WHAT DOES YOUR BROKER KNOW (AND NOT KNOW)?

Scenario: You have been advised to undergo a knee replacement and now have to find a competent surgeon. Which of the following two options would you consider in selecting a surgeon for your knee replacement?

Option 1:

A surgeon who has been in practice for several years, specializing in knee replacements; has conducted a number of such surgeries; and has had a documented successful track record

Option 2:

A general surgeon who performs different types of surgeries, and is open to doing knee replacements whenever an opportunity presents itself.

The simple truth is that you will chose, and should chose, what is in your best interest. You should and will opt for a surgeon who is an expert at what he or she does, someone who is a specialist. Only a specialist will have access to the latest technologies and know the possible intricasies pertaining to your condition in order to hopefully provide you with the best possible long term treatment and solution.

One should utilize the same viewpoint when facing arguably one of the most important purchases a physician or medical practice will make when seeking to protect his or her medical practice — securing medical professional liability insurance or medical malpractice coverage. The past trend of blindly being cared for by an inexpereinced, unspecialized broker is an ever increasingly risk laden business practice.

Here are some of the questions every physician and/or medical practice should ask themselves and their potential broker when contemplating malpractice coverage options:

• What is covered by a medical malpractice insurance policy?

• Who is covered? Support staff? Licensed employees?

• What are the policy limits?

• What are the exclusions on the policy that may leave me without coverage in the future?

• What is the difference between a claims-made and occurrence policy? What is the difference in the coverage limits that I will have when I terminate either policy?

• What else do I need to understand about claims-made policies?

• How do I get coverage for my professional corporation, should it be named in a lawsuit with or without me, or my employees?

• What are the considerations in selecting a malpractice insurance carrier? What do I need to know about the carrier and their operations?

• Is my consent always required to settle the outcome of a claim? What are the repurcussions should my perspective on settling a claim differ from that of my defense attorney?

• Who pays for defense expenses when there is an issue with the consent to settle?

• Does my premium change if I am named in a lawsuit, or if the carriers expends money to defend me? What would happen should there be a settlement on my behalf?

• Could my malpractice carrier non-renew my coverage if I am named in a lawsuit/s, and if they settle a claim on my behalf? Could they surcharge me?

• How does my premium get affected if one of my associates is part of a major settlement?

• Is the insurance carrier admitted in NY? How safe or stable is my insurance carrier?

• Under what circumstances would I be able to access the Section 18 Excess coverage?

• Would I be covered by the State Guaranty Fund in the event my malpractice carrier goes bankrupt, or is unable to pay any settlements?

• What is the application process?

• Should I finance my insurance premium through the carrier, or are there other less expensive options?

Key Considerations for New York Physicians

Guaranty Fund Protection: Policyholders insured by NYS licensed carriers (such as MLMIC & PRI) are protected by the New York State’s $1 Million per claim guaranty fund in the event of insolvency of the carrier. However, RRG policyholders are not protected by the guaranty fund if the RRG becomes insolvent. Therefore, it is extremely important to find a RRG with strong financials and a conservative business model. The NYS Property/Casualty Insurance Security Fund (Guaranty Fund) provides a safety net protecting policyholders of NYS licensed carriers.

Free Excess Coverage: Physicians who are insured by a NYS licensed malpractice carrier are eligible to get $1/3 Million of Excess Coverage provided by the State. Excess coverage is currently provided at no cost to physicians who have primary limits of $1.3/$3.9M, and who complete the requisite risk management course. Physicians are expected to have this application processed through their primary affiliated hospital. Physicians who purchase their primary coverage from a RRG are not eligible for the $1/3 Million of free excess coverage. They do however have the option to purchase higher limits of primary coverage offered by some RRGs to offset the lack of the free excess coverage.

Coverage Forms: NYS licensed carriers provide both types of coverage — Occurrence and Claims-made Coverages. Most RRGs only provide Claims-made coverage, while only a few offer both types.

State Regulation: RRGs are not regulated by NYS. RRGs can set their own premium rates, policy forms and claims handling practices, without filing for and/or requiring approval from the NYS Department of Insurance.

Hospital Credentialing Requirements: Some hospitals do not grant staff privileges to physicians insured by an RRG. However, this scenario is changing rapidly, as many hospitals recognize the crisis physicians face, and are accepting physicians insured by a few select RRGs. It is important to check with your hospital(s) to confirm which, if any, RRGs are currently accepted.  One of the primary benefits some physicians can expect from RRGs is a sometimes significant premiums savings. This is especially true in cases where physicians have an above-average claims experience or other licensing/disciplinary issues.

Key Points In Selecting A Broker To Represent You And Offer An Objective Analysis

In most cases, physicians have the option to purchase their malpractice coverage directly from an insurance carrier or through a broker who represents several carriers. Working with an independent broker does not increase the premiums as any commission(s) paid to a broker by the insurance carrier is already factored into the premium. An insurance carrier cannot reduce your premium if you decide to purchase your malpractice coverage directly from them rather then through a broker

The question now arises: Why do you need a broker, and how do you go about selecting one to represent your best interests. The answer to this question is not as simple as many may think. At the very least a medical practice must consider the following when deciding.

• Online & Out of State Brokers vs. Local Brokers: NYS is a large market for malpractice coverage due to the sheer size of the medical community. This in tuen, attracts several out of state brokers who try to acquire clients through their website searches with minimal access to a ‘in-person’ broker, where contact is limited to phone calls and emails. It is in one’s best interest to work with a broker who has a local presence in NY, one who can visit your office and take a closer look at your practice needs if need be and make suggestions to help you.

• Access To All Major Insurance Carriers in NY: Most brokers don’t have access to all the major malpractice carriers in NY, limiting the options to what they can offer you. This however, may not be the best scenario for you, as the options available through the broker may not be best suited to your practice needs. Additionally, some of the limited options available through the broker may not be from financially stable carriers. Ultimately you want to have an insurance carrier that has had experience of handling claims for several years — an experience that is invaluable when in comes to defending you in a malpractice lawsuit.

• Broker vs. Agent: Unbeknownst to most, there are differences between a broker and an agent. A broker represents you, the client, and will be able to provide coverage options from several malpractice carriers. An agent represents one carrier – which may not necessarily be in your best interests.

• Specialization: Does the broker specialize in malpractice coverage or is he or she(s) a general insurance broker offering other coverages such as Auto, Home, Life, Disability etc? Typically one would choose a broker who focuses primarily on medical malpractice coverage, and one who is cognizant of the latest changes in the market and all the intricacies of a medical practice. An experienced malpractice broker can also suggest ways in which you can reduce your malpractice premiums through available discounts and risk management programs.

• Experience and Longevity: It would be prudent to investigate the experience of the broker you are considering working with. Some of the items you should find out include — How long have they been in business? How many practices or physicians do they represent? Do they have any State Licensing Agency actions against them? Do they offer you periodic reviews and premium financing options? Is the support staff trained and licensed to discuss malpractice coverage with you?

There are far too many brokers who are inexperienced, unknowledgeable, and only dabble in medical malpractice when they have the opportunity. Working with such a broker with limited access to carriers could possibily place you or your practice in serious jeopardy. In the recent past, there have been a few situations where malpractice carriers with questionable financials have been ‘pushed’ by certain brokers, only to find too late that the carriers have exited NY, leaving their insured physicians scampering for alternatives. Even more critical is the fact that this situation may negatively impact the availability of defense and indemnity coverage should you have a pending claim with any such carrier. Carriers such as JM Woodworth and Oceanus have exited or curtailed their business, forcing their insured physicians to look for a new broker or carrier. This can be further complicated by the fact that you may have been provided with a claims-made policy from one of these exiting carriers.

In summary: Medical professional liability insurance is arguably one of the most important coverages a medical practice needs to have. Since you are purchasing protection for lawsuits that could happen at a distant time in the future due to past incidents, it becomes imperative that you choose a broker who is stable and experienced, along with a malpractice carrier that has a history in NY.

PriMed Consulting is an independent medical professional liability brokerage company, with access to all major carriers in New York. Our objective has always been to provide physicians with the best value, without sacrificing stability or coverage. PriMed’s client account executives and support staff are all appropriately licensed and trained, and provide frequent face to face meetings with clients to analyse changing needs.