January 2008

2008 resolution: Review malpractice insurance policy

by Timothy Feuling

What's on your list of New Year's resolutions? Increase patient volume, spend more time with friends and family, become involved in a professional organization, or keep abreast of research news, are common ones.

Few people ever put "evaluate malpractice insurance" on the list, but they should. It's one of the most important things they can do to ensure the success and security of their practice.

Luckily, reviewing insurance coverage is a lot easier than losing that stubborn 10 pounds you put on over the holidays, or even designing a new marketing campaign.

All you have to do is read your insurance policy carefully. If you are confused by any provision, call your insurance representative and ask questions about what's covered and what's excluded. Then, get a few quotes from other companies for policies with the same or better coverage.

One of the factors to look for is the company's underwriter. It's critical to get a policy backed by a well‑known, highly rated and financially stable company.

Chiropractic Benefit Services, for instance, has a solid relationship with one of the largest and most financially successful underwriters in the world, CNA Insurance Company, a $60 billion industry leader rated "A" with AM Best. It is the seventh largest US commercial insurer and the 13th largest US property & casualty insurer, providing insurance protection to more than one million businesses and professionals in the US and internationally.

Most doctors appear a bit more interested in policy premiums, though. Doctors sometimes think all policies, given the same limits, will cost about the same from each company. They're often shocked when they see how much they can save by moving to a different company. One Michigan practice with five doctors discovered they would save more than $70,000 over a 10‑year period with CBS versus their rates with another large malpractice company. In addition, they gained valuable policy coverage they didn't have before.

The savings can be so significant that many doctors don't even wait until their current policy renewal date to switch companies. Instead, they switch to CBS immediately and receive a pro‑rated refund from their old company. One doctor switched just two months prior to his renewal date and saved nearly $400 in a 50‑day period.

Yet, the coverage provided by the policy is at least as important as the underwriter or the premium. In fact, the most important factor to consider when choosing malpractice insurance is the coverage. This is another area where doctors often think all policies are the same, but that's just not true.

The last thing you want is to be sued and find out you're not covered.

The policy offered through CBS is considered to have one of the most comprehensive coverages available on the market, with several important features lacking in many of the other policies.

For example, the CBS policy contains a "consent to settle" clause that gives doctors the right to decide whether or not they want to settle a case out of court. Without that clause, the insurance company can make that decision without the approval of the doctor.

Other policies may have a "hammer clause" that limits coverage to the amount offered in an out‑of‑court settlement. If you choose not to settle for $50,000, for instance, your coverage could be limited to that amount if the case is taken to court. If, ultimately, the plaintiff is awarded $150,000, you'd be liable for the remaining $100,000.

Sexual misconduct defense and professional board dispute defense for patient care‑related complaints, are other important coverage points missing in many policies. Doctors are at greater risk from these two problems than from almost anything else, yet some policies fail to provide any coverage for them. The CBS program covers defense for sexual misconduct lawsuits and up to $30,000 in board dispute defense.

In addition, the CBS policy offers $10,000 in HIPAA defense and $10,000 in first aid coverage, items that are rarely offered in malpractice insurance policies.

One of the most frequent questions I'm asked is the relative merit of occurrence vs. claims made policies. Although occurrence policies were standard until the early 1990s, changes in the insurance industry have made them less and less popular with chiropractors, medical doctors and other health care providers.

As doctors discover the benefits and price savings of a claims‑made policy, they are leaving their pricey occurrence policies behind. The claims‑made policy is less expensive, portable and most companies provide prior‑acts coverage and tail coverage at retirement at no extra cost. We switch hundreds of doctors over to the CBS program every month. One benefit of claims‑made policies is that the doctor doesn't pay for tail coverage unless it's needed. Occurrence policies are more expensive because the tail coverage is actually included in the premiums.

A great deal of my time is spent providing doctors with information about the two types of policies, with specific figures and comparisons so they can make the decision that's right for them.

For doctors with claims‑made policies, CBS picks up prior‑acts coverage from their prior carrier at no cost. Occurrence doctors get to start at our low first‑year claims‑made price that matures over a four‑year period. Often the mature premium is hundreds of dollars less than they are paying with their current carrier for occurrence. The doctors enjoying the biggest savings are the ones with an occurrence policy who switch to claims‑made. The savings will differ for each doctor, but can often reach four figures.

For example, a doctor in Texas who has an occurrence policy priced at $2,900, can save thousands of dollars over just the first five years, and continue saving about $500 each year thereafter. Many doctors I talk to have had an occurrence policy for 20 years or more. Many of them have spent $80,000 and are now over the age of 52. They could have saved thousands of dollars and would receive a free tail at retirement with the CBS Program by purchasing claims‑made. Average chiropractors practice well into their 60s, meaning they will all qualify for free tail coverage. For doctors who are already over age 52, the CBS program means almost immediate savings since, after just one year, they get free tail coverage when they retire.

 (Timothy J. Feuling is president of Chiropractic Benefit Services (CBS) and assists doctors in maximizing their practices through the proper choice of insurance and related services. Mr. Feuling is also available for speaking engagements at state conventions and other chiropractic events. Doctors may contact him with questions, comments, and requests for insurance quotes at 2950 N. Dobson Rd. Ste. 1, Chandler, AZ 85224, by phone at 800 883 0412 or by e mail: feuling@cbsmalpractice.com ).