Policyholder Services

What is OMIC’s position concerning satisfaction guarantees or warranties?

A satisfaction guarantee or warranty is a contract between the health care provider and patient in which the provider agrees to return fees, pay for remedial medical expenses, or provide other compensation or services to the patient if the patient does not achieve agreed-upon results.

Guarantees are fraught with potential litigation and coverage issues. Because a guarantee is “the assurance that a contract or legal act will be duly carried out,” a suit based on breach of guarantee is often a “breach of contract” suit. This takes it outside of the realm of medical negligence and, consequently, outside the realm of coverage under a medical professional liability policy. The plaintiff may allege only that the terms of the guarantee were not met, not that there was necessarily any malpractice. Other allegations commonly seen as a result of guarantees and warranties but which fall outside the general scope of a medical professional liability policy include unfair business trade practices, fraud, and misrepresentation. Alternately, the plaintiff may include allegations of medical negligence. By giving a guarantee, the doctor may be giving a false sense that any results less than those guaranteed constitute a breach of the standard of care, increasing the likelihood that a patient will sue under medical negligence if the care received does not meet the guarantee terms.

Under Section III, Exclusions, B. Conditional Defense, OMIC’s policy excludes payment of damages and supplementary payments for settlement or judgment attributed to a guarantee by the Insured of the result of any direct patient treatment. OMIC will, however, defend an Insured because of a claim otherwise covered by the policy that arises out of, but is not solely limited to, a guarantee. Similarly, OMIC will defend an insured but will not pay damages or supplementary payments for claims arising out of, but not solely limited to, false, misleading, or deceptive advertising and marketing.

As a specific condition of coverage for intraocular refractive surgery procedures and certain cosmetic procedures, the insured must comply with OMIC’s underwriting requirements applicable to such procedure, including those relating to advertising as follows:

Advertisements must comply with state law and FDA- and FTC-mandated guidelines. Ads and other patient information materials must not be misleading and must not make statements that guarantee results or cause unrealistic expectations. Similarly, satisfaction guarantees, warranties, and similar contracts are not permitted.

Physicians are encouraged to read the Risk Management Recommendation Letter, “Advertising Medical Services,” and related “Review of Advertisement for Medical Services” for further guidance.