Written by Sarah Lim, CA Lic# 0M52397
A Guide to Protecting Your Practice
For those physicians who have chosen to practice independently, medical professional liability can be purchased directly from a professional liability company or through an insurance agent or broker. Now, be aware that there is a difference between an agent and broker. The most basic definition of an insurance agent is provided in Section 31 of the California Insurance Code, which states that an insurance agent is “a person authorized, by and on behalf of an insurer, to transact all classes of insurance other than life insurance.” [All statutory references herein are to the California Insurance Code or Title X of the California Administrative Code (the “Regulations”)]. In contrast, an insurance broker, is defined by Section 33, as “a person who, for compensation and on behalf of another person, transacts insurance other than life with, but not on behalf of, an insurer.” In short, agents work for the insurance company. Brokers, like those in California Attending Physicians, represent the client.
The following are things to consider when selecting the right coverage:
1) Make sure that the policy covers things like: any addition or deletion of procedures within your practice; if you need to take a leave of absence; or if your status changes from part-time to full-time or the reverse.
2) Confirm that any locum tenens, physician assistants (PAs), nurse practitioners (NPs), and any other providers you supervise are covered for the services they provide on behalf of your practice.
3) Make sure your limits of liability are enough to cover your entire practice, taking into consideration the minimum requirements put forth by state laws, local hospitals, and health plans. The most common limits are $1M (per claim)/$3M (aggregate) but there are states that require minimum limits as low as $100,000/$300,000 and some states with no limit requirements.
4) Coverage is usually provided with individual limits per physician. In some instances though, depending on the kind of practice, the entity and all the physicians in it can share a single limit. Practices like Emergency Medicine and Urgent Care are not rated based on the number of physicians employed, but rather the volume and acuity level of patient visits.
5) Make sure to be clear on the availability of entity coverage. Physicians are directly responsible for the care they provide to their patients, but the medical group also shares responsibility in the form of vicarious liability. The volume of care that is being provided by PA’s and NP’s is continuing to grow thereby creating additional risk for medical groups.
