Risk Management

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.