Questions on Malpractice Insurance
A nurse practitioner (NP) writes:
"My collaborative MD believes that I should not need more liability insurance than his rider. My FNP liability insurance costs $1200 -- more than either PNP or ANP. My colleague in the same practice has separate credentials for ANP and PNP but as most of our patients are adult she only carries her insurance for adult -- $800. What do you think about the actual liability needs?"
This question exemplifies the dilemmas NPs are facing when attempting to cover themselves for professional liability. Inherent in this NP's questions are the following questions:
Do I need my own policy, if I am employed and my employer covers me?
How much malpractice insurance do I need?
Do I need coverage for all of my areas of certification, even if my practice is limited to one area?
Why do policies for some areas of certification cost more than others?
If I don't sign up for the appropriate type of policy, can the insurer refuse to cover me if I am sued?
This article addresses those questions.
The questions that need to be answered to answer this question are:
Will my employer's coverage be enough?
Is my employer's coverage dependable?
Do I perform any services that aren't covered by my employer's policy?
If I leave the employer, will my employer's policy cover me for an incident that occurred while I was still employed?
If I have 2 policies, will the policy terms allow the insurers to argue about who pays?
Will my employer's coverage be enough? It is difficult to get reliable data to use to predict what settlements, judgments, and defense costs might run. However, according to 2 sources, defense costs are running between $20,000 and $40,000, depending upon whether the claim resulted in a payment.[1,2] Data from the insurance industry places the average payout for serious injuries as now exceeding $1.5 million. Another source puts the average payout at just under $200,000. A third source puts the average at $320,000.
Average payouts mean little if the verdict or settlement against you is for an amount that exceeds the limits of your policy. Damage awards give clinicians clues that at least $1 million in malpractice insurance is necessary. Here are some recent cases against NPs. All involve diagnostic errors, which is the most common reason for malpractice lawsuits against NPs and physicians in office practice.
A 15-year-old female, complaining of a severe headache, left school early. Her mother gave her Tylenol and took her to see an NP that evening. The teenager also complained of very stiff joints, aches, and fever. The NP noted a temperature of 103.7 degrees, no cough, no chest congestion, no rhinitis, and no abdominal complaints. A complete blood count showed a white cell count of 16,600. The NP performed tests for meningeal irritation but found none. A pediatrician working in the practice conducted a cursory observation of the patient at the end of the visit. The NP diagnosed probable flu, told the patient's mother to call if the girl vomited or showed other changes in symptoms, and sent the patient home. Later that evening, the mother phoned the office to say her daughter had vomited several times. The NP advised the mother to keep the girl at home for the night, and bring her to the office in the morning. By morning, the girl was lethargic to the point of being only marginally responsive. On her arrival at the clinic, staff called 911. At the hospital, the girl was diagnosed with meningitis, put on antibiotics, intubated, and admitted to intensive care. She continued to deteriorate, endured brain herniation, and died 1 week after the initial visit. The plaintiff's attorney alleged that the NP must have performed improperly the tests to elicit signs of meningeal irritation, as it was certain that the patient had unusual neck stiffness. The NP denied any negligence, arguing that the girl had influenza that quickly progressed overnight into meningitis. The parties settled the case for $500,000.
A 44-year-old woman whose mother had taken diethylstilbestrol (DES) while pregnant visited a women's health center for evaluation for hormone replacement therapy. An NP performed the evaluation, including a pelvic examination. The patient had some symptoms of pregnancy, but the staff reportedly attributed those symptoms to menopause. The patient said she had been told by doctors at the center that she was incapable of becoming pregnant and did not need to use contraception. The NP did not note an enlarged uterus. Six weeks later, the patient had a CAT scan of the abdomen to rule out tumor. There was no tumor, but there was a 6.5-month fetus. The woman gave birth to a daughter with asymmetrical dwarfism, also known as Russell Silver Syndrome. The child was expected to have to undergo a series of surgeries and use hormonal and physical therapies. The woman sued the women's health center, the larger institution of which the health center was a part, and the NP, who is an expert on DES daughters. The woman argued that her daughter's syndrome was caused by in-utero exposure to hormonal replacement therapy, CAT scans, prescription drugs, and lack of proper prenatal care. The plaintiff argued that the late diagnosis caused her to lose the opportunity to terminate the pregnancy. The parties settled for damages of $1.7 million.
A 29-year-old female nurse testified that she visited an NP in December 1992 for a physical exam. The NP pointed out a firm lump in the right breast. The NP diagnosed the lump as "fibrocystic breast formation." In April 1994, the patient saw the NP for an unrelated problem. She asked the NP about the breast lump. Later in 1994, the patient saw a coworker NP who examined the breast lump, which had increased in size and had become tender. That NP ordered a biopsy, which was positive for breast cancer with lymph node involvement. In March of 1998, the patient filed lawsuit against the first NP for failure to timely diagnose breast cancer. The NP's side of the story is that in December 1992 she performed a breast exam but made no note of a breast complaint or abnormal findings regarding the patient's breast. Had the patient reported a lump or if there was a lump on exam, the NP would have recorded that in the record. In April 1994, the patient did not complain of breast lump, and no breast exam was performed. There was no record of a complaint of breast lump or breast exam. In March 1998, the NP defended with the arguments that: (a) the statute of limitations had expired; (b) the patient never complained of a breast lump; and( c) the December 1992 breast exam was normal. The patient died in 1999, leaving a husband and 3 children. A judge denied the NP's motion for summary judgment based on expiration of the statute of limitations. After mediation, the parties settled the case for $600,000.
Successful plaintiffs can enforce judgments or settlements by garnishing wages, putting a lien on the defendant's house, and exercising a levy on the defendant's bank accounts. There are various ways to try to shelter one's income from successful plaintiffs, but they have their own risks and costs.
The ethics of "going bare" (not having insurance) or not having enough insurance weigh heavily on many clinicians. If you make a mistake and someone is injured, are you going to feel ethically responsible for compensating the patient? If you try to get out of this obligation, is it going to weigh heavily on your conscience? If you elect not to purchase insurance or go with a policy with low limits, are you going to worry constantly about having the cash to pay off an injured patient? Will you save money in an account just for that purpose? Are you worried that your employer's policy won't cover you? Or are you unable to get information on your employer's policy? If the answer to any of these questions is "yes," it is probably worth the cost of your own policy to maintain your integrity and have peace of mind.
Every NP is going to encounter different risks and different premiums. Do a risk-benefit analysis. Get as much coverage as you can afford, but no less than $1 million per occurrence. If an employer's policy has limits below $1 million, strongly consider purchasing your own policy for additional coverage.
Is my employer's coverage dependable? An insurance purchaser needs to feel secure that the insurance company is financially secure enough to pay out if necessary. To research the financial stability of an insurance company, find out which company underwrites the policy. This information should be provided on the insurer's Web site. Go to A.M. Best's Web site, or another of the several companies that rate the financial stability of insurance companies, to find the insurer's financial stability rating. You'll want to see a rating of A- or higher.
Do I perform any services that aren't covered by my employer's policy? Each insurer has different terms and conditions. If an NP relies on an employer's policy, the NP will need to be sure he or she can meet the conditions of the policy. Read the policy to determine whether the procedures and services you provide are covered.
If I leave my employer, will my employer's policy cover me for an incident that occurred while I was still employed? Most insurance policies for physician practices are "claims made." With a claims made policy, an NP must purchase a "tail" -- coverage extension -- when the NP leaves the employer. The prices for tails vary greatly and can, for a pediatric NP (PNP), be in excess of $5000. Some employers agree, as part of an employment agreement, to pay for the NP's tail policy. If the employer will not pay for the tail, the NP is going to have to do it when he or she leaves the employer, or the NP will be "bare."
Additional important advantages of having one's own policy are:
The NP will have her/his own legal counsel with expenses covered.
The NP may be covered for incidents that occur out of the employment setting (depending on the terms of the policy).
The NP can purchase limits that may be higher than the employer's.
If the NP purchases an occurrence policy, the NP will be covered if he/she leaves the employer's practice, and need not purchase a tail.
The disadvantages of having one's own policy are:
The plaintiff may draw the NP into the lawsuit, or attempt to keep the NP in a lawsuit longer than justified, in hopes of drawing on the NP's insurance. However, this may happen whether or not an NP has his or her own policy, as a plaintiff will not know until the "discovery" part of the litigation process whether or not the NP has an individual policy.
It is a significant expenditure.
Before electing to go solely with an employer's policy, ask the following questions of the employer:
Who is the insurer?
What are the limits?
What is the company's financial stability rating?
Am I a named insured? If not, what policy language assures that I will be covered?
Are there any requirements on NP practice, such as level of supervision, that must be met under the terms of the policy?
Does the policy state any conditions that I must meet in order to stay covered?
Is it an occurrence policy or claims made? If claims made, ask: Who will pay the premium for the tail? If the employer refuses to promise to pay the tail premium, ask: How much will the tail cost?
Purchase your own policy if:
Your employer's policy is claims made, the employer won't pay for the tail policy, and you can't afford to pay for the tail.
You are not clearly one of the additional insured individuals on the employer's policy.
You perform NP services outside of your employment.
Your employer covers you only under certain conditions, and you can't meet all of those conditions.
The employer's insurance company has a rating lower than A-.
The employer's policy limits are below $1 million per incident.
If working for a government agency, the considerations are:
Am I protected under a Tort Claims Act?
If so, are there are any conditions under which I could be sued as an individual?
If working for a hospital or large organization, the considerations are:
Does the organization purchase a commercial policy?
Is the organization self-insured?
If the organization has a commercial policy, what are the exclusions (ie, what are the circumstances under which I would not have coverage)?
If the organization self-insures, are there are limits to what the organization would pay in the way of damages, attorney fees, and expert witness fees?
Are any of my activities as an NP excluded from coverage?
How much coverage should I purchase? Rates vary, based on the company, length of time in practice, type of certification, state where practicing, and number of hours practicing per week. For an employed adult NP working full time in Maryland, recent rates varied as follows:
$590 a year for a $2 million per incident/$4 million aggregate occurrence policy
$504 per year for a $1 million/$6 million occurrence policy
$566 per year for a $1 million/$6 million occurrence policy
$663.32 per year for a $1 million/$6 million claims made policy
Rates may be lower or higher in other states or for other NP specialties. Purchase as much insurance as you can afford, but not less than $1 million per occurrence.
Why do policies for some areas of certification cost more than others? Premium rates are determined by actuaries who analyze the risk for each category of clinician. If a policy for a family NP (FNP) costs more than a policy for an adult NP (ANP), that means the company's actuaries determined that it is more likely that the payout for an FNP will be more than for an ANP. One reason why the payout might be higher for an FNP would be the extended statute of limitations when the injured party is a child.
Do I need coverage for all of my areas of certification, even if my practice is limited to one area? Maybe. First, if you are an ANP and PNP but practice only with adults, are you committed to never providing services for a child? Second, have you been honest on your insurance application, stating that you are an ANP and PNP but are purchasing only ANP insurance? Third, have you checked with the company to see whether they have any term or condition that would require you to be insured as both ANP and PNP? Insurers may make their own terms and conditions and may deny coverage if their terms and conditions are not met.
If I don't sign up for the appropriate type of policy, can the insurer refuse to cover me if I am sued? Yes.
If I have 2 policies, will the policy terms allow the insurers to argue about who pays? Some policies state that if there is any other insurance policy that applies to the amounts covered under the policy, the other insurance must pay first. In that case, if an NP is insured through an employer as well as his or her own policy, the NP's insurance may be secondary (ie, would pay only if the other insurance has reached its limits). If an employer's policy had a similar condition, the NP might find him or herself involved in litigation about which insurer must pay first. Read and understand each policy's terms regarding other insurance. Ask insurers for terms that will suit your situation.
Topics in Advanced Practice Nursing eJournal. 2006;6(1) © 2006 Medscape
Cite this: Questions and Answers on Malpractice Insurance for Nurse Practitioners - Medscape - Feb 03, 2006.