Task Force Studies OMIC-Insured Surgical Facilities

By Kimberly Wittchow, JD, OMIC Staff Attorney

Digest, Fall 2005

Over the past year, a task force of OMIC Board and staff members, John W. Shore, MD, Anne M. Menke, RN, PhD, and Betsy Kelley, has been examining and revising underwriting requirements and risk management guidelines for coverage of outpatient surgical facilities (OSFs) insured by OMIC. OMIC’s Board of Directors assigned the task force to study scope of practice issues, state laws governing OSFs, and national, state, and local practice standards that establish a standard of care for cases performed in facilities insured by OMIC.

Types of Outpatient Surgical Facilities

First, the task force reviewed the type of facilities that OMIC insures. It found that OMIC insures a wide variety of OSFs with varying goals, scopes of business, and types of surgical procedures and anesthesia provided, including in-office surgical suites, refractive laser centers, and ambulatory surgery centers (ASCs). The types of anesthesia used in facilities insured by OMIC range from topical ocular anesthesia to full general anesthesia with invasive monitoring in high-risk surgical patients.

Some facilities are office-based treatment rooms where major eyelid and facial procedures are performed. Some of these offices permit outside surgeons of different specialties to utilize the in-office surgical suites. These surgeons, many of whom are not insured by OMIC, may perform major facial surgery in an unlicensed and loosely structured practice environment. This increases the vicarious liability shared by owners of the facility who are insured by OMIC.

Other surgical facilities are refractive surgical and laser centers. Surgical services in these facilities are usually limited to those requiring only topical anesthesia. The procedures are short in duration and the patients are relatively healthy. Some, however, are free-standing, licensed ambulatory surgery centers (ASCs), where surgeons of almost every specialty provide surgical services to a full range of pediatric, teenage, adult, and geriatric patients.

Review Process

Then the task force studied all of OMIC’s claims, suits, and settlements involving OSFs. The task force analyzed nursing, anesthesia, pediatric, and surgical standards by national professional groups as well as state and federal laws, regulations, and directives. Information gathered was used to revise existing underwriting requirements and risk management guidelines for OMIC insured OSFs. In addition to being discussed by both the Underwriting and Risk Management Committees, the proposed changes were extensively reviewed by consultants and practicing ophthalmologists with the goal of providing meaningful, clinically relevant, and workable requirements that cover all types of OSFs insured by OMIC. An anesthesiologist was consulted to review the anesthesia, monitoring, and emergency response requirements.

New Requirements

As a result of its work, the task force produced a rewritten and reformatted “Outpatient Surgical Facility Application” (OSFA), which was adopted by the OMIC Board of Directors. All ambulatory surgery centers, laser surgery centers, and in-office surgical suites used by physicians other than the owners and their employees will be required to complete the new OSFA. The OSFA contains detailed information about OMIC’s underwriting requirements pertaining to patient selection, type of anesthesia/sedation, pre- and postoperative assessments and monitoring, and emergency response and equipment. These requirements will be implemented immediately for all new OSF applicants and effective upon renewal in 2006 for facilities currently insured by OMIC.

It is important that insureds abide by all underwriting and notification requirements specified in the OSFA, as failure to do so could result in uninsured risk or termination of coverage. Working with OMIC’s experienced underwriters should enable insureds to complete the application, understand its requirements to avoid any coverage problems, and obtain an extension for those facilities that need additional time to comply with the requirements. While OSFs that are licensed or accredited may already meet or exceed these requirements, we anticipate that some OSFs may need additional assistance to implement them. Most accredited OSFs will receive a 5% premium discount for meeting the accreditation standards.  There are helpful resources listed at the end of the OSFA itself and OMIC’s risk manager is available for confidential consultations.

All OMIC-insured physicians help bear the cost of defending claims and paying indemnity. It is incumbent on the OMIC Board of Directors, therefore, to protect OMIC insureds as a whole by establishing requirements that it believes will best limit the company’s liability and by making certain that insureds abide by these requirements, while at the same time offering physicians the ability to practice in various settings.

The Impact of a Claim on Your OMIC Policy

By Kimberly Wittchow, JD 

OMIC Staff Attorney

Digest, Winter 2006

Stress and worries abound when a patient sues or claims malpractice. One concern of insureds is the effect such action will have on their insurance coverage. Although claims can and sometimes do have an impact on insurability, understanding how a claim is handled at OMIC may provide insureds with some peace of mind.

Each department at OMIC has a different responsibility when a claim arises. Risk Management encourages insureds to be proactive and contact the department when medical incidents or issues occur so the risk manager can help them appropriately respond to the incident and incorporate any necessary changes in their practices or procedures. The Claims Department, in cooperation with the insured, wants to resolve the claim or lawsuit as efficiently and cost effectively as possible. Underwriting, meanwhile, must make certain that OMIC insures good risks. Insureds may therefore get several seemingly conflicting messages from the company depending on the status of their claim. Rest assured, however, that there are checks and balances in OMIC’s operational protocols to balance these priorities. Most importantly, OMIC’s Board of Directors is made up of ophthalmologists who not only approve company processes but also conduct claims and underwriting reviews.

Physician Review Panel

OMIC employs a continuous underwriting process, monitoring the claims activity of all insureds not only in anticipation of policy renewal, but also during the course of the insured’s coverage. Whether an insured’s claim(s) will warrant further review by OMIC’s physician review panel depends upon the insured’s history of claims frequency the number of claims or suits) and severity (indemnity amounts) and on the specific circumstances surrounding the claim(s). This could include indications that an insured is performing experimental procedures outside of the ordinary and customary practice of ophthalmology or has provided substandard care, followed poor informed consent techniques, or failed to cooperate during the claims-handling process. OMIC’s reviewers consider the insured’s entire claims experience, including his or her experience with insurance carriers other than OMIC.

After consideration, the physician review panel may determine one of several outcomes, including any of the following:

• The panel may continue the insured’s coverage without any conditions placed on his or her policy.

• The panel might continue the policy coverage with conditions, such as endorsing the policy to exclude coverage for certain activities or reducing the policy limits.

• The panel could also conclude that the insured’s risk profile falls outside of OMIC’s conservative underwriting standards, and that OMIC, therefore, is no longer in a position to cover the insured beyond the expiration of the insured’s policy.

• Finally, the panel, in rare circumstances, might determine that the insured’s actions warrant mid-term cancellation if the reasons for the cancellation fall within the policy provisions. These include fraud relating to a claim made under the policy and a substantial increase in “hazard insured against,” such as claims frequency or severity or unacceptable practice patterns.

Insureds are provided the opportunity to appeal coverage and termination decisions to the full Underwriting Committee. OMIC would not generally apply a policy surcharge (higher premium) because of claims experience.

Reporting a Claim or Medical Incident

The policy requires that an insured report to the Claims Department any claim or medical incident that occurs during the policy period which may reasonably be expected to result in a claim. The reporting of such an incident triggers coverage with OMIC. Even if the insured doesn’t obtain an extended reporting period endorsement (tail coverage) when he or she leaves OMIC, OMIC will continue to insure him or her for all covered claims and incidents reported while the policy was in force. An incident that does not develop into a claim will have no effect on the insured’s premium and will not be included in claims history reports provided to hospitals or other third parties. Claims or incidents reported to OMIC’s Risk Management Department are kept confidential: they are not shared with the Underwriting or Claims Departments without an insured’s permission and are not considered reported to OMIC for coverage purposes.

Finally, any indemnity payment made by OMIC on behalf of an insured will result in the removal of the insured’s loss-free credit upon renewal and for two policy terms. Then, if no further claims payments are made on behalf of the insured, the insured will begin earning loss free credits again, beginning at 1% and increasing 1% annually to a maximum discount of 5%.

Defending Claims, Selecting Counsel

By Kimberly Wittchow, JD  OMIC Staff Attorney

Digest, Spring 2006

Ophthalmologists inquiring about professional liability insurance often ask how OMIC selects defense counsel when a claim or lawsuit arises. They want to know which attorneys OMIC uses in their city, how OMIC chooses the attorneys it appoints, and if insureds can select their own counsel.

Selection of counsel is not specifically addressed in OMIC’s insurance policy. The policy does explain, however, that OMIC has the right and duty to defend each covered claim brought against the insured. In order to protect insureds against even frivolous claims, the policy requires that OMIC defend claims “even if wholly without merit.” The reciprocal duty of the insured is to immediately report the claim or any circumstances that might give rise to a claim. Without timely notice, OMIC may not be able to adequately exercise its right and fulfill its duty to defend the insured. OMIC must be involved from the beginning of the claim in order to actively participate in the insured’s defense. In the experience of OMIC’s Board and staff, if OMIC does not have control of the defense process from the earliest stages of litigation, its mission of effectively defending ophthalmologists is frustrated, which ultimately works to the detriment of the insured and the company as a whole.

Expert Defense of Ophthalmologists

Implicit within OMIC’s right and duty to defend each covered claim is the right to select and appoint defense counsel. Currently, OMIC has approximately 190 attorneys and law firms on its nationwide list of active counsel. These are the most qualified and consistently successful medical malpractice defense attorneys in the country. Most have worked on several OMIC cases and many are considered “subspecialists” in the defense of ophthalmologists. Given this large base of competent attorneys, assigning defense counsel has been a relatively smooth process in all of the claims OMIC has handled since its inception.

For their part, most OMIC insureds handle the stress of emotionally charged medical malpractice litigation very well and do not allow their anxiety to spill over and adversely impact the selection of counsel and defense of their claim. Mutual trust and a professional relationship between the insured ophthalmologist and his or her attorney are fundamental to a successful defense. OMIC carefully monitors this relationship throughout the course of litigation and surveys every insured after a claim is closed to get feedback about the insured’s experience with counsel.

On rare occasions, the fit between an insured and an attorney is not right. When this occurs, insureds are encouraged to make OMIC aware of any issues they are having with their counsel. Oftentimes, these issues are a natural consequence of the stress of litigation and frequently resolve themselves without OMIC intervening. However, in a few circumstances, OMIC has felt that an insured’s defense would be better served by a change of counsel and has appointed a different attorney.

The Need for Separate Counsel

There are some occasions during litigation when OMIC may have the duty to advise an insured to retain his or her own separate counsel. This happens when some of the allegations in the lawsuit are not covered by the OMIC policy or when the policy pays defense costs but not indemnity for certain allegations. Sometimes OMIC must advise the insured to retain separate counsel if the claim is likely to result in a judgment in excess of the insured’s policy limit or if the judgment may include non-covered sums, such as punitive or other exemplary damages. In many of these situations, the uninsured allegations are dismissed before there is a need to retain separate counsel. Unfortunately in other cases, the allegations remain and the insured must bear the cost of any separate legal defense.

In a handful of cases, OMIC has learned that the insured has engaged his or her own private counsel prior to reporting the claim to OMIC or without OMIC’s approval. Insureds have even tried to settle cases themselves without informing the company of the claim. In these situations, if the insured engages counsel directly without OMIC’s approval, the defense costs accrued will not be covered by OMIC. In addition, any indemnity payments made by the insured without OMIC’s approval also will not be covered by the company.

For more information on this subject, please see OMIC’s Litigation Handbook for the Ophthalmologist or the following articles, which can be found on the OMIC web site at www.omic.com:

• “Choosing Defense Counsel,” by Mary Kasher, MSN, JD, OMIC Digest, Winter 2001.

• “How to Survive a Malpractice Suit,” by Paul Weber, JD, Review of Ophthalmology, July 1997.

• “Anatomy of a Claim,” by Marilys Fernandez, RN, JD, OMIC Digest, Winter 1991.

OMIC Forms 43rd Educational Alliance with the Michigan Society of Eye Physicians and Surgeons (MiSEPS)

This cooperative venture will significantly reduce malpractice premiums for MiSEPS members by offering a 10% discount (averaging more than $1,300) to members for attending a qualifying cosponsored risk management event. CME credit available for some courses.

For more information on OMIC’s CV program contact Deena Mader at OMIC at 800-562-6642, ext. 628. www.omic.com

For Michigan state society membership, please contact Theresa Wiley, Associate Director for the Society at 313 823 1000 or email at twiley@miseps.org.

Visit the MiSEPS website for more info: www.MiSEPS.org.

Several New and Revised Consent Forms Published by OMIC

Several new and revised informed consent documents and risk management recommendations documents were recently uploaded.

CATARACT SURGERY

• New: Same Day Sequential Bilateral Surgery Addendum
• New: Femtosecond Laser Cataract Surgery Addendum

RETINA

• New: Intravitreal Anti-VEGF Injections for Adults: Risk Management Recommendations
• Revised: Avastin^TM (bevacizumab) Consent
• Revised: Eylea^TM (aflibercept) Consent
• Revised: Lucentis^TM (ranibizumab) Consent
• Revised: Ozurdex^TM (dexamethasone) Consent

RETINOPATHY OF PREMATURITY

• New: Intravitreal Anti-VEGF Injections for ROP: Risk Management Recommendations
• Revised: Intravitreal Anti-VEGF Injections for ROP Consent

See all new consent forms here.

See all new risk management recommendation guides here.