Click the questions below to see the answers.
Malpractice Insurance Terms
1. What is negligence?
An unintended act or omission that causes an injury or harm to a patient. Negligence may be the result of errors in diagnosis, treatment, aftercare, lack of proper consent or medication errors. It is the predominant theory of liability concerning allegations of medical malpractice making this part of Tort Law.
2. What is malpractice?
It is the professional negligence, either by act or omission, by a healthcare provider in which the treatment falls below the accepted standard of practice in the medical community and causes injury or death to the patient.
3. What is the difference between professional liability, medical malpractice (medmal), and medical professional liability insurance?
When using these terms loosely they mean exactly the same thing: the insurance coverage doctors are required to have to practice medicine in the US.
Professional liability is the term most often used in the insurance world. For example, Arkansas Mutual protects a certain profession which happens to be the medical profession. This is roughly how the phrase medical professional liability insurance has gotten popular. Malpractice is a term most often used in the legal world. The term medical malpractice is a very familiar term in a physician’s life. When a physician is looking for the correct insurance for their profession, they will often say medmal insurance.
4. What types of malpractice insurance are there?
- Claims-made: Commonly used for medical malpractice coverage. Coverage is triggered by the date you first become aware of the possibility of a claim and notify the carrier. The incident must have occurred after the policy retroactive date. The policy that is in place when the claim is reported is the policy that responds.
- Occurrence: Almost never used for medical malpractice coverage. Coverage is triggered by the incident, which results in a claim. The policy that is in place when the incident occurs in the policy that responds. This coverage continues even if the policy is no longer in effect.
5. What is malpractice “tail” coverage?
Maintaining coverage after a claims-made policy’s termination date, requires a physician to either replace coverage or secure a tail endorsement. A tail is an extended reporting period endorsement, offered by a physician’s current malpractice insurance carrier. The tail covers claims/suits that are filed after the termination/cancellation date, caused by incidents occurring after the retroactive date. The physician has the option to extend coverage for claims reported after cancellation or termination of a claims-made policy. The premium varies from carrier to carrier.
Arkansas’ statute of limitations for medical negligence is 2 years with some exceptions. (To read the exceptions, click here for the Statute of Limitations under General Legal Principles – last definition)
6. What is ‘prior acts’ or ‘nose’ coverage?
This type of coverage provides coverage for claims that arose from the prior acts of the practitioner, before being insured with the claims-made carrier. Prior acts coverage is the coverage period between your retroactive date and effective date. If you change insurance carriers, and your effective date and retroactive date are the same, you do not have prior acts coverage. If your new insurance carrier picks up your retroactive date, you will not need tail coverage.
7. When would I need tail coverage?
Coverage is necessary when a claims-made policy is cancelled or terminated AND you cannot secure insurance that covers “prior acts.” Tail coverage is also necessary when retiring from medicine, or in the unlikely event of death or disabling injury. Be sure your insurance carrier offers a free tail for those events.
Most hospitals require you to have malpractice coverage in place, not only during the time at the hospital, but also for any potential, future claims that may arise as a result of your practice of medicine when he/she was on staff.
If you leave a practice and go to a new one, make sure the new policy picks up your current retroactive date. If it does you will not need tail coverage; if it does not, you will need tail coverage.
Be aware that tail coverage is costly. Although costly, the ramifications of not having tail coverage can be worse.
Malpractice Insurance Basics
1. What does malpractice insurance cover?
Lawsuits or monetary damage requests brought by a patient and/or family alleging negligence in the care and treatment by the healthcare provider. Malpractice insurance covers the cost of the defense against the suit from the time the suit is filed, to the time of the settlement or trial. If monetary damages are part of the settlement or judgment, the insurance carrier will pay up to the limit amount.
AR Mutual also covers expenses associated with medical board or Peer Review Organization investigations.
2. What is NOT covered by malpractice insurance?
Generally, any criminal wrongdoing, e.g. fraud including medicaid/medicare, sexual misconduct, HIPAA violations, EMTALA (Emergency Medical Treatment & Labor Act) violations, committee or board positions held, and cyber hacking
4. What do the coverage limits mean?
Limits are expressed as $##/$##, which means the maximum amount the policy will pay per occurrence/per aggregate. For example, limits of $1Million/$3Million mean that the most indemnity that would be paid by the insurance carrier, on your behalf on any ONE suit (occurrence) is $1 Million. The the most indemnity that would be paid by the insurance carrier, on your behalf on ALL suits/claims, per policy year (aggregate) is $3 Million.
Importantly, most policies, including AR Mutual’s policies, defense costs do not erode the indemnity limit. For example, the insurance carrier could pay $200,000 (or more) in legal fees and still pay $1million as a judgment or settlement, without exceeding the policy limit.
5. What coverage limits do I need?
Arkansas hospitals require $1Million/$3Million limits for staff privileges. The $1M/$3M coverage limits are customary in Arkansas. AR Mutual offers limits of $1M/3M, $2M/4M, $3M/5M, $4M/6M, and $5M/7M. Normally, you want prevailing limits based on your geographical area (limit requirements vary from state to state), specialty, and what best fits your situation.
3. Do I need insurance if I moonlight as a resident?
Yes. The coverage you have as a resident does not cover work outside of your scope of practice as a resident. If you are going to moonlight, outside of your residency, you will need to purchase an individual, part-time policy.
6. Could I be personally liable for a medical malpractice claim?
Rarely, but yes. If you do not have insurance in place covering all of your years of practice, you could be liable. This is why keeping up with your tail and prior acts coverage is so important.
You could also be personally liable, if the judgement of a lawsuit exceeds your policy limit, but no known insured Arkansas physician has faced this situation.
7. What information does a malpractice insurance company report to the National Practitioner Data Bank?
Any payment that is made by an insurance carrier on behalf of a healthcare provider in the settlement of, or in satisfaction of a claim or judgment against that practitioner must be reported to the Data Bank. The judgement/settlement amount is filed in connection with the physicians name, DOB, work address, and claim details.
Arkansas Mutual Insurance FAQs
1. How is my insurance premium determined?
This amount is calculated by the insurance carrier based on your specialty, retroactive date (premium increases for the first 5 years of a claims-made policy), geographic location (state to state), personal claims experience or predicted experience paid on an annual basis. Some specialties pay more in premiums as they are considered a more ‘high risk’ field of medicine, where suits are more frequently filed.
Arkansas Mutual’s underwriting department reviews the doctor’s application and prepares a quote based on these factors.
Arkansas Mutual operates at a net cost. The premiums we collect are used to pay for losses and overhead. We have no shareholders to financially appease. We have strict underwriting guidelines and expect the loss ratio of Arkansas physicians to be better than the experience of physicians in surrounding states. In fact, in 2011 we were able to reduce our rates by 12.5%.
2. If there are additional monies leftover each fiscal year, are said monies distributed back to the policyholders in the way of credits/refunds?
Those monies of credits/refunds are owned and controlled by the policyholders, through their Board of Directors. Not only can this money be returned in the form of dividends, but there are other options if you take advantage of our Capital Advantage Plan with Stephens.
3. Who is the law firm that will be representing us in the event of litigation?
From the first indication of a possible claim, we work closely with our insured. We first determine what Arkansas attorney, specializing in medical malpractice law, our insured would be most comfortable using. If the insured does not have an opinion, we will be happy to make recommendations.
4. Does Arkansas Mutual offer any CME programs?
We do offer CME programs at no cost to our insured physicians and colleagues and seek the input of those physicians on what topics they would like to have presented. We also offer webinars, which can be used for CME credits. Our policyholders will receive an email listing these webinars, or they can be found on our upcoming events calendar. Below is a list of past CME programs:
- Policyholders with Arkansas Mutual can take online CME courses at no cost through MedRisk CME. Please click here to register.
- Past live CME Events:
- “Overview of Current Legal Issues in Medical Malpractice Cases”, presented by Laura Smith, JD of Friday Eldredge & Clark 12/3/2011
- “How will the Patient Protection & Affordable Care Act Affect your Profession and Your Practice?”, presented by Lars Powell, PhD, Whitbeck-Beyer Chair of Insurance, UALR 12/3/2011
- “HIPAA/HITECH: Steps to Take, Pitfalls to Avoid”, presented by Todd Newton, JD of Mitchell WIlliams Law Firm 11/23/2013 – Click here to watch this video
- “Stress due to Litigation”, presented by Rebecca Tutton, JD, RN. CME in conjunction with UAMS for the 18th Annual Family Medicine Update 10/4/14
4. Does Arkansas Mutual offer a free tail?
Yes: The extended reporting period (tail) premium is waived in the event of death, total and permanent disability, attainment of age 60 with 15 years continuous coverage with Arkansas Mutual, attainment of age 62 with 10 years continuous coverage with Arkansas Mutual and permanent retirement with one year of continuous coverage with Arkansas Mutual.