Professional Liability Insurance Roundtable
A panel of rehab professionals discusses the key underpinnings
of professional liability insurance and its impact on practices.
Compiled by: Brittan West
Rehab Management gathered a panel of professionals whose rehab practices represent a range of specialties to share their insights about how professional liability insurance can help shield a practice from financial losses, and discuss the potential impact the Affordable Care Act (ACA) may have in this arena.
Featured in this roundtable are Vicki Buchanan, PT, owner and chief executive officer of Regional Physical Therapy Inc; Christopher J. Morton Sr, PT, DPT, CCCE, clinic director of Mariners Physical Therapy; Michael J. Mulrenan, PT, chief executive officer for ProEx Physical Therapy; and Lindy D. Royer, PT, PMA-CPT, founder of Park Meadows Pilates & Physical Therapy.
Rehab Management (RM): Explain why a physical therapy clinic and its staff need professional liability insurance.
Vicki Buchanan: Every practicing physical therapist needs to have professional liability insurance. In the event that a patient claims an injury sustained during treatment, the costs incurred to defend yourself are substantial. Professional liability insurance will help offset the money required to defend the claim. Even if you are practicing in a hospital setting, you need to have insurance for yourself to assist in the event that the employer would claim you were not practicing according to the professional code of conduct.
Christopher J. Morton: Professional liability insurance generally protects the healthcare provider specifically for medical malpractice such as iatrogenic injuries, misdiagnosis, performing improper therapeutic methods, etc.
Michael J. Mulrenan: Most third-party payors require proof of insurance as part of their credentialing process. So if the PT wants to treat their subscribers and be reimbursed, they need professional liability insurance. Between 2001 and 2010, there were approximately 4,000 closed claims by one of the largest physical therapy insurers, totaling more than $44,000,000 in claims paid. Although not a high-risk industry, accidents and mistakes still occur.
Lindy Royer: Physical therapy clinics and their staffs are generally dedicated to helping improve the quality of people’s lives. Unfortunately, in these litigious times, the chances of you getting sued are increasing. Without the right malpractice protection, you jeopardize your professional goals, placing your career, your personal assets, and your family’s financial future in serious danger. Professional liability insurance is designed to protect your assets and cover your expenses in the event of a suit being brought against you for malpractice or some type of staff negligence.
RM: Why would a clinic owner need professional liability insurance in addition to general liability insurance?
Buchanan: General liability insurance does not cover actions of the therapist during the course of treatment. General liability is only useful in the event a person gets injured from something that occurred in the facility itself rather than while being treated during the physical therapy session.
Morton: General liability insurance covers issues not directly related to malpractice such as a person falling in a clinic, being injured by faulty equipment, or any other injury/harm from negligence or any other unforeseen matter.
Mulrenan: To protect the owner when offering advice/treatment outside the clinical setting. We don’t realize it, but we are always offering advice or examining people outside of the four clinic walls.
Royer: General liability insurance protects against various types of liabilities, including those related to the products of the clinic, the clinic premises, and liabilities that may occur after clients have left the clinic.
General liability insurance will only cover claims stemming from bodily injury, property damage, personal injury, or an advertising injury. But if a client sues for damages that result from you or your clinic’s negligence, misrepresentation, violations of good faith, or failure to render an opinion or offer a service, you will also need professional liability insurance, which can cover judgments, attorney fees, court costs, and settlements. Even if claims are found to be unwarranted, extended litigation can drain your cash reserves or even cause bankruptcy.
RM: How will the Affordable Care Act affect the requirements for professional insurance (if at all)?
Buchanan: It is unclear [what] exact impact the ACA will have on professional liability insurance. However, historically speaking, during times when the economy is bad, insurance claims and lawsuits increase. Insurance is a means to protect both the provider and the public from careless acts and thus should remain in place for the foreseeable future.
Morton: At this time, it is unknown how/if the Affordable Care Act will affect the requirements for professional insurance.
Mulrenan: Unless tort reform is addressed early, claims might rise in proportion to the increased number of newly insured Americans.
Royer: The Affordable Care Act may indeed impact medical liability. Brian K. Atchinson, president and CEO of PIAA, the international insurance trade association, states, “The federal government estimates that millions of Americans, who previously had no health insurance, may eventually be covered under the ACA, which also establishes Accountable Care Organizations as a way to manage care and rein in healthcare costs. In addition, as a result of changes in the delivery of healthcare promulgated by the ACA, physicians, hospitals, nurses, and other healthcare providers will be challenged to comply with the many new payment provisions, evidence-based medicine guidelines, and other requirements.”
Although a US Government Account-ability Office study done before the ACA was implemented stated that the law does not explicitly alter the Medical Professional Liability system, it is clear that the courts will be responsible for specific interpretation of this language. It is not yet clear how the ACA might affect a physical therapy clinic and its staff, so it is best to err on the side of caution and protect ourselves by making sure we have adequate liability coverage.
RM: What should a clinic owner consider when determining what company to select as an insurer?
Buchanan: Different companies will specialize in different types of coverage. You should investigate the percentage of their business that is involved in physical therapy coverage. The greater the percentage, the more knowledgeable they will be in handling claims for that field. Additionally, you should ask other clinic owners and the state and national organizations who they recommend. Insurance companies do occasionally go under or drop certain types of insured, so you don’t want to get caught without coverage.
Morton: Things that should be considered include whether the insurer is specific to physical therapy, policy coverage amounts for individual and aggregate claims, and whether the policy is part of a general liability plan.
Mulrenan: [A clinic owner should consider] premium cost, [as well as] coverage for intentional acts; legal defense coverage; sexual misconduct coverage; HIPAA violation coverage; cyber liability; and coverage for wellness coaching or personal training, should you offer those cash paying services. Also coverage for any contractual arrangements you may have outside of the clinic, such as athletic training services. And lastly, the company’s experience in the healthcare field, specifically physical therapy.
Royer: A clinic owner should investigate the company’s size, how long they have been in business, their reputation, financial strength, and how they have processed claims by companies similar to yours. Also find out how the company is rated by independent insurance rating organizations. An “A” rating is the best.
Speak with others who have been insured by the company and see how well claims were processed. It might be advised to use a reputable insurance broker who can assess your needs and adequately connect you with the best insurance provider for your specific situation.
RM: What features should a liability insurance policy for a clinic include?
Buchanan: I consider the coverage of policies that are claims based or occurrence based. The claims-made policy offers greater flexibility, because your last year’s policy is the one covering your past (prior acts). Thus, you can increase your limits or buy a new coverage that was not available when you started your policy. Since the policy in force at the time of the claim responds (not the policy you had when you provided the service), you get the benefit of the enhanced coverage. Claims-made coverage is portable. You can take the coverage from one insurance company to another. The advantage to an occurrence policy is its permanence. The period of time you are insured under an occurrence policy is protected forever by the policy you had that year. You do not need to renew or buy the tail (extended coverage) when you leave. The claims-made policy costs at least 35% less when you compare the cost of buying a claims-made policy and the unlimited tail against having occurrence coverage for the same period. The savings increase if you qualify for a free death, disability, or retirement tail.
For example: You buy a claims-made policy in 2008 and renew it every year. You treat Client X from 2009 to 2010. In 2012, Client X decides to sue for the services you provided in 2009 and 2010. You are covered because: 1) you are continuously insured up to when the claim is made and 2) the treatment was provided after the policy started in 2008.
Morton: Malpractice and office liability should be combined to address issues such as someone falling during an exercise—is that malpractice or general office liability? Overlapping coverage by the same provider may limit two insurance companies from assigning blame to the other, known as subrogation.
Mulrenan: Coverage outside the clinic setting for things such as participating in community events or injury prevention programs with employers, and occurrence versus claims made coverage. We go with occurrence coverage as it has the flexibility to change insurance companies with the peace of mind that you are covered for the period you had the previous insurance.
You will need to make sure the per occurrence and aggregate insurance coverage amounts meet the third-party insurer’s thresholds.
Royer: Professional liability insurance for a physical therapy clinic should include several features, which warrant more detail along with your understanding. Simply listed, some important features are:
• Occurrence and claims-made policy options
• Admitted and nonadmitted paper
• “A” Rated Carrier
• Coverage for employees and entity
• Incident sensitive trigger
• HIPAA defense limit of at least $25,000
• Defense costs outside the policy limits
• Medical director coverage available if needed. RM