know where we stand now, but believe it or not, the Wharton School of Business was number two at the time. I jumped into insurance early and knew exactly where I wanted to go in my career. And I’ve been in this business for about 16 years.

Jeff Segal, MD, JD

I love the idea that risk management is associated with the University of Georgia mascot, the bulldog. I think there is a connection there somehow.

You’ve got a footprint across the country. And if I heard you correctly, you work with more than one carrier, meaning that you’re not beholden to a single professional liability carrier. You can figure out what is the best fit for an individual practice. Is that accurate?

Teddy Gillen

That is one hundred percent accurate. You know, the malpractice landscape around the country is very specific – based on location and specialty. And often we’ll see groups working directly with carriers.

We pull together the underwriting information and provide a proposal that fits their unique needs.

Jeff Segal, MD, JD

Let’s talk about the direct model. That’s where the doctor would call up the carrier directly. And at least in theory, they would cut out the middleman, the salesman, the broker. And I guess in their brain, the doctor is thinking, “Well, I guess I get a discount because there’s no commission paid.” But that’s a one-on-one relationship. In a sense, you’re paying retail at the individual level.

Tell our audience the benefit or advantage of working with a broker.

Teddy Gillen

That’s a great question. First, the direct carriers offer a great product. And the salespeople on the direct side are excellent salespeople. The big difference is that as a broker, we’re the client’s advocate. We work on behalf of the client. Whereas on the direct sales side, they’re employed by the insurance company they work for. Their first allegiance is to those folks.

And most of the marketplace is the admitted marketplace, which means the state insurance office has provided a stamp of approval for that insurance company to be writing malpractice insurance. And in that approval process, the carriers submit their rates with the state. They’re approved by the state on the front end, and whether they deliver that product through their direct or through their broker model, the price is the same. There’s no differentiation of paying more by going through the broker.

And because we can create a little bit of competition between our markets, we can drive the price down lower than what you can get from a direct agent. That’s because they’re not out there shopping your insurance quotes. We work on behalf of our clients and we’re not paid unless we get the deal done. We’re incentivized to get out there and provide the best deal for our clients year over year.

Jeff Segal, MD, JD

In a sense having more than one entity bidding on the doctor’s business reminds me of purchasing food or water at the airport, meaning that it’s hard to bargain shop when there’s only one store selling water. They can charge whatever they want. But if there were multiple entities selling it, at least in theory, the price would go down – not dissimilar to the professional liability market. If there are multiple entities vying for a physician’s business or a group of businesses, the price is likely to reflect more competition.

So much has changed in the medical marketplace over the past decade; and certainly, over the past two years. I’ve seen the ups and downs. It looks like a roller-coaster. It almost looks like the stock market. It’s gone from hard to soft, hard to soft.

Why don’t you educate listeners as to what that means, as well as what has changed over the past two years, what makes this marketplace different, and what physicians can expect going forward?

Teddy Gillen

Well, that’s a great question, and you hit the nail on the head. Currently, the market is in a little bit of a change and we are experiencing a hard market.

By our definition, a hard market is when carriers are increasing rates and tightening their policy conditions. They’re looking for clients that have had no claims. In general, in a hard market, it’s harder to find great coverage at a great price. But before the last couple of years, we experienced – since 2001 – a soft market – which means every year the carriers’ rates were getting better. Competitively they were trying to one up each other on new terms, better terms, better policies.

They were trying to buy each other’s business, and gain market share, and it drove premiums down for a significant time period. This started about 2001 and until about 2017/2018, we saw a historical long, soft market, where it would be a buyer’s market, if you will, for the doctor buying medical malpractice insurance.

Jeff Segal, MD, JD

For a doctor, that was a good deal, meaning, that prices for premiums went down. Doctors at least had the belief that prices were stable and were not going to be a significant line item in their operating budget over time. I guess the underlying feeling was that all the carriers were equal, they were commodities that were being bought and sold, and that if a doctor were ever sued, that they would get exactly what they thought they were getting, namely a defense, as well as settlement or judgment up to the policy limits.

All that’s changed, correct?

Teddy Gillen

It’s changing dramatically. We’ve seen in the last three years more than eight failures in the malpractice marketplace. Some of those were with typical mutual carriers and others with risk retention groups that are in this business and then fail. And when that happens, if they’re an admitted carrier in the state, the state must seize their assets and come in and take over the claims and handle them from there.

And those failures are a warning sign – or they were a warning sign to us that the market was changing. And since that time, we’ve seen acquisitions. In early 2020, one of the top carriers in the industry, Pro Assurance, announced that they will be acquiring one of the top mutual carriers in the country, which is NorCal Group. That’s a big splash in the industry.

Two of the top ten carriers consolidating. We’ve seen downgrades and then we’ve seen some other state specific mutual companies exiting and selling to some of the larger organizations just because they’re seeing the trends and the long term trends are showing that they just can’t keep up with the claims that they’re receiving.

Jeff Segal, MD, JD

This is disruptive. I remember around 2000, one of the larger carriers in the country, I believe they had just shy of 10 percent of market share said, “You know what? We don’t know how to make money in professional liability. We’re done. We’re out.”

And they were a profitable company, but they didn’t know how to make money in the professional liability business. So, when they exited, it was extremely disruptive. It meant there were fewer players left, even though 90 percent of the market was intact. But it was viewed as a very disruptive event. That’s when prices started to spike. And it wasn’t just a question of affordability, it was a question of availability.

There were doctors who could not find coverage even if they tried and were willing to pay a significant price for it.

Teddy Gillen

You’re right. So back in that 2000 – 2001 time frame, insurance carriers had a significant combined loss ratio. The combined ratio is for every dollar that they take in a premium, how much do they pay and expenses and claims? If you’re paying 150%, you’re going to have to get 50% in the marketplace to make up for your losses.

And it’s hard to get 50% on your investment income. And so that’s when major carriers exited the market. They looked at it as a line item and said, “You know what? We cannot be in this business.” And that’s where we saw the surge of the med mal specific carriers. And a lot of them were state specific, whether it was the Medical Association of Georgia or Alabama or Tennessee, and around the country, there were state specific carriers that came in to save the day. And they lobbied their local state government to implement tort reform and drive down the cost associated with a claim.

And it worked.

Jeff Segal, MD, JD

So that was one of the benefits, meaning that you had a regional marketplace. The carriers became very well versed in some of the nuances of the local marketplace. They understood their clients well and the legal landscape well. And in parallel, they were able to get through various efforts, such as tort reform, passed in a number of those states to take the heat off the legal process. Correct?

Teddy Gillen

Absolutely. As you know, things are cyclical, so while it worked at that time, we saw those combined ratios start to plummet. If there’s tort reform in the state of Florida where they cap out the pain and suffering losses in the medical malpractice marketplace, then it makes it easier for carriers to do business in the state of Florida. And it was like that in many other states across the country. That really drove down pricing. It created this competitive atmosphere that we experienced over the last 15 years. And as they have sort of been bottoming out their pricing and improving their coverage, we hit a bottoming out point and we’ve seen tort reform around the country getting repealed.

The plaintiff’s attorneys are very powerful with their lobbyists and their individual states have been working to repeal that tort reform. Now we’re seeing shocking verdicts around the country – a shocking verdict being a verdict that is well above policy limits.

Jeff Segal, MD, JD

That’s a real freak out for the doctor, because on the one hand, the doctor wants to defend his name. He doesn’t want a claim to end with a settlement or judgment, ideally, because it can impact his reputation, his credentialing, and his license. Settlements and judgments get posted as a line item in the National Practitioner Data Bank. There are a lot of reasons why the physician will not want to settle if they believe the case is defendable.

The challenge is that most doctors aren’t willing to risk their nest egg, their house and their future just to prove a point. And historically it would be crazy to see judgments that were above policy limits. So, the insurance policy covered everything, and the doctor could play poker. They could take the risk. But today, it is possible to get a verdict on the order of 5 million, 10 million, 20 million dollars.

And if you’re the only doctor on the hook and your policy is just a million dollars, that’s not a good day for you.

Teddy Gillen

No, not at all. And every situation is unique. That’s where you’d want to be with a carrier that is a med mal specific carrier. You’d want to have terms of your contract, which we can talk about now or later in the show, close at hand.

And those terms are going to dictate the trajectory of that claims process. Oftentimes people view medical malpractice, or any of their insurance policies as these abstract things. But it’s a lot like buying a car. You can buy a Pinto, you can buy a Ferrari and everything in between.

And if you don’t have an advocate that’s really explaining the terms and providing those explanations to you, you may not be buying exactly what you’re looking for.

Medical Justice provides free consultations to doctors facing medico-legal obstacles. We have solutions for doctor-patient conflicts, unwarranted demands for refunds, online defamation (patient review mischief), meritless litigation, and a gazillion other issues. We also provide counsel specific to COVID-19. If you are navigating a medico-legal obstacle, visit our booking page to schedule a free consultation – or use the tool shared below.

"Can Medical Justice solve my problem?" Click here to review recent consultations...

We’ve been protecting doctors from medico-legal threats since 2001. We’ve seen it all. Here’s a sample of typical recent consultation discussions…

  • Former employee stole patient list. Now a competitor…
  • Patient suing doctor in small claims court…
  • Just received board complaint…
  • Allegations of sexual harassment by employee…
  • Patient filed police complaint doctor inappropriately touched her…
  • DEA showed up to my office…
  • Patient “extorting” me. “Pay me or I’ll slam you online.”
  • My carrier wants me to settle. My case is fully defensible…
  • My patient is demanding an unwarranted refund…
  • How do I safely terminate doctor-patient relationship?
  • How to avoid reporting to Data Bank…
  • I want my day in court. But don’t want to risk my nest egg…
  • Hospital wants to fire me…
  • Sham peer review inappropriately limiting privileges…
  • Can I safely use stem cells in my practice?
  • Patient’s results are not what was expected…
  • Just received request for medical records from an attorney…
  • Just received notice of intent to sue…
  • Just received summons for meritless case…
  • Safely responding to negative online reviews…

We challenge you to supply us with a medico-legal obstacle we haven’t seen before. Know you are in good hands. Schedule your consultation below – or click here to visit our booking page.

 

Jeff Segal, MD, JD

Let’s talk about that. I think it’s important. In some ways it’s not dissimilar to a health insurance policy or car insurance policy. If you buy direct, we all know enough to be dangerous. We don’t have the background, training, and experience to understand what our needs will be down the road. So, in a sense, doctors, myself included, need an education with this. The last thing you want to be doing is pulling out your policy for the first time to go over the terms and conditions after you’ve been sued.

Because the first thing you may find is that you’re not covered. And we’ve seen this before, for example, where a physician is underwritten as an E.R. doctor or a family practitioner. But on the side, he’s doing Botox, for example, something that would not typically be done in an E.R. practice. And then a patient comes in with an infection, something that would otherwise be easily defendable.

But they don’t have coverage. They don’t have coverage because they just assume that E.R. coverage is probably more expensive than plastic surgery or cosmetic surgery coverage.

The time to identify these deficiencies is before there’s a problem as opposed to after. Let’s go through the educational process. What is it that doctors must know going into purchasing a policy? How do you educate them?

Teddy Gillen

First, it’s only as good as the paper that it’s written on. So first, who are you buying your coverage with? What are their financial ratings?

AM Best is the premiere rating basis in our industry. And you can go to their website and search for your carrier and see what their ratings are and anything less than A-, I would be concerned about. We have several carriers that are claiming to be the direct model or claim they’ve reinvented this process and can do it better than their competitors.

But if you peel back their financial ratings, you may see something that frankly I wouldn’t trust. So, the first thing you want to know is: Who is my carrier? What are their financials? If they have fewer assets, oftentimes we see some of these carriers have fewer assets than the doctors do.

And that’s scary to tell a doctor that he or she has more assets than the entity they’ve charged with protecting their assets. At that point, what are you even buying?

Jeff Segal, MD, JD

Given the two, if I were a plaintiff’s attorney, I’d take the liability coverage from the doctor directly. Thank you very much.

Teddy Gillen

That’s right. When you when you are looking at those types of coverages, you want to be with an admitted carrier. Has the state insurance office placed its stamp of approval on this insurance company? And if so, if they were to fail, the state comes in and picks up the claims.

Jeff Segal, MD, JD

And even that’s not perfect.

We’ve certainly seen carrier failures, high profile failures where they go into a fund. But the fund doesn’t have unlimited resources. It has resources, so it is better than nothing. But if, for example, you thought you had a million dollars’ worth of coverage in terms of policy limits, it may be that the fund will only supply, and I’m pulling a number out, maybe 30 cents on the dollar. So, you still have coverage. You just don’t have the same type of coverage you had before.

And that’s probably not a great feeling. I think your point is, ideally, you never want to be in that situation. But if you are in that situation, you’d rather have some coverage than no coverage at all.

Teddy Gillen

I agree. And in that situation, that 30 cents on the dollar was not that far off.

We saw one recently in Tennessee where it was it was 40 cents on the dollar. What that means is they just look at the entire book of business across the board and figure out how much they have and what they can pay. And then they just apply a percentage, not on a case by case basis, but just across the board and say, “Well, we can we can afford to pay 40 cents on the dollar on any claims that we have in this book of business.”

Jeff Segal, MD, JD

I hate to be Debbie Downer here, but I’m aware of a car insurance company, an automobile liability company that was, I believe, in New Jersey. The carrier went under. It was in liquidation. There was a fund, the backup fund, and I believe it was 30 cents on the dollar that they were willing to pay out. So, the ultimate question for the defendant was, are they still on the hook for the million dollars or are they just on the hook for $300,000?

Because these people were the good citizens. They did everything properly. They purchased liability insurance coverage. They paid a premium and they did everything they were supposed to do. You would think in a perfect world that the risk would be split somehow and that everybody would take a haircut. But the way this was set up and adjudicated, at least in New Jersey, was: “Nope! You’re the entity that purchased the coverage. Sorry, that’s your problem.”

The liability limits didn’t change. Even though you only had access to 30 cents on the dollar, you were still on the hook for the full amount. And of course, this created a horrible leverage situation. If you translate this to professional liability, the plaintiff attorney might say, “Look, Doc, you’re on the hook for the whole amount. You only have $300,000 worth of coverage. And by the way, I’m such a nice guy, I’m just going to take $300,000 in coverage today to settle this case and call it a day.”

What do you want to do? You want to roll the dice, or do you want to limit the potential loss to what the backup fund is going to pay? Certainly, an uncomfortable situation. Like I said, I hate to be Debbie Downer here, but at least in one state, that was how it played out. I can’t say that is what the landscape looks like all across the country, but it would not surprise me if the plaintiff would not be forced to accept the risk; meaning, that if the carrier goes under, insurance companies are the backup for the defendant anyway.

Ultimately, the defendant is the one who’s liable and responsible.

Teddy Gillen

You’re exactly right.

And I think anyone in this space, any physician or physician practice, part of their risk management should be to look into working with financial advisors and protecting their assets in a way where they could be protected in a situation where, for example, policy limits are exhausted and a judgment is beyond those limits. That’s something to have done on the front end because post-lawsuit, you can’t change the “behind the scenes” of your financials – because that would be illegal.

There’s some front-end preparation that needs to be done on protecting your assets and how you structure your organization. Typically, with policy limits, it’s a million dollars (each state is a little different), but a million per occurrence and a three million aggregate is common. If you’re buying coverage and must deal with the situation that you just mentioned, we don’t see juries sticking it to the defendant.

Where we really see people “sticking it to the doctor” are in cases of negligence where the physician selected a fly by night carrier with the lowest limits possible.

That’s where the jury/court says, “OK, he didn’t even intend to have to care for the patient with his medical malpractice coverage.” And so that’s where we see some of those harsher judgments come into play.

Medical Justice provides free consultations to doctors facing medico-legal obstacles. We have solutions for doctor-patient conflicts, unwarranted demands for refunds, online defamation (patient review mischief), meritless litigation, and a gazillion other issues. We also provide counsel specific to COVID-19. If you are navigating a medico-legal obstacle, visit our booking page to schedule a free consultation – or use the tool shared below.

"Can Medical Justice solve my problem?" Click here to review recent consultations...

We’ve been protecting doctors from medico-legal threats since 2001. We’ve seen it all. Here’s a sample of typical recent consultation discussions…

  • Former employee stole patient list. Now a competitor…
  • Patient suing doctor in small claims court…
  • Just received board complaint…
  • Allegations of sexual harassment by employee…
  • Patient filed police complaint doctor inappropriately touched her…
  • DEA showed up to my office…
  • Patient “extorting” me. “Pay me or I’ll slam you online.”
  • My carrier wants me to settle. My case is fully defensible…
  • My patient is demanding an unwarranted refund…
  • How do I safely terminate doctor-patient relationship?
  • How to avoid reporting to Data Bank…
  • I want my day in court. But don’t want to risk my nest egg…
  • Hospital wants to fire me…
  • Sham peer review inappropriately limiting privileges…
  • Can I safely use stem cells in my practice?
  • Patient’s results are not what was expected…
  • Just received request for medical records from an attorney…
  • Just received notice of intent to sue…
  • Just received summons for meritless case…
  • Safely responding to negative online reviews…

We challenge you to supply us with a medico-legal obstacle we haven’t seen before. Know you are in good hands. Schedule your consultation below – or click here to visit our booking page.

 

Jeff Segal, MD, JD

Thinking about protecting assets in advance of a problem is a doctor’s best insurance policy against an insurance carrier’s failure. With one client that we have right now, he fully protected his assets years ago and then the carrier that he purchased coverage from went under. So, there’s good news and bad news. The good news is that there is a fund, and his assets are protected. He can come to the table with some powerful chess pieces.

I wouldn’t say he can run the board, but I think he’s certainly in a better position than having no access to a backup fund (through the insurance company’s failure) and being directly exposed. He’s probably still going to have a challenging conversation with the plaintiff’s attorney.

The two attorneys will need to speak together, but it’s better to have a level playing field and at least have some strategic advantage than to be totally vulnerable.

You made an interesting and powerful point. The time to protect your assets is not when your house is on fire. You need to do this well before there’s a problem. The protection of the assets needs to have a legitimate business purpose. Its primary purpose can’t be to deny or delay transfer of funds to a worthy creditor or plaintiff. So, if you’re if you’re going to court in one week, that’s not the time to protect your assets.

That would be considered a fraudulent conveyance. On the other hand, if you set it up well in advance, that becomes a debating point. It becomes a powerful tool for your defense attorney to chat with the other side saying, “Look, you do know the carrier doesn’t have full assets. But by the way, if you take this case to the bitter end, you’ll spend years trying to collect directly from the doctor. Be forewarned because he’s protected his assets.”

I love the idea of a belt and suspenders approach to managing risk.

Teddy Gillen

Not only that, you need to know exactly what kind of policy you’re purchasing. In the scenario you mentioned, we saw a client who had purchased coverage, only to see the carrier fail. And then they were exposed for their past exposures. Well, in that scenario, there are two different types of coverages. The two main types of policy provisions are claims-made policies and occurrence policies.

We are asked to explain the difference all the time. I think in med school, there’s something in textbooks that says, “You should buy occurrence coverage because that’s the best.” I think the shared mentality of many doctors is, “Hey, how can I get some of that occurrence coverage?” And we’re always hesitant to just give it to them.

We consult with our clients. Everything is situational and based on their location and their specialty and their individual histories.

Jeff Segal, MD, JD

Tell everyone the distinction between occurrences and claims-made. Many listeners will know, but for others, this will be the first time they’ve heard it.

Teddy Gillen

Absolutely. An occurrence policy provides coverage while the policy is in effect, even if the claim happens after the term. So, essentially occurrence policies are a lot like how we purchase our auto insurance, our homeowner’s insurance and the other various types of insurance. It’s a standard type of a policy in our industry. Outside of medical malpractice, there are very few folks that have claims-made policies. For example, if you have an automobile, you know whether you’ve been in an accident and you know your policy term.

Jeff Segal, MD, JD

Yeah, there’s no surprises.

Teddy Gillen

The physician marketplace is a little bit different in that you could have seen patients a long time ago and you don’t know if they’ve had a bad outcome. They could learn about a bad outcome a year down the road. And then most states have a statute of limitations of two years from knowing about the incident and if it involves minors, they had two years from their 18th birthday. And all that’s saying is that you have a past exposure that’s unknown.

Let’s imagine you are purchasing an occurrence policy. And at the end of year one, you have no claims. At the end of year two, still no claims. But at year three, you renew, and you receive papers and you’re being sued by patient that you saw in year one. According to the occurrence model, you go back to year one to the policy that you purchased in that year and you submit the claim.

And in a claims-made model, every time you renew your policies, you carry forward your past exposure going back to the date that you started, and that’s commonly referred to as a retroactive date. And so, in the scenario you mentioned about a carrier failure, if you have an occurrence policy and you transition to a new carrier, you can be sued for the past incident. And if your old carrier goes out of business, you essentially are going to be working with the state insolvency fund. Or you could potentially have no coverage at all.

And to supply another claims-made example, if you’re currently with a carrier that is shaky in terms of their financials, we can transition your exposure over to an AM Best rated carrier and they will pick up your prior acts, your prior exposure, going back to your retro date. And any policies you purchased in the past are irrelevant at that point. It’s the policy that you have in the present day that picks up all claims.

Jeff Segal, MD, JD

The way I often think of this is that with an occurrence policy, it doesn’t really matter when you get sued. You’re covered even if it’s years down the road. Of course, occurrence policies are more expensive, at least on paper. On the other hand, with a claims-made policy, as the name suggests, you need to have had coverage from the time that you committed the medical act, if you will, all the way to the date of the legal claim. And that could be a very long window of time. Of course, claims-made policies are less expensive than occurrence policies. But in a sense, you need to have year after year after year of coverage. The two policies may get close to each other in terms of pricing if you amortize it over a lifetime.

Certainly, when I was in medical school, everyone said, “Yeah, get occurrence, then you don’t have to think about it any longer.” There are ways to get the advantages of pricing with a claims-made policy and use various strategies to make sure that the risk is managed. At the end of the day, you don’t really care so much how it gets labeled. You just want to make sure that as you progress in your career, all risks will be covered, so you can sleep at night.

Teddy Gillen

That’s exactly right. And to add to that point is the fact that most of the med mal specific insurance carriers don’t particularly love occurrence policies. Because of that, occurrence policies don’t have as many options as the claims-made policies. So, when working with a broker to assess your options, if you are currently with an occurrence policy, which year over year, you do tend to spend about 5 to 20 percent more than a fully mature, claims-made policy, you don’t have as many options in the marketplace.

To walk back on the pricing model, let’s say the physician is spending $10,000 a year as a baseline premium. And that’s their occurrence premium every year. According to your first-year claims made policy, on day one of year one, you can’t be sued for anything you’ve done in the past. And so actuarially, the underwriters take that into account. Your premium is significantly less in year one than it will be during your fifth year in business. And why is that? Simple.

When you’ve been practicing for five years, you have five years of potential exposure. You slowly become perceived as “riskier” over time. The pricing starts out at about 30 percent on the first year of a claims-made policy. And then it matures, or it increases in cost up until about the fifth year. It is around the fifth year most policy providers say, “OK, well, actuarially, after five years, the risk of a lawsuit stabilizes.” And because the perceived risk stabilizes, the pricing stabilizes.

From there, you’re still paying 10 to 15 percent less than your occurrence policy year over year. So that’s the big difference in pricing. The one caveat to that is on a claims-made policy, if you were to retire or “hang it up”, then you must purchase a tail policy. And that’s a one-time policy that picks up all your prior acts and gives you a policy that does not have an ending date.

It would be a one-time policy going back to your start date. And it continues in perpetuity. If you’re sued years down the road, you have a tail policy that covers you.

Jeff Segal, MD, JD

The tail policy in one sense converts a claims-made policy into an occurrence policy. But you’ve got to pay for it. There’s a cost associated with it. And in a sense, it almost comes down to a case of: “But wait, there’s more!”

Teddy Gillen

People can be blindsided if they’re not working with an agent that’s explained to them that they may have to purchase a tail. But the way the market has gone during this soft market is that most physicians never actually purchase a tail. If they’re currently with a claims-made policy and they’re with Company A, and we provide a competitive offer from Company B, we’ll transition their prior acts to the new carrier. There’s no tail required. The new carrier picks up prior acts, which is sometimes referred to as nose coverage. That term is not used as frequently as tail coverage, but the nose essentially picks up the prior acts. And then most carriers provide a free tail in the event of death, disability, or retirement.

When you are ready to retire, typically there is no cost of insurance at that point. The carrier just says, “Here’s your tail insurance.”

Typically, we see people purchasing this product when there’s a large physician group that owns the policy. And it’s a claims-made policy and folks are coming on and off the policy roster. And it’s something to look for if you’re an employed physician. It is important to know the answers to questions like: “Am I responsible for tail coverage? If I were to leave my employer, how would my coverage be affected?”

Jeff Segal, MD, JD

Let me double down on this point. You want this in writing, in your employment agreement. If the employment agreement, the contract that you signed when you get started, is silent on it, different states treated it differently. I do know that in New York there is a case law that states that if there’s no comment made related to tail coverage, it’s possible that your employer will be on the hook for providing your tail coverage down the road.

But there are other states where the outcome is 180 degrees opposite, meaning, if the employment agreement is silent on that point, the employer is not on the hook; you’re on the hook. Still, you never want to rely upon judicial precedent to make your point. The truth is, even in New York, I could imagine it still going the opposite direction for the employee. Just get it in writing.

I know people think that, “Hey, look, I’m getting hired. I don’t have any negotiating power.”

That may very well be true, but at least know what you’re getting into.

Don’t imagine that silence will save the day down the road. Silence will likely not save the day. The time to have the conversation is before there’s a problem. And there are other options. You could split the tail coverage. It doesn’t have to be binary – either you pay for all of it or your employer pays for all of it. I cannot stress this enough. That is a major sticking point. A major point that should be addressed before you sign on the dotted line.

Teddy Gillen

In those scenarios, we’ve seen a group policy where the group may be spending millions of dollars on their medical malpractice insurance policy, and the individual physician is just one part of that. If they don’t have that in writing, as you mentioned there, the cost for their million, three million in coverage, might be about $30,000 a year. Meaning the typical tail cost is two times your annual premium. If a physician is responsible for their own tail, they may not have had any responsibilities in the decision making of who their malpractice carrier is, because that’s decided by their employer.

They’re coming on board. They have coverage, as you mentioned, in the contract. If it’s silent, or if it’s mentioned that they’re responsible for tail, they can be terminated or they could terminate the agreement themselves and then have to pay $60,000 and a one-time payment due within 30 days to cover all the risk associated with that arrangement with that employer.

Jeff Segal, MD, JD

Just think about that for a second and let that sink in for a moment. Let’s say the doctor voluntarily leaves. He’s going across the street. He can’t take work from that same employer. Imagine if there’s a clause in the agreement that says the doctor is responsible for any risk associated with his employment or any professional acts related to the employment for the time period while he was employed.

Well, that’s a very vague and ambiguous statement. Now, you’ve gone across the street and then you open up an envelope and it says, “By the way, as per the agreement that you signed, you are responsible for the risk while you are here. And while there are no open claims, there could be some down the road, and we need to have tail coverage. Here’s your invoice for $60,000.” That is a bad day.

Teddy Gillen

Yeah, that stings. We try to educate our clients on the front end. We consult with them on their employment contract and we answer questions directly to not only the C suite level, but the individual physician level. If they ever have any questions about their coverage, they can contact us at any time, and we can explain the nuances.

There’s another thing on the front end that you want to know about and take care of and have in writing.

Jeff Segal, MD, JD

People generally think they need tail coverage when they retire. Some carriers will supply tail coverage based on your age and how long you been with them, just as a courtesy. But not infrequently, if you leave and go from one state to another and your carrier is not admitted in that new state, you may need to get tail coverage just to cover your prior acts in that old state.

So, in one sense, you’re almost doubling down. You’re having to eliminate the residual risk in the state that you’re leaving through tail coverage. And then because you’ve moved to a new state, you need to get started in the new state. Now, it may be that the carrier is only admitted in the new state, not the old state, but I can’t imagine you have many alternatives other than getting tail coverage. If the carrier is admitted in both states, there may be an option if they want to keep your business.

But that’s where having a broker can assist with that dialogue.

Medical Justice provides free consultations to doctors facing medico-legal obstacles. We have solutions for doctor-patient conflicts, unwarranted demands for refunds, online defamation (patient review mischief), meritless litigation, and a gazillion other issues. We also provide counsel specific to COVID-19. If you are navigating a medico-legal obstacle, visit our booking page to schedule a free consultation – or use the tool shared below.

"Can Medical Justice solve my problem?" Click here to review recent consultations...

We’ve been protecting doctors from medico-legal threats since 2001. We’ve seen it all. Here’s a sample of typical recent consultation discussions…

  • Former employee stole patient list. Now a competitor…
  • Patient suing doctor in small claims court…
  • Just received board complaint…
  • Allegations of sexual harassment by employee…
  • Patient filed police complaint doctor inappropriately touched her…
  • DEA showed up to my office…
  • Patient “extorting” me. “Pay me or I’ll slam you online.”
  • My carrier wants me to settle. My case is fully defensible…
  • My patient is demanding an unwarranted refund…
  • How do I safely terminate doctor-patient relationship?
  • How to avoid reporting to Data Bank…
  • I want my day in court. But don’t want to risk my nest egg…
  • Hospital wants to fire me…
  • Sham peer review inappropriately limiting privileges…
  • Can I safely use stem cells in my practice?
  • Patient’s results are not what was expected…
  • Just received request for medical records from an attorney…
  • Just received notice of intent to sue…
  • Just received summons for meritless case…
  • Safely responding to negative online reviews…

We challenge you to supply us with a medico-legal obstacle we haven’t seen before. Know you are in good hands. Schedule your consultation below – or click here to visit our booking page.

 

Teddy Gillen

Yeah, that’s a great point. If you have a broker, we have carriers with national contracts that are in all states. And that’s the way the majority of the of the top seven or eight malpractice carriers are organized. If they’re not in all states, they’re trying to be in all states. If you’re in Ohio and you move to Florida, a broker can help.

And so, if your Ohio malpractice carrier is not in Florida, exactly as you mentioned, you may have to spend that $60,000 to tail out of your coverage in Ohio and start a new policy in Florida. If you’re working with a broker, even if you’re with a state specific carrier, this can be tricky – but doable. Some states are dominated by one player. For the sake of this example, let’s say it’s State Volunteer in Tennessee. They may be in some other states, but they’re primarily in Tennessee.

And if you want to transition out of Tennessee and move to Texas, you’ll have to purchase tail coverage from State Volunteer. Or work with a broker that has a carrier in Texas that is also admitted in Tennessee and willing to pick up prior acts for your new exposure. So, it is possible to move to Texas, start a policy with a new carrier, and be covered for everything you’ve done in Tennessee. As you can imagine, a broker can be helpful in complex situations like that.

Jeff Segal, MD, JD

Just having that little nugget of wisdom would be a helpful bargaining chip. I’m guessing that the doctor, if they have unlimited time, can probably research some of these nuggets.

But it’s still quite a challenge. I’m probably capable of doing any number of professional things outside of my domain of expertise, but I still rely upon experts who are seasoned and have been in the field for a long time to advise me on these things – because sadly, not everything you read online is true.

Teddy Gillen

Oh, well, that’s a given.

And the last point I’ll make is this: If you’re listening and you’re responsible for purchasing malpractice coverage for your group, and you’re (a) a decent size group and (b) recruiting somebody from outside your state, that can be used as a point of negotiations. If they have a malpractice policy in place in Texas and you’re going to bring them over to Florida, if you have the right carrier with the right footprint, you can negotiate terms to hire them and pick up their prior acts.

And that could be a differentiator on whether you can recruit that physician or not. Because if they’re looking at a $60,000 tail policy and if they’re not ready to write that check, having a carrier that can underwrite their Texas exposure and bring them into Florida on the new policy could be a huge win for all parties.

Jeff Segal, MD, JD

Precisely. We’ve mostly been talking about professional liability, but there are a gazillion other types of coverages. Let me start with the basic ancillary components of professional liability. You have your own practice, but you also have several mid-levels working there. They could be a nurse practitioner, a physician’s assistant, and so on.

Talk about whether you need to get those people “line itemed” in your policy – or whether they’re already along for the ride if they’re W2 employees.

Teddy Gillen

You’ll want to structure it in one of two ways. The mid-levels will either be named with a separate limit, or they’ll be named with a shared limit. Or in some cases, the “lower” mid-levels (like a nurse) have automatic coverage on the policy underneath – either the physician or the entity, depending on how the policy is structured. If it’s a nurse practitioner that you employ, you’ll want to notify your carrier that you have a nurse practitioner and ask about their coverage.

We often see programs out there for nurse practitioners and so we see them bring their own coverage. The physician would have vicarious liability coverage for that nurse practitioner, meaning if the nurse practitioner is sued and the physician is named along with their entity, there would be coverage. In other situations, we may just add the nurse practitioner to the policy with a separate limit. And limits do stack.

If you have a provider with a million to three million in coverage, and a nurse practitioner with a million to three million, and an entity with a million to three million, and all those are separate limits, if they’re all named in a lawsuit, there’s a potential of three million dollars there for the claim.

Jeff Segal, MD, JD

Knowing upfront whether limits are stacked or not and the language associated with that is not a trivial distinction.

It is the type of thing that you want to know. And even if you don’t have any mid-level providers working for you, if your corporate entity is named and you are named individually, knowing whether you’ve got a total of two million or one million is also helpful to know up front.

Teddy Gillen

In addition to that, some of the important policy contract nuances are related to defense costs. Are they outside of the limits or are they inside the limits? If you have a million dollars of coverage, but the defense cost erodes your limits, what happens when you are sued? If you are defending yourself, there’s a big cost associated with that. And if that defense is draining your bucket of money, that’s a big negative. It puts you in a precarious position.

You want a policy with defenses that are outside of the limits. The second big thing is control. Who has control over settling the claim?

Jeff Segal, MD, JD

Let’s talk about that, because I’ve seen the ups and downs. Part of this is a creature of state law. Different states treat this differently. But certainly, when the market was soft, the overriding type of policy was consent-to-settle, meaning the doctor had to agree to settle before any money would be paid.

If the doctor wanted to fight to the bitter end, that was one of their options. Now, carriers still had some options with things called the hammer clause – and we’ll spend a couple of minutes talking about, as it was a tool to persuade people to be rational and reasonable. But the doctor, when the market was soft, is in the driver’s seat. Have you seen that change? And please describe what is meant by consent-to-settle in deeper terms.

Teddy Gillen

Well, in the standard marketplace, we haven’t seen a change. Where we have seen a change is that underwriting guidelines are tightening, pricing is going up, and more consumers are driven towards a non-standard marketplace. And in a non-standard marketplace, those carriers do not get approved by state insurance. Oftentimes they’re Lloyd’s of London type insurers. They can still be big AM Best, A++, and very capable of handling claims. But without submitting the paperwork to the state, it allows them to operate outside of that approval, which means they can put anything into a contract that they want. And they can price their business at any price that they want.

There’s no real structure there. But if you purchase that policy, you don’t have the backing of the state guarantee fund if they were to go out of business. With that said, we don’t see the standard marketplace changing the consent-to-settle clause. And as you mentioned, it essentially says if a physician wants to fight a claim, they can fight, and the carrier must stay with them and defend it until the end.

Jeff Segal, MD, JD

That’s a positive.

Teddy Gillen

It’s a big, big positive. It’s a huge, huge positive. And if you’re with a carrier that’s in the non-standard marketplace, you may be attracted to the price. But make sure you look at the contract. As you mentioned, if you don’t have consent to settle, then the insurance company can come in and say, “OK, we can get out of this for $100,000. And so that’s what we’re going to do.”

And as you know, you don’t have to be guilty to be sued.

Jeff Segal, MD, JD

No – just human. Have a pulse.

Medical Justice provides free consultations to doctors facing medico-legal obstacles. We have solutions for doctor-patient conflicts, unwarranted demands for refunds, online defamation (patient review mischief), meritless litigation, and a gazillion other issues. We also provide counsel specific to COVID-19. If you are navigating a medico-legal obstacle, visit our booking page to schedule a free consultation – or use the tool shared below.

"Can Medical Justice solve my problem?" Click here to review recent consultations...

We’ve been protecting doctors from medico-legal threats since 2001. We’ve seen it all. Here’s a sample of typical recent consultation discussions…

  • Former employee stole patient list. Now a competitor…
  • Patient suing doctor in small claims court…
  • Just received board complaint…
  • Allegations of sexual harassment by employee…
  • Patient filed police complaint doctor inappropriately touched her…
  • DEA showed up to my office…
  • Patient “extorting” me. “Pay me or I’ll slam you online.”
  • My carrier wants me to settle. My case is fully defensible…
  • My patient is demanding an unwarranted refund…
  • How do I safely terminate doctor-patient relationship?
  • How to avoid reporting to Data Bank…
  • I want my day in court. But don’t want to risk my nest egg…
  • Hospital wants to fire me…
  • Sham peer review inappropriately limiting privileges…
  • Can I safely use stem cells in my practice?
  • Patient’s results are not what was expected…
  • Just received request for medical records from an attorney…
  • Just received notice of intent to sue…
  • Just received summons for meritless case…
  • Safely responding to negative online reviews…

We challenge you to supply us with a medico-legal obstacle we haven’t seen before. Know you are in good hands. Schedule your consultation below – or click here to visit our booking page.

 

Teddy Gillen

And most of the physicians that I work with are fantastic doctors. And oftentimes when they go through the claims process, there was no liability on their part. There was a bad outcome, probably not due to the way they practice medicine. It becomes offensive to them if a carrier comes in and says, “I want to settle and be done.” There’s pride on the line. There’s reputation on the line. There’s a career on the line – because they do follow you into the DataBank if you settle a claim.

The ones that believe in defending it to the end, if you have a consent-to-settle policy, you can defend to the death. And so those are the type of carriers that we would want to bring to our best clients. And in certain situations, if you have a less than standard contract, the carrier may have control over consent-to-settle.

And then, as you mentioned, they may also include a hammer clause which says, “Hey, we’d like to settle this for $100,000. We believe we can do that.” And if the doctor or the insurer decides to take it further and defend themselves, then the carrier will only pay the amount they believed they could settle for, which would be $100,000 in the case of this example. And then the rest would be on you.

That’s it in a nutshell.

Jeff Segal, MD, JD

This makes people more reasonable and rational. So if it turns out you really are liable and that most people would say you are liable and the carrier thinks that they can truly get it settled for that amount, if you want to be unreasonable, you’re gambling with your own money, not house money. Meaning that the carrier will pay up to that reasonable amount, which is $100,000 in this case.

But any amount over? You’re gambling with your own money.

Teddy Gillen

I tend to agree with you and disagree with you on the reasonable side. And let me give you a sort of a counterpoint to that.

Jeff Segal, MD, JD

Please do.

Teddy Gillen

You mentioned some of the other coverages that our clients should investigate. And one is employment practices liability coverage. And that essentially is a legal defense coverage for if and when you’re sued for discrimination or wrongful termination. And that can be from a patient or that can be from an employee.

Here’s an example: We had a large multi-specialty group. They hired a provider and gave him a guarantee, and at the end of the guarantee, they moved him over to an “eat what you kill” model, which was explicitly written in the contract. The physician, who was highly compensated, filed a suit. And the suit alleged discrimination, racial discrimination, gender discrimination, etc. An EEOC claim was made. Our insured, who had done everything possible to help this physician be successful, was now being sued for something that he didn’t do.

And the claims adjuster looked at the facts, the black and white of the person suing and said, “Hey, they’re not asking for much, let’s just make a settlement offer.” And our client was appalled, quite honestly. And without that clause, our client may have been forced to settle. They ended up winning the case in the end.

Jeff Segal, MD, JD

I’m going to put a plug in there for employment practices liability insurance. I think everyone listening to this should at least get a quote on it. You’ll be pleasantly surprised. The premiums vary, depending upon the structure of the organization and the claims history. But these are expensive cases to defend. If you must go out and hire your own attorney to defend you for claims of wrongful termination or discrimination, sexual harassment and so on, you’ll find that even if you win, you lose. You’re probably looking at six figures out of pocket. Not a great place to be. And since the environment has changed, it’s not more employer friendly, it’s more employee friendly, particularly with cases of sexual harassment.

And the thing that I find fascinating or interesting, maybe not fascinating, is that in the past, there needed to be a minimum number of employees to trigger some of these complaints, sexual harassment was one and disability discrimination was another – meaning that you needed “X” number of employees to file such a claim.

For each type of claim, it’s different. But in states like New York, and I don’t know that New York is the only outlier, I think there are others, merely having a single employee is enough to trigger some of these types of employment practices lawsuits.

So, a tiny little practice with a single employee could be on the hook for sexual harassment, discrimination and so on and so forth. But having the coverage, I think, gives the defendant some peace of mind, because now you don’t have to worry about giant checks. Many of these policies have a deductible associated with them. But that deductible pales in comparison to having to write a six-figure check. I mean, it is painful. Nobody wants to write any checks at all.

But having most of your legal fees covered, as well as a settlement or judgment covered, gives people peace of mind. And most people aren’t thinking about employment practices in terms of getting sued. But certainly, in federal court, employment litigation is likely the number one or number two type of lawsuit that is filed in federal courts. Forget about the state court. In federal court, it’s a common lawsuit. And I’m going to take an educated guess that those premiums are rising, just because the cost to defend, as well as the cost of settlements and judgments are also going up.

Teddy Gillen

Well, most physicians that are solo practitioners would say they may practice for 30 years and never have a med mal incident. And the chances that they could have an allegation of some sort (discrimination or harassment) are higher than the chances that they will have a med mal claim. Even if you don’t have an employee, the policy covers you for third parties as well. That includes patients. That could be the mailman that comes in your office.

Anyone interacting with, not only you, but also your employees, can file a lawsuit alleging discriminatory practices. It covers not only the folks in your organization that may see you, but those that are outside – a third party. And so that’s one of the key nuances you want to look at in that policy. Ask if it has third party coverage.

Jeff Segal, MD, JD

Let me give an example of that in action. We had a client who had a small number of employees. A patient came in, I think he was in his 60s or 70s, but he was just abusive to the staff. And he was always hitting on the staff. 24/7 sexual innuendo. And it made one of employees entirely uncomfortable, and I think she told the doctor, and so the question was: Should the doctor terminate the doctor-patient relationship?

I think he ultimately did, letting the patient know that he couldn’t tolerate the bad behavior, but by then, the damage was already done. This is an employee that was still working there. She liked the practice and still wanted to work there. But because no substantive action took place immediately, there was a lawsuit associated with that. And in this case, the doctor hadn’t done anything directly wrong. It’s just that he didn’t terminate the doctor-patient relationship quickly.

And that became the basis for the lawsuit. Not a good day for him.

Medical Justice provides free consultations to doctors facing medico-legal obstacles. We have solutions for doctor-patient conflicts, unwarranted demands for refunds, online defamation (patient review mischief), meritless litigation, and a gazillion other issues. We also provide counsel specific to COVID-19. If you are navigating a medico-legal obstacle, visit our booking page to schedule a free consultation – or use the tool shared below.

"Can Medical Justice solve my problem?" Click here to review recent consultations...

We’ve been protecting doctors from medico-legal threats since 2001. We’ve seen it all. Here’s a sample of typical recent consultation discussions…

  • Former employee stole patient list. Now a competitor…
  • Patient suing doctor in small claims court…
  • Just received board complaint…
  • Allegations of sexual harassment by employee…
  • Patient filed police complaint doctor inappropriately touched her…
  • DEA showed up to my office…
  • Patient “extorting” me. “Pay me or I’ll slam you online.”
  • My carrier wants me to settle. My case is fully defensible…
  • My patient is demanding an unwarranted refund…
  • How do I safely terminate doctor-patient relationship?
  • How to avoid reporting to Data Bank…
  • I want my day in court. But don’t want to risk my nest egg…
  • Hospital wants to fire me…
  • Sham peer review inappropriately limiting privileges…
  • Can I safely use stem cells in my practice?
  • Patient’s results are not what was expected…
  • Just received request for medical records from an attorney…
  • Just received notice of intent to sue…
  • Just received summons for meritless case…
  • Safely responding to negative online reviews…

We challenge you to supply us with a medico-legal obstacle we haven’t seen before. Know you are in good hands. Schedule your consultation below – or click here to visit our booking page.

 

Teddy Gillen

And we’ve also seen a big uptick in claims on the directors and officer’s liability side. Oftentimes when people think of those policies, they’re thinking of publicly traded organizations. But the reality is that most of these claims are coming from private organizations. And if you’re a physician practice that has partners, multiple owners, or investors, and you have a group of individuals making decisions that are not inclusive of all the ownership, then you have a major directors and officers liability exposure. Because if you’re an investor and you’re not on the board and someone mismanages your money, then you’re going to be upset.

You’re likely to sue. The health care industry is not immune to that. In the physician’s practice, often the ones we’re working with are raising private capital. They’re trying to acquire, or they have a group of 30 physicians, and all 30 are partners, but they have an executive committee of five that make most of the decisions. The need for D&O coverage is great.

And it’s since it’s optional, it is sometimes overlooked by the people who need it most. Say you have a great relationship with your med mal carrier and you’re working direct. Oftentimes those carriers don’t offer these other products. They’re coming in and they’re diving deep on the med mal, and they’re asking the questions from the risk management side associated with medical malpractice. Brokers take a holistic approach. We examine your entire practice and identify your exposures. Then we provide a full, robust proposal detailing how you can transfer a certain risk and the cost of doing so.

As a broker, we would offer a directors and officers quote and an employment practices liability quote. If there’s a 401k plan or some other sort of deferred compensation, there might be a need for a fiduciary liability policy. We often see that they’ll have a management group, a separate company that manages the practice itself and how the dollars flow.

And sometimes they do that for other practices in their community. If that’s the case, they may need an errors and admissions policy, too. Certainly, the traditional coverages like the property and general liability. And if you have employees, you need worker’s compensation. But those are some of the other risks associated with the physician’s practice.

Jeff Segal, MD, JD

Then there’s also administrative defense if your license is at risk, as well as cyber insurance, just to round out the list. Your professional liability carrier may provide coverage for medical licensing board defense or claims related to Medicare, etc. But typically, the limits that are provided are modest. And even if they do provide them, you should at least understand whether the amount that’s being provided is reasonable to cover the average claim that would come in your direction.

When I say average claim, I mean the legal defense cost to make sure that you can defend your license. Your license is probably the largest asset. It’s how you make money going forward. And if your credentials or your privileges are curtailed in any way, your ability to make a living goes away.

In one sense, it’s almost like disability insurance. You need to make sure that you can still carry on. That’s why it comes as a real shock to many physicians when they must hire a lawyer and they see they have no license defense coverage, or maybe they only have $25,000 dollars. They soon learn that amount is exhausted rapidly.

Teddy Gillen

Absolutely. Let’s go back to the standard versus non-standard carriers for a bit. Your standard carriers that are med mal focused and admitted in the state have a supplement, as you mentioned. That could be $25,000. It could be $50,000. Most of them also include some sort of cyber coverage. And generally, that’s about the same. And if you’re responsible for patient records and you’re breached, the cost of notifying the patients that you’ve had a breach is exorbitant.

$50,000 is not going to cover the cost of notifying, let alone address any actual damages. So, we have separate programs, or we can go out and provide standalone policies. And some of our carriers that include as a supplement, “buyups” that make it inexpensive to go from $50,000 to $1,000,000 of coverage. Or to go from $100,000 in a supplement to a $1,000,000 in coverage contained within your med mal policy.

But those are all things to look at and consider when you’re looking at your coverage.

Jeff Segal, MD, JD

And here’s an example of a cyber problem where the records were breached. They included before and after pictures of plastic surgery patients.

And those pictures were being held for ransom, with the hackers basically saying, “You’ve got 24 hours or we’re going to release the pictures of your patients. And I’m pretty sure they’re not going to be happy.” And if they do get released, the patients are not going to be happy.

So, $25,000 dollars of coverage is likely not going to be adequate to make the problem go away. And if the problem does manifest, those pictures are released, or details of medical records are released, you’re looking at an ugly public relations story, a media story, as well as angry patients who will be looking to be made whole for the privacy violation.

Teddy Gillen

I know of a similar circumstance. We’re not talking about some sophisticated hackers, by the way. We saw a case where the before and after pictures were on the doctor’s website and someone was able to save the images to their computer. And when they saved the files, the files had been named after the patients they depicted.

Jeff Segal, MD, JD

I know the case.

Teddy Gillen

Dominated in our headlines are stories alleging China and Russia and other folks are hacking these larger, sophisticated organizations. But many of these cases are not nearly all that sophisticated.

Jeff Segal, MD, JD

One thing that’s helpful, and I think this is where getting a trusted adviser is also useful, is that if you’re working with third parties, such as a webmaster or a web marketing company, understand what type of coverage they have if they create a problem. For example, if you are putting up before and after pictures and your webmaster is responsible for all of that, in a perfect world, they would also have their own coverage if they create a faux pas, such as including the names of the patient in the file names, even if there’s a giant black band over the patient’s eyes and you can’t otherwise see who they are.

Medical Justice provides free consultations to doctors facing medico-legal obstacles. We have solutions for doctor-patient conflicts, unwarranted demands for refunds, online defamation (patient review mischief), meritless litigation, and a gazillion other issues. We also provide counsel specific to COVID-19. If you are navigating a medico-legal obstacle, visit our booking page to schedule a free consultation – or use the tool shared below.

"Can Medical Justice solve my problem?" Click here to review recent consultations...

We’ve been protecting doctors from medico-legal threats since 2001. We’ve seen it all. Here’s a sample of typical recent consultation discussions…

  • Former employee stole patient list. Now a competitor…
  • Patient suing doctor in small claims court…
  • Just received board complaint…
  • Allegations of sexual harassment by employee…
  • Patient filed police complaint doctor inappropriately touched her…
  • DEA showed up to my office…
  • Patient “extorting” me. “Pay me or I’ll slam you online.”
  • My carrier wants me to settle. My case is fully defensible…
  • My patient is demanding an unwarranted refund…
  • How do I safely terminate doctor-patient relationship?
  • How to avoid reporting to Data Bank…
  • I want my day in court. But don’t want to risk my nest egg…
  • Hospital wants to fire me…
  • Sham peer review inappropriately limiting privileges…
  • Can I safely use stem cells in my practice?
  • Patient’s results are not what was expected…
  • Just received request for medical records from an attorney…
  • Just received notice of intent to sue…
  • Just received summons for meritless case…
  • Safely responding to negative online reviews…

We challenge you to supply us with a medico-legal obstacle we haven’t seen before. Know you are in good hands. Schedule your consultation below – or click here to visit our booking page.

 

Teddy Gillen

Absolutely. I think the health care industry does not do a good job of checking into the insurance policies that their contractors have in play. It is important to button that up tight. If you’re in the construction industry and you’re a general contractor and you’re hiring out subs, you’re checking to see if they have coverage. When they are coming in and doing the framing on up to the roof and building it out, you’re really buttoning up that tight.

And on the health care side, we just don’t see the same attention to detail for whatever reason. So, as you mentioned, it’s extremely important to see what contracts you have in place, whether that’s for the hospital or with a provider and who’s responsible for coverage in the event of a loss. Especially if you have a third-party doing billing and coding, or a third party responsible for your patient records, you want to see what kinds of exposures they are on the hook for by contract.

You need to know if they’re holding you harmless or indemnifying you for those exposures. And going beyond that, ask them to supply you with a certificate of insurance. Ask them to add you as an additional insured or a certificate holder.

Jeff Segal, MD, JD

Teddy, we are tight on time. I do have one other question I’d like to dig into if we can before we must part ways.

We’ve had several physician clients, maybe not a lot, but more than I’m comfortable seeing, who have gotten a notice of non-renewal from their carrier. These are people that may have been out practicing for 20 or 30 years. They’ve got a decent track record. They may have been sued once or twice, and then they’ve been sued again and they’re in the middle of a case. And then the carrier says, “OK, we’ll defend this case to the bitter end. But then we’re done with you. We think you’re too risky.”

And that notice of non-renewal never comes with a large window of time. They may already be defending a case and are kind of stressed out. And if they’re shopping for new coverage, they have to say, “I’m in the middle of a case right now.” And obviously that’s an awkward bargaining position. What options are available for doctors who find themselves in that position?

I know it’s not hopeless because certainly we’ve seen doctors get placed. And for most high earning doctors, for example, those practicing in the surgical subspecialties, you need or want hospital privileges. And most hospitals with rare exception mandate that you have some type of professional liability coverage. Talk about what options are available so that it’s not only doom and gloom.

Teddy Gillen

There are several options available and we’ve seen this as well. Backing up, depending on the state, there may be some legal requirements that the carrier must go through if they’re going to change pricing at all. If they are going to go up by more than 10 percent on the renewal, they may have to notify you legally 40 days out from your renewal date. And that legal notification may also include a notice of cancellation. They may, in fact, provide an offer for coverage at your renewal and it may be significantly different.

And so that notice of a cancellation must go out legally. So, if you get that the day before your renewal, then legally you can push back on that notice and require the carrier to renew your coverage for some period of time where they give you proper notice. So, working with the broker will help you understand that. And when you do get those, we can transition you, the consumer, or whoever is getting the notice, to a new policy and pick up the prior acts on the claims made.

One of the key carrier coverage issues that you want to look out for is this: When is the carrier legally on the hook for a claim? In the scenario you mentioned, let’s say you’re with a Lloyd’s of London type carrier. And I’m trying to avoid using specific carrier names. But let’s say you’re with a less than standard carrier. They’re not on the hook for any claim or any bad outcome until a written demand is made against you for that outcome.

So, in your scenario, let’s say you’re a practicing physician, and you have a death that happens. One of your patients dies. And you notify your carrier. Well, the carrier will say, “Thanks for the notification, but legally and contractually, it’s not our claim until you actually receive a demand of some kind.” Some sort of written demand.

And that will put the doctor in a precarious situation if they then decide to cancel his coverage. Because in that moment, if you’ve not yet been sued and not yet received those papers, but they cancel your coverage when you transition to a new carrier, your new carrier is going to ask you in the application the following: Are you aware of any incidents that could result into a claim?

And if the answer is yes, it’s going to be very, very difficult to transition your past exposures to a new company. Knowing the nuances of whether you have an incident trigger for reporting in your policy, or a written demand trigger is extremely important in this scenario. If it’s an incident trigger and you reported that claim, the carrier issuing the non-renewal notice is still legally on the hook for all your claims that you’ve submitted to them.

When you transition or go to a new carrier, you essentially start brand new with any of the incidences that you don’t know about.

Jeff Segal, MD, JD

I’ve got a question, though. So, what happens if you’re aware of the patient death? Let’s call it a high risk, meaning that you’re worried that this may turn into litigation. Let’s go forward three or four months and you get a notice of non-renewal, but you have yet to receive anything in writing from the patient or their family or an attorney. Where does that sit in the abyss?

Should you notify your carrier of this? I think I see the problem with both sides.

Teddy Gillen

It’s a little gray. I think it depends on the state. But the gray area is as follows: When you are completing an application for your new carrier, that new carrier will ask the question: “Are you aware of any incidents that could reasonably rise into a claim?” And the answer is yes or no. And so if you answer no, and there’s something that’s extremely obvious that you shared with your previous carrier, it’s going to be easy for the new carrier to get out of that claim if you are sued in the future. They can go back and say, “You lied to us.”

And so that could technically be insurance fraud. Misrepresentation on that application.

Jeff Segal, MD, JD

But the prior carrier may not be on the hook unless there’s a written claim from the patient, their family or a lawyer, correct?

Teddy Gillen

Yes. We’ve faced these situations. If you’re just stuck between a rock and a hard place, just be honest with the new carrier. The only option is purchasing tail coverage. And I’ve not seen a policy out there that doesn’t allow you to buy contract purchase tail for some period. Whether that’s for one year, two years, three years or an indefinite period of time varies, but we’ve seen some of these situations arise where we have to consult the physician and say, “If you want to make sure that you’re covered in this scenario, you’re going to have to purchase tail from your current provider.”

And then we start over brand new with the new carrier.

Jeff Segal, MD, JD

I guess you can’t encourage the patient to send a demand letter.

Teddy Gillen

Maybe they should work with Medical Justice at that point.

And I know you do great work on that side of the house for physicians that are in those scenarios.

Jeff Segal, MD, JD

Teddy, we are running up against a clock. I want to thank you for taking what is otherwise considered a dry and dreary subject and turning to something that to me was fascinating. And I’m positive everyone listening to this learned many things that they didn’t know previously. I know I did. I’ve been in this space for almost 20 years, so I appreciate you joining us today. Tell people how they can get in touch with you if they want to learn more about who you are or what you do.

Teddy Gillen

Great. Again, my name is Teddy Gillen. I can be found on LinkedIn. Our website is epicbrokers.com.

My email is teddy.gillen@epicbrokers.com.

Or you can call me on my cell phone: 404-550-5561.

Jeff Segal, MD, JD

We’ll include all that contact information in the show notes. So, Teddy, thanks for joining us today. And I look forward to speaking with you again. Bye-bye.

Teddy Gillen

Thank you for having me. Bye-bye.

Medical Justice provides free consultations to doctors facing medico-legal obstacles. We have solutions for patient conflicts, unwarranted demands for refunds, online defamation (patient review mischief) and a meritless litigation. We also provide counsel specific to COVID-19. If you are navigating a medico-legal obstacle, request a consultation.

"Can Medical Justice solve my problem?" Click here to review recent consultations...

We’ve been protecting doctors from medico-legal threats since 2001. We’ve seen it all. Here’s a sample of typical recent consultation discussions…

  • Former employee stole patient list. Now a competitor…
  • Patient suing doctor in small claims court…
  • Just received board complaint…
  • Allegations of sexual harassment by employee…
  • Patient filed police complaint doctor inappropriately touched her…
  • DEA showed up to my office…
  • Patient “extorting” me. “Pay me or I’ll slam you online.”
  • My carrier wants me to settle. My case is fully defensible…
  • My patient is demanding an unwarranted refund…
  • How do I safely terminate doctor-patient relationship?
  • How to avoid reporting to Data Bank…
  • I want my day in court. But don’t want to risk my nest egg…
  • Hospital wants to fire me…
  • Sham peer review inappropriately limiting privileges…
  • Can I safely use stem cells in my practice?
  • Patient’s results are not what was expected…
  • Just received request for medical records from an attorney…
  • Just received notice of intent to sue…
  • Just received summons for meritless case…
  • Safely responding to negative online reviews…

We challenge you to supply us with a medico-legal obstacle we haven’t seen before. Know you are in good hands. Schedule your consultation below – or click here to visit our booking page.

 

Meet Your Hosts

Teddy Gillen

Principal at EPIC Insurance Brokers & Consultants

Teddy Gillen is a principal at EPIC Insurance Brokers & Consultants. As a principal, Teddy assists clients in identifying, analyzing and financing risks. He helps clients understand their key objectives in terms of risk retention and transfer. Teddy is adept at designing healthcare professional liability insurance programs to meet his client’s objectives. He also assists clients in analyzing appropriate alternative financing mechanisms.

Jeff Segal, MD, JD

Founder & CEO, Medical Justice
Dr. Jeffrey Segal is a board-certified neurosurgeon. In the process of conceiving, funding, developing, and growing Medical Justice, Dr. Segal has established himself as one of the country’s leading authorities on medical malpractice issues, counterclaims, and internet-based assaults on reputation.

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