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5 Things Psychiatrists Should Avoid When Buying Malpractice Insurance

You have insurance coverage.

You received the lowest rate and have the certificate of insurance.

You are properly insured, right?

Perhaps not.

Here are five of the most common issues you should avoid when choosing a policy.

 1. Not having enough licensing board defense coverage.

PRMS is seeing increased licensing board activity for many reasons such as aggressive boards, greater public attention, easy online access for the public to make complaints and the state’s obligation to investigate all complaints.

Some policies include a basic limit to defend against a board investigation and then charge more if you want higher limits.  PRMS knows the importance of protecting your license and reputation so our policy includes a separate limit up to $150,000 at no additional charge. 

 2. Only one policy type to select from.

Some companies only offer claims-made policies.  However, PRMS offers you a choice.  There are two common policies to consider.

Claims-Made:  This policy protects you in a practice-related legal proceeding if the policy is active when the “claim” is “made” against you during the policy period.  The limits of liability in effect at the time the legal proceeding is made will apply.  If you cancel your policy, you cannot report legal proceedings and should consider additional coverage to extend the reporting period – this is commonly called tail coverage. 

Occurrence:  This policy protects you in a practice-related legal proceeding if the policy was active at the time the treatment or incident occurred, regardless of when the lawsuit is filed.  You don’t need to buy tail coverage with an occurrence policy. 

We will explain your options so you can decide what works best.  Also, PRMS waives tail coverage costs in certain cases such as retirement, longevity with the program, death or permanent disability. Learn more about tail coverage here.

 3. Speaking of tail, some insurance companies have limited options for waiving tail coverage costs.

Tail coverage can be expensive.  The good news is that if you have a claims-made policy with another company, you do not need to buy your insurer’s tail because you may transfer your retroactive date to a policy through PRMS.  

Some companies waive tail costs only if you retire, become permanently disabled or die.  PRMS also waives tail costs for those reasons (retirement means permanent retirement after 5 years’ continuous coverage at age 55+).  However, we also waive tail costs if you maintain a claims-made policy for 10 consecutive years (presuming you are claim free or had no surcharges for claims on your policy).  In most states, we count your previous companies’ claims-made policy years toward the 10-year rule.

 4. Choosing an insurance company with risk management services not specifically designed for mental health.

Other companies usually comingle psychiatry rates and policies with other specialties. In terms of risk management advice, multi-specialty companies can generalize their educational material focused on primary care physicians/surgeons due to their large numbers and higher risk.  As a result, you may not receive enough advice for mental health.

PRMS policies and services are designed for psychiatrists and groups of psychiatrists with allied behavioral healthcare providers.  We are committed to psychiatry-specific risk management services.  We believe risk management – and complimentary access to information and CMEs (PRMS is ACCME accredited) – are essential.  Our advice is based on our superior experience in managing psychiatric claims, lawsuits and significant events for over 30 years as well as addressing about 70,000 psychiatric risk management questions and issues.

 5. Selecting an insurance company that doesn’t have psychiatric claims experience.

At the end of the day, it is about results. Will your company be there for you and act in your best interest when a claim is brought against you?  Do they normally manage psychiatry claims?  Does your company outsource claims defense?

In the over 30 years of our program’s existence, we have managed all claims in-house (no outsourcing).  Also, most of our clients’ claims are dismissed.

Choosing the right malpractice insurance can be a complicated and confusing process, but we are here to help you avoid these and other common pitfalls.

To ask a question or get a personalized rate indication, contact us at (800) 245-3333 or TheProgram@prms.com.

 

The content of this article (“Content”) is for informational purposes only. The Content is not intended to be a substitute for professional legal advice or judgment, or for other professional advice.  Always seek the advice of your attorney with any questions you may have regarding the Content.  Never disregard professional legal advice or delay in seeking it because of the Content.

©2018 Professional Risk Management Services, Inc. (PRMS). All rights reserved.

Actual terms, coverages, conditions and exclusions may vary by state. Insurance coverage provided by Fair American Insurance and Reinsurance Company (NAIC 35157). FAIRCO is an authorized carrier in California, ID number 3175-7.

5 Things Psychiatrists Should Avoid When Buying Malpractice Insurance

You have insurance coverage.

You received the lowest rate and have the certificate of insurance.

You are properly insured, right?

Perhaps not.

Here are five of the most common issues you should avoid when choosing a policy.

1. Having a “conditional” consent to settle clause in the policy.

Even though “consent to settle” clauses are common, if an insured doctor wants to defend a lawsuit and the insurance company prefers to settle, some policies require  arbitrators to settle the dispute. Ultimately, this may favor the insurance company rather than you.  Or, in some policies, the insurance company will make you pay for a portion of the claim if you did not agree to the amount they wanted to pay and the jury awarded a higher amount.  This is referred to as a “hammer clause”.

Always read the fine print and make sure to choose a policy that will properly represent your best interests by not having an arbitration clause or a hammer clause. With The Psychiatrists’ Program, our client-focused policies do not include these clauses.

2. Paying hidden costs.

A low premium won’t always end up saving you money particularly when you are faced with the bill for upfront defense costs, high deductibles or inadequate coverage for medical board investigations.

Did you know that psychiatrists are more likely to be reported for medical board complaints than named in a lawsuit?  And states are obligated to investigate all board complaints.  Your insurance company may require you to find an attorney, pay defense costs upfront and then apply for reimbursement.  Some insurance companies also have hefty deductibles for this coverage.  Check the limits on your current policy. Some companies may only quote you defense coverage as low as $5,000 in their standard policy and then require you to pay more for appropriate coverage.

With The Psychiatrists’ Program, we automatically provide $50,000 per complaint/$50,000 per policy limits for medical board complaints.  We also do not assess deductibles for these claims and we pay all covered claims directly to the attorney. No additional premium is charged* and you don’t have to pay for these costs upfront.

3. Choosing a policy with risk management services not specifically designed for psychiatrists.

Other insurance companies usually comingle psychiatry rates and policies with physicians in other specialties. In terms of risk management advice, multi-specialty insurance companies often generalize their information or develop educational material focused on primary care physicians due to their large numbers or on specialties such as surgeons. As a result, you may not receive the specific advice relative to your practice of psychiatry.

The Psychiatrists’ Program’s policies and services are designed specifically for psychiatrists and groups of psychiatrists with behavioral allied healthcare professionals. The policy is customized to define psychiatric services.

A hallmark of our program is our commitment to providing clients with psychiatric-specific risk management services. We believe risk management – and convenient access to risk management information – is essential to your practice. Our risk management advice is based on our superior experience in handling more than 22,000 psychiatric claims, lawsuits and significant events and addressing over 44,000 psychiatric risk management questions and issues through our toll-free helpline.

4. Paying extra for CMEs and risk management education.  

Some companies require psychiatrists to pay third-party companies for CMEs because the insurance company does not offer the service in-house or as part of its insurance package.

The Psychiatrists’ Program provide CME risk management education to all of our insured clients, free of charge. We are accredited by the American Council for Continuing Medical Education and achieved ACCME Accreditation with Commendation – a level awarded to only 21% of accredited companies.  This speaks to the quality of our education both in-person and online.

5. Selecting an insurance company that doesn’t have psychiatric claims experience.

At the end of the day, it is about results. Will your insurance company be there for you and act in your best interest when a claim is brought against you? How has your insurance company performed?

In the nearly 30 years of our program’s existence we have won 99% of claims that went to trial for a verdict. You can read more about our 2013 claims results in our Year in Review. 

Choosing the right medical professional liability insurance can be a complicated and confusing process, but we are here to help you avoid these common pitfalls and many others.

To ask a question or get a free assessment and quote, contact me at (800) 245-3333 or TheProgram@prms.com.

*Maryland regulations require separate charges but we still automatically provide $50,000 per complaint/$50,000 per policy limits for medical board complaints.  Proper coverage and your professional reputation is important.

Rich Stagnato, PRMS Account Manager
Mr. Stagnato is responsible for new and renewal business, providing customer service, insurance counseling as well as obtaining competitive data on the medical malpractice market. He is a licensed Property and Casualty agent. Richard Stagnato rejoined PRMS in 2004 after almost a year as an underwriter at NCRIC. Prior to joining the company in 2000, he had been an insurance specialist for five years with the Boat U.S. insurance program.

 

We have answers…

No one is more pleasantly surprised than I am to see that a number of you have become regular readers of this blog. Up to this point, we at PRMS have chosen the topic of each post, based largely on what we think you may be interested in reading about.  We would, however, like to hear from you. What do you want us to write about?  

Please send us your questions.  You can email me or The Program. Of course, there are a few ground rules. 

First, we will not identify you in any way should we use your question for a future blog post.  The most we might do is say, “A psychiatrist from Oregon asks … .”

Second, do not provide any personal or identifying information about patients, colleagues, employees, institutions, or organizations.

Third, if you have a question about your specific liability policy or a current risk management matter, please call us at 1-800-245-3333 for policy questions and 1-800-527-9181 for risk management questions.

We are also interested in hearing from you about trends you are seeing in the practice of psychiatry in your area. For example, have you joined an ACO (Accountable Care Organization)? Have you had notably good or bad experiences with EHRs (electronic health records)?  Is your state considering changes to its “duty to warn” law?  Let us know.

Ask us a question. We exist to serve the insurance and risk management needs of our psychiatrist customers.

Are you smarter than a PGY-4?

(At least about liability insurance.)

I have mentioned more than once that while PRMS staff always welcomes the opportunity to speak to groups of psychiatrists in all stages of practice, we particularly welcome the chance to speak with residents. We believe that good advice early in one’s career can ease the transition to practice, reduce the anxiety that it creates, and help the resident build good risk management techniques into his or her practice from Day 1.

Those of us who do most of these resident sessions collected residents’ FAQs. Here they are:

  • 1. What’s the difference between occurrence and claims-made liability insurance? Which one is better? Why are there two kinds of coverage? What does it mean to me, practically speaking?
  • 2. If I’m joining a group practice, why do I need to know anything about liability insurance? The group will provide me with coverage as part of my contract.
  • 3. Do I need to do anything about “tail coverage” before I leave residency? What kind of coverage do they provide me here?
  • 4. What can I do to keep from being sued?
  • 5. I thought malpractice insurance was like life insurance – essentially the same coverage from one company to the next. How do policies from different companies vary in terms of the coverage they provide?

How many of these can you answer? Are you confident about the accuracy of your answers? If you’re not, let us know, and we’ll make sure you have the information you need to assess whether you have the right coverage for your practice, whether you’re just starting or many years into it, and you understand the pros and cons of the varieties of policies and the coverage they provide.

And if you have a group of psychiatrists who need a speaker on liability and risk management issues, just let us know. You can contact me directly at tracy@prms.com.