Notify OMIC of Changes in Your Practice
By Kimberly Wittchow, JD OMIC Staff Attorney
Digest, Spring 2005
It is important to OMIC that our insureds remain adequately protected from liability, especially during times of change and transition. By accepting your OMIC policy, you agree that the statements you made in the application are true. Most insureds supply accurate and thorough information both on the written application and in follow-up correspondence with their underwriter. However, after the underwriting process is complete and the insured is accepted for professional liability coverage, insurance may not be at the forefront of his or her mind. Nevertheless, it is important that insureds continue to communicate with their underwriter about any changes that occur in their practice.
Change in Practice Activities, Arrangements and Locations
The policy requires that insureds promptly inform OMIC, in writing, of any changes to the representations they made in their application. And insureds warrant, when signing the application, that they will update the information supplied on the application as necessary. This ensures that the coverage you have and the premium you pay correspond to your risk exposures.
• For instance, if you begin to perform a new refractive surgery procedure, you must complete and submit a supplemental questionnaire for this procedure. If OMIC grants your coverage request, your policy, which excludes coverage for all refractive surgery procedures, will be endorsed to provide coverage for the particular approved procedure.
• If you hire an optometrist or certified registered nurse anesthetist or bring in a locum tenens, you will want to ensure that he or she has his or her own insurance, or else is accepted for coverage by OMIC under your policy.
• You must alert OMIC when your practice arrangement changes, for example, if you join another practice, form a partnership with others, incorporate your practice, or allow outside utilizers to use your surgery facilities. You and your underwriter can discuss what options you have for deleting, adding, or otherwise changing your entity coverage and what limits are available or required for you to maintain.
• You must notify your underwriter if you significantly reduce your hours, eliminate certain surgical activities, or discontinue surgery altogether, so that your coverage can be amended and premium discounts, if any, can be applied.
• You must notify OMIC if you move or begin to practice in additional counties or states because your premium may need to be adjusted.
Claims, Complaints and Medical Conditions
While you already know to contact OMIC to report claims covered under your OMIC policy, you also must advise us of any claims filed against you that are covered by another carrier. Additionally, you must notify OMIC if a professional conduct complaint is filed against you, and as soon as you become aware of any proceedings or status changes regarding your license to practice medicine; your BNDD (drug) license, privileges at a hospital, HMO, or other medical facility; or your certification by or membership in a medical association, society, or board.
You are required to notify OMIC when certain life changes occur, for instance, if you have been treated for any medical condition that might impair your ability to practice, if you have been diagnosed with any mental illness, or if you have experienced any alcohol or drug dependency problems. If you are taking time off from your practice for maternity or paternity leave, you will want to alert OMIC because you may be eligible for a suspension in coverage.
Policy Endorsements and Coverage Reviews
While OMIC attempts to accommodate its insureds and their practice needs, changes requested by insureds are not always approved due to underwriting considerations. If requests are not made in a timely manner, there is no guarantee that we will retroactively amend your policy. Please remember that only endorsements or revised policy declarations, not simply notice, can waive or change the terms of your policy.
Under certain circumstances, changes that the insured notifies OMIC of may result in the insured being reviewed for continued insurability by OMIC. When certain increases in hazard are apparent or when membership criteria are not met (for example, if an insured loses his or her license or is no longer a member of the American Academy of Ophthalmology), OMIC may discontinue providing coverage to the insured.
The consequences of not notifying OMIC of changes will vary depending on the nature of the omission and the circumstances under which the omission is noted. These range from simply updating the information in your OMIC underwriting file to possible denial of a claim, or, in extreme cases, cancellation of your policy. Our goal is to encourage our insureds to notify us of changes to information we have about them in a complete and timely fashion to avoid any gaps in coverage.
Group Policies
By Kimberly Wittchow, JD
OMIC Staff Attorney
Digest, Summer 2005
Whether you are new to a group practice or leaving a group to work for yourself or with others, you should be aware of how an OMIC group policy works and what to do if your practice situation changes.
A group that has OMIC professional liability insurance is usually issued one policy. The Declarations Page, which accompanies the policy, lists the ophthalmologists, CRNAs, optometrists, and any entities that are covered under the group’s policy. Under INSURED AND MAILING ADDRESS on the Declarations Page, the group name, or “policyholder,” is listed. This policyholder controls the group policy and is the main party with whom OMIC communicates about the policy.
Notice
Communications are often handled on behalf of the insureds of a group by the policyholder’s administrator or representative. OMIC assumes that, as a member of the group, the insured has given this representative the right to speak on the insured’s behalf regarding routine underwriting issues. While the administrator may initiate or facilitate a change in coverage, OMIC will seek the insured’s consent before changing the insured’s coverage limits, provisions, or classifications. Whenever possible, OMIC will communicate directly with an insured regarding any sensitive issues, such as licensure actions, substance abuse problems, or medical or psychiatric treatment.
Payment of Premium
Often, the business entity for the group will pay for each of the insured’s premiums under the policy. Nevertheless, each insured under the policy is considered by OMIC to “own” his or her own coverage. (Note, however, that for slot coverage for residents and fellows, the slot position, and not the individual in the slot, is the insured, and therefore the coverage is controlled entirely by the group practice.) This means that the insured is ultimately responsible for payment of his or her coverage under the policy. However, any refund of premium is credited to the policyholder, and it is the policyholder’s responsibility to distribute any refunds to individual insureds as appropriate.
Cancellation and Nonrenewal
Regarding cancellation and nonrenewal, the policyholder may request that OMIC delete an insured from a group policy. OMIC will try to get confirmation from the insured that he or she agrees with this termination of coverage. If OMIC cannot contact the insured, however, OMIC will process the termination, but will continue to attempt to communicate with the insured in order to determine whether he or she would like to remain insured with OMIC under an individual or another group policy.
Prior Acts Coverage
When joining a group, insureds may choose to purchase coverage for claims based on events which occurred before their coverage inception date under the group policy. Some groups do not allow the insured to acquire prior acts coverage under the group’s OMIC policy, while others may permit or require it.
Each insured under the group policy will have his or her own retroactive date which will reflect whether that insured has prior acts coverage. Some insureds will not need prior acts coverage because they are either new to practice or their prior acts are covered under another policy. This occurs when insureds were previously covered under an occurrence policy or bought an extended reporting period (tail) endorsement from their previous carrier. Remember that an insured’s retroactive date is usually not the same as the group entity’s retroactive date, and that the insured’s inception date may also be different from the group’s if the insured joined after the beginning of the group’s policy period.
Tail Coverage
Some groups require physicians to sign contracts when they join the group. Under these contracts, the group might require that, when a physician leaves the practice, he or she maintain coverage for the activities he or she participated in as a member of the group. This might take the form of purchasing a tail upon leaving the group, or proving that he or she maintains prior acts coverage under his or her new insurance policy after being deleted from the group policy. OMIC sends a tail offer directly to the insured upon termination of coverage. While it is ultimately the insured’s responsibility to obtain tail coverage if desired, a group may agree to pay for it. If the insured instead purchases prior acts coverage from his or her new carrier, the group might require that certificates of insurance be sent to the group periodically to ensure that the physician who left is maintaining his or her coverage for acts undertaken while with the group.
Entity Coverage
By Kimberly Wittchow, JD
OMIC Staff Attorney
Digest, Summer 2006
There are numerous ways a practice can be organized and many options for the creation of a legal entity. It is important that OMIC insureds understand both how to secure professional liability coverage for their various business entities and how that coverage works.
OMIC’s policy excludes coverage of individuals for liability arising from their status as members, partners, officers, directors, shareholders, or employees (hereafter referred to as “members”) of any partnership, professional association, or corporation. Because members and entities may be named as defendants in lawsuits, OMIC offers separate coverage to professional entities. Entity coverage insures the entity itself, its members in their capacity as such, and non-physician employees of the entity for their respective acts and omissions. It also covers the entity and its members for their vicarious liability arising from the acts and omissions of others.
Sole Shareholder Corporations
If an insured ophthalmologist has a sole shareholder corporation, it is included as an additional insured under his or her policy. No additional premium is charged to insure the solo corporation at shared limits with the sole shareholder. Separate liability limits are available for an additional premium. In order to obtain this coverage, the sole shareholder corporation must be listed on the ophthalmologist’s application and the applicant must indicate whether shared or separate limits are desired. Coverage is in place only when the sole shareholder corporation is named on the Declarations.
Multi-shareholder Corporations
An insured ophthalmologist may decide to sell or give shares of the sole shareholder corporation to another physician or individual, thus converting the corporation into a multi-shareholder corporation. When this occurs, the corporation must complete an entity application so that OMIC can evaluate the entity’s eligibility for continued coverage. If OMIC determines that the change in ownership violates OMIC’s eligibility requirements or increases the risk of insuring the entity too dramatically, the entity’s coverage may be cancelled mid-term following appropriate advance notice. If new articles of incorporation are filed as a result of the change in ownership, the entity is considered a new entity. Therefore, coverage for the sole shareholder corporation would cease as of the date it is dissolved, and the new entity would not be covered until properly underwritten, paid for, and named on the Declarations. Multi-shareholder corporations, partnerships and outpatient surgical facilities (OSFs) may obtain entity coverage at separate liability limits. (These limits do not serve to increase an individual insured ophthalmologist’s personal limits of liability.) In order to obtain this coverage, the multi-shareholder corporation or partnership must complete an entity application; the OSF, an OSF application. Coverage is in place only when the application has been approved, the required premium has been paid, and the entity or OSF is listed on the Declarations.
Partnerships
Unlike corporations, which can have changes in ownership or name changes without affecting the legal status of the corporation, partnerships, can exist only in their original form. If a new partner is added or a partner leaves, the partnership ceases to exist. Instead, a new partnership is created. Therefore, the retroactive date for the new partnership, if insured, would be the date the new entity was formed, and the former partnership would need to purchase tail coverage in order to remain insured for future claims arising from past services.
Insureds must remember that entity coverage is not applied automatically. The ophthalmologist application gives several areas to provide information about the applicant’s professional entities. It asks for the name under which the applicant does business, inquires about how the practice is organized, and provides space to give the name of the legal entity(ies). Only those entities approved for coverage that have paid the required premium, if any, and are listed on the Declarations or an endorsement to the policy are covered.
Remember that coverage for a claim against an entity, its members, or its non-physician employees is only available if the entity is already listed on the Declarations or an endorsement to the policy at the time the claim is reported. In addition, the incident upon which the claim is based must have occurred on or after the retroactive date applicable to the entity. To prevent an uninsured risk, insureds should notify OMIC immediately if they form or acquire a new entity during the policy period so the entity can be properly underwritten and added to the policy, if approved.
Leasing Equipment, Space or Employees
By Kimberly Wittchow, JD, OMIC Staff Attorney, and Betsy Kelley, OMIC VP of Product Management
Digest, Winter 2007
It is important to understand how your policy responds when you lease your office equipment, space, or employees to others.
Leased Equipment or Space
If an OMIC insured enters into a lease agreement with another physician or group, allowing the other use of its equipment or space, the arrangement may be treated either like a landlord-tenant relationship or an outpatient surgical facility, depending on the facts of the particular situation.
In general, when an OMIC insured (the lessor) enters into a formal lease agreement to provide space or equipment to other ophthalmologists (the lessee) and the lessor is not providing other health care-related services under the agreement, its liability should, at least theoretically, be limited to that of a landlord or lessor, even though its members are health care providers. This is most clear when leased equipment is used at the lessee’s site or when the lessor leases its office space and equipment for use when the lessor’s physicians are not themselves occupying the space or using the equipment. The lessor’s OMIC policy would not cover any liability arising out of the lessee’s use of the equipment or space as this is a general liability exposure.
However, the lessor may be exposed to additional liability risks if the lessee’s physicians use the space and/or equipment concurrently with the lessor’s physicians or if the lease agreement provides for the lessor to extend services beyond that of a typical landlord/lessor. For instance, the lessor may credential utilizers or operate the equipment on behalf of the lessee. The lessor’s liability exposure will depend upon the services the lessor provides and how the situation is perceived by patients.
If there is no formal lease agreement and the outside utilizers are given open access to the owner’s space and equipment, the situation is more clearcut. OMIC would treat the arrangement as an “outpatient surgical facility” (OSF). Subject to underwriting review, compliance with OMIC’s OSF requirements, and payment of any applicable premium, coverage may be extended to the OSF for its vicarious liability arising from the professional services rendered at the facility.
An OSF is defined as an ambulatory surgery center, laser refractive center, or surgical facility (including an in-office surgical suite or in-office laser equipment) utilized by physicians other than the owners and their employees. OSFs encounter the same type of increased liability that hospitals do for credentialing the physicians who use the OSF and for conducting peer review. In laser centers in particular, the OSF must properly maintain and calibrate equipment and train users in the operation of the equipment. In addition, employees of the OSF may provide professional support and assistance to the outside utilizers. For these reasons, when a leasing agreement does not exist, or when the agreement calls for the lessor to perform tasks outside of the landlord/lessor realm, liability is increased and the arrangement must be treated like an OSF in order for the group to be properly underwritten and protected.
Leased Employees
Ideally, when lessees use equipment leased from an OMIC-insured group, they should provide their own qualified staff to assist them. However, if the lessees do not have anyone qualified to assist and they need the lessor to provide staff trained and skilled in performing procedures on the equipment, then the lessor should formally lease the employee as well as the equipment to the lessee in order for the lessee’s policy to respond (assuming the lessee is OMIC insured or has similar policy coverage). In this case, the lessee’s policy would extend coverage to the leased employee while that person was rendering services on behalf of the lessee. The lessor’s policy would not cover the leased employee for the work he or she did for the outside utilizer. The policy covers non-physician employees only while they are acting within the scope of their employment by and for the direct benefit of the insured.
Similarly, if an OMIC insured leases his or her employees to work in another ophthalmologist’s office, the employee is not covered under the OMIC insured lessor’s policy for such activities. Although it might be part of the employee’s job description, he or she will not be working for the direct benefit of the employer. Instead, the employee will be working for the direct benefit of the lessee and may be covered under the lessee’s policy as a leased employee. If the employee is not formally leased to the other ophthalmologist, but instead is simply “loaned,” the work by the employee again is not for the direct benefit of the employer and therefore is not covered under the employer’s policy. And, under OMIC’s policy, since the borrower has not formally leased the employee, the employee might not have coverage under the borrower’s policy. Employees, therefore, should ensure that they are covered under a lessee’s or borrowing ophthalmologist’s policy before agreeing to work for them. If not, the employee should obtain his or her own policy with an appropriate carrier.
Apologies and Insurance Coverage
By Kimberly Wittchow, JD
OMIC Staff Attorney
Digest, Spring 2007
There has been much recent dialogue among health care providers about the value and importance of apologizing to patients for unexpected outcomes. While saying “I’m sorry” communicates to the patient the physician’s sympathy and may discourage the patient from filing a malpractice lawsuit, some providers fear that an apology may jeopardize their insurance coverage for a claim based on the incident.
Cooperation Clause
OMIC’s policy does not preclude insureds from apologizing, and, as discussed in the lead article of this Digest, OMIC encourages such open and empathetic communication with the patient. However, OMIC’s policy does require that insureds not admit liability or make any payment, assume any obligation, or incur any expense without OMIC’s prior written consent (Section VIII.9.d. of the policy revised 01/01/2007). If they do, this is a breach of the Cooperation Clause, the outcome of which can be denial of coverage of the claim (Section VIII and Section VIII.9 of the policy).
It is important, therefore, to differentiate between an apology and an admission of liability. In your communication with the patient, you should express compassion, focusing your words on the patient’s outcome and feelings, such as “I am sorry that you…” or “I am sorry for your…” rather than on your actions “I am sorry that I….” If a clear-cut error has occurred, do communicate this, focusing on the facts of the outcome. Do not speculate about what might have occurred or who might be at fault. Much of the time the cause of an error or unanticipated outcome is not immediately known. And an error that occurred may not be the cause of the particular bad outcome.
While apologizing in this context is expressing regret for the outcome that occurred, admitting liability is saying to the patient that the outcome was your fault and that you are responsible for any damages incurred. By stating this to the patient, it becomes much more difficult, if not impossible, to later defend your care or refuse to compensate the patient if it turns out that the poor outcome was not caused by your negligence. Since OMIC insures you, you are potentially obligating OMIC to pay for damages that may not be warranted or should not be attributed to you. That is why OMIC requires that you confer with your insurance carrier before making any admissions of liability or assuming any obligations or expenses. Complications can occur without you having done anything wrong.
“I’m Sorry” Laws
As you are probably aware, many states have enacted “I’m Sorry” laws, which permit doctors to apologize to patients without the apology being used against them at trial as evidence of negligence. The laws vary by jurisdiction; they may protect oral statements only, provide a timeframe within which such statements must be made in order to be protected, or provide a broader exemption for all statements of apology or commiseration. Even if your state has an “I’m sorry” statute, you should practice caution when you communicate the facts of the outcome and express your sympathy to the patient. Even when you are careful, patients may hear words of condolence and explanation as admissions of liability. The sooner you talk to OMIC’s risk management specialists, the easier it will be to discern the proper way to talk to the patient and respond to the unanticipated outcome.
Beyond “I’m Sorry”
The following is an example of a situation that might fall under the proscription of the cooperation clause. An unanticipated outcome occurs. It was a known complication, but it has never happened to you, and you are upset. The patient, seeing the poor result, is angry. You immediately blame yourself and feel you must have done something wrong. You apologize profusely to the patient. You say that the bad outcome is your fault and you would like to not only refund the patient her money, but pay her $10,000 for the inconvenience and potential pain and suffering of going through a second surgery. She agrees and you state in writing to the patient that you made a mistake while performing the surgery, which resulted in the patient’s poor outcome, and you enclose $10,000 as payment of damages. Later, you review a video of the procedure and realize you did nothing outside the standard of care. You belatedly recognize that the outcome was an unfortunate risk of the procedure. Even though you paid the patient $10,000, you did not have the patient sign a release and she sues you. You follow up with OMIC. OMIC may refuse to defend you or pay any damages, as you have seriously damaged the defense of your claim in violation of the Cooperation Clause.
Such a situation can easily be avoided by promptly communicating with OMIC regarding any maloccurrence. Additionally, following OMIC’s Risk Management Recommendations, as found in “Responding to Unanticipated Outcomes,” will help you to openly, honestly, and empathetically communicate with the patient while minimizing your personal liability.
