Watch Out for This Growing Malpractice Trend

Brian S Kern, Esq.


May 27, 2009

In This Article

How Can Physicians Lessen This Risk?

Buying additional insurance for the entity can reduce the risk for personal liability. However, the cost may be prohibitive. Worse, high insurance limits often result in higher settlements. The more money available, the more money plaintiffs' attorneys may demand.

To lower both cost and exposure, physicians should develop an overall coverage strategy. Four options follow.

First, use 1 policy limit to cover multiple entities, if applicable.

Second, have physicians "share" their respective limits with the corporate limits to avoid bringing additional insurance policies into a lawsuit and largely eliminate a plaintiff's leverage.

Be careful when constructing this, because it can create significant exposure if coverage is not coordinated for every agent of the corporation. Shared coverage will only respond on behalf of the corporation if the claim is related to a physician that is a "named insured" on the underlying policy.

Third, look into creative solutions for insurance. Although state laws and credentialing requirements often govern insurance policy limits for physicians, there is often no similar framework for healthcare entities. As a result, insurers can offer unique solutions, such as high deductibles, aggregate limits, or even policies that only cover legal expenses, but do not insure against losses (settlements or awards).

Fourth, check with your broker before renewing your insurance coverage. Also consider consulting with experts in accounting, healthcare, and insurance law to coordinate your insurance needs with a comprehensive asset protection plan.

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