We get it—insurance is not the most exciting topic. But we also understand that medical professional liability insurance (MPLI) is an essential part of your practice. The following information is designed to help you understand key details about MPLI and make the most of the benefits that come with your coverage.
An adverse outcome can occur despite the best efforts of providers. It’s essential to have the right MPLI policy in place so that your actions can be strongly defended, as coverage serves to protect you and your practice, both financially and reputationally. The main things that MPLI covers are defense attorney fees, court costs, and settlements or judgments, which entail compensation to a patient or patient’s family for both economic (actual medical costs) and non-economic (pain and suffering) damages. In many states, physicians and other providers are required by law to have MPLI, and many employment contracts with hospitals and other healthcare organizations require this as well.
In addition, the time spent dealing with a claim and defending oneself can be extensive. According to a study by the Medical Professional Liability Association, the average time to resolve a claim is 4.6 years, with surgical specialty claims taking between four and five years, and primary care claims taking between five and six years.
MPLI should provide services and resources to help you to proactively prevent a claim or lawsuit from occurring. Some benefits to look for include:
A claim of medical malpractice means that a plaintiff, usually a patient or a patient’s family, alleges that the patient was harmed by a provider due to negligence and the failure to meet the standard of care. If you’re notified that a claim has been made against you or your organization, or if you have reason to believe that an unexpected or adverse outcome has occurred and could lead to a claim, you should reach out to your MPLI carrier right away to initiate its claim review process.
In addition to helping you defend yourself and covering legal and court expenses, your MPLI carrier may offer resources that can help you during a claim, such as:
With an occurrence policy, for an alleged incident to be covered it must have taken place during the active policy period – regardless of when the claim is reported. With a claims-made policy, which is most common for MPLI, for an alleged incident to be covered it must have taken place during the active policy period and been reported during the active policy period. Because claims-made policies only cover incidents that extend into the past up until the policy’s retroactive date, you may need to consider having prior acts coverage. And since claims that arise after a claims-made policy ends would also not be covered, it is wise to have tail coverage upon cancellation.
Prior acts coverage provides coverage for unknown and unreported claims that occurred before the effective date of a policy. Tail coverage provides coverage for claims made after a policy has expired or been cancelled. It can be purchased upon the expiration of a claims-made policy for continued coverage.
Claims-made policies typically have a lower initial premium that increases gradually over a period of four to five years until it is “mature.” After that, premiums typically change due to a change in risk classification, discounts, claims experience, or if the insurance carrier adjusts overall rates.
Consent-to-settle and a collaborative approach
This is an important clause because it requires the carrier to get written permission from the insured before making any settlement with a plaintiff. Without a “consent to settle” clause, the insurance company can make important decisions about settlements and take action without your permission. In addition, some policies have a “hammer clause,” which states that if an insured does not agree with a carrier’s recommendation to settle, the insured would then be responsible for any damages or costs above the amount the carrier believes the claim could have been settled for.
Cyber liability coverage
Cybercrime has become a constant and severe threat to healthcare organizations, with sensitive patient information vulnerable to data breaches and ransomware. Many MPLI policies now include some level of cyber liability coverage. Pay attention to the level of supplementary cyber liability coverage offered in each policy, because it’s important to get coverage that’s adequate for your level of risk (for instance, a large health system would have a higher risk for a broad data breach than a small office).
Legal defense coverage
This covers costs incurred when a provider is involved in the following types of situations: a complaint is filed with the state medical board, a hospital or other medical entity initiates peer review proceedings to investigate and assess an incident, a government investigation is brought as part of allegations that a provider violated the law, or disciplinary proceedings are launched by a state licensing authority or other government entity. Coverage should include all reasonable attorney fees and other fees, costs and expenses attributable to the investigation, and defense or appeal of a claim or other legal or administrative dispute.
Free tail coverage in case of death, disability, or retirement
Tail coverage covers claims that are caused by an incident that occurred during a claims-made policy period, but that are reported after a policy has expired or been canceled. It’s helpful to have free tail coverage as part of your policy so that you are always covered.
Exclusions
This is a list of things that an insurance policy will not cover. MPLI policies typically have exclusions for incidents that are considered dishonest, fraudulent, or criminal, plus general exclusions for property damage and other risks not associated with providing healthcare. Make sure to know which claims or allegations will not be covered. One common exclusion, for instance, is settlements or judgments for claims of sexual abuse or misconduct.
Premium discounts and credits
Some carriers offer premium discounts or credits to providers for things like taking continuing education courses in risk management, belonging to certain professional associations, being claims-free, or being new-to-practice. Such discounts or credits could impact your ongoing premium cost so they are worth exploring and comparing when shopping around.
Copic’s Insuring Your Life’s Work: An Insider’s Guide to Medical Professional Liability Insurance (MPLI)
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