Risk Management

Some Legal and Insurance Issues Regarding Retirement

By Linda Radigan

Argus, April, 1993

After giving years of medical service to the community, many physicians start thinking about slowing down and practicing fewer hours or even retiring completely. Early retirement is gaining in popularity among ophthalmologists in particular as third party reimbursement and managed care arrangements becoming increasingly complex. Whether an ophthalmologist decides to scale down to part-time practice or to retire completely, careful planning makes good financial, legal and risk management sense.

Professional Liability Issues

Once you have addressed the financial arrangements related to retirement, notify your professional liability insurance carrier and ask about their retirement requirements. Do not cancel your liability insurance until you stop practicing completely and have arranged for tail coverage. Many insurers offer part-time coverage at reduced premiums for policyholders who meet certain criteria. OMIC, for example, offers a 50% reduction in premiums to insureds who limit their practice to medical ophthalmology (no surgical procedures) and who practice no more than 20 hours a week. The reduction increases to 65% if the practice is limited to 10 hours a week.

The most common form of malpractice insurance, including that offered by OMIC, is claims-made coverage. Claims-made policies cover only those claims that arise during the policy period. If a claim is filed after the policy period had ended-even if the incident occurred during the policy period-it will not be covered by a claims-made contract unless the insured had an extended reporting period endorsement placed on the policy, commonly called “tail” coverage.

Many insurers, including OMIC, provide free tail coverage to retiring policyholders age 55 or older after five years of continuous coverage with the company. Some will discount the tail premium if the policyholder meets the other retirement criteria but has not been insured by the company at least five years. OMIC offers a 20% discount on tail premiums for each full year of coverage with OMIC. A free or discounted tail can result in significant savings since this coverage usually costs between 150% and 200% of the mature rate premium.

Notify Your Patients

Insurance aside, one of the most important risk management aspects of discontinuing a practice is proper notification of patients. Simply posting handwritten signs in your office or informing patients verbally is not enough. Such approaches leave the retiring physician open to charges of abandoning patients who were not notified or simply forgot the conversation.

To help avoid charges of abandonment, send a letter to all patients you have seen in the last two years stating exactly when the practice will close. Give at least three months’ notice. Regular mail is usually sufficient for most patients; however, consider registered mail with return receipt requested for high-risk patients or for those you are actively treating for chronic problems. Keep a copy of these letters and receipts in each patient’s file.

Encourage patients to begin looking for a new ophthalmologist immediately. If you have been practicing with an associate or are selling the practice to another ophthalmologist, send a letter of introduction to all patients and try to give your regular patients an opportunity to meet the new physician. But avoid making unsubstantiated representations about the associate’s competence because it could be interpreted as warranting the care provided by that physician. Instead, refer patients to the local medical or ophthalmologic society for the names of other ophthalmologists.

Explain in your letter the need for the patient’s written authorization to transfer medical records, and request that the patient return the written authorization form you provide by a specified date. In most states, a patient’s medical record is considered the physician’s property, subject in almost all instances to the patient’s right to copies of the record, while the information contained in the medical record is the patient’s personal property. Patient records can never be sold to another physician, but copies or summaries of the record may be transferred with the patient’s written consent.

Retain and safely store all original records. You may need them at some point to defend against malpractice or abandonment claims. Consult with your attorney or state medical society regarding the statute of limitations for professional liability in your state to determine how long to keep patient records.

For questions on part-time or tail coverage, or other risk management aspects of retirement, please call OMIC at 1-800-562-OMIC (6642).