Caption Corner Part 10 – The 3 N’s of Insurance

As licensed practitioners, there is no doubt that you should have a professional liability insurance policy to cover you for malpractice, a cyber or data breach insurance policy to insure you for HIPAA violations arising from third party information breach, and a general liability insurance policy covering your office, fire perils, bodily injury, and third party property.

This month we will continue to discuss some of the most important liability insurance terms that you need to know: Named Insured, Named Peril, and Negligence.

In Part 1 published in December 2016, we discussed the following:
Insurance Agent or Insurance Agency; Hazards and Perils; Limits and Sub-limits; and Insurance Claim.

In Part 2 published in January 2017, we discussed the four D’s of insurance:
Declarations; Deductibles; Direct Writer; and Dynamic Risk.

In Part 3 published in February 2017 issue, we discussed the four E’s of insurance:
Endorsements; Exclusions; Effective Date; and Extended Reporting Period.

In Part 4 published in March 2017 issue, we discussed the four F’s of insurance:
Form, Fraud, First-Party Risk, and First-Named.

In Part 5 published in April 2017 issue, we discussed the three G’s of insurance:
General Liability, Group-Owned Captive, and Guaranty Fund.

In Part 6 published in May 2017 issue, we discussed the three H’s of insurance:
Hazards, Hold Harmless Agreement, and Hard Market.

In Part 7 published in June 2017 issue, we discussed the three I’s of insurance:
Insurable Interest, Insured and Insuring Clause.

In Part 8, published in July 2017 issue, we discussed the three L’s of insurance: Liability – Joint and Several, Limit and Limitation of Risk, and Line of Business.

In Part 9, published in August 2017 issue, we discussed the four M’s of insurance: MGA, Maturity, Monoline, and Mutual Insurer.

Named Insured

The Named Insured is the individual or business named on the policy declarations page (on the front page of the policy). Typically this individual or entity is responsible for performing the daily functions of the insured, such as paying the insurance premium and operating the enterprise.

However, the First Named Insured is the first name listed on the insurance policy declarations page. This insured acts as the legal agent for all Named Insureds to initiate a cancellation, request policy changes or accept returned premiums. The First Named Insured may also be responsible for the payment of premiums.

Often times, an additional insured is a person or organization that is added to the insurance policy through an endorsement to be covered. Often times, a landlord is named as an additional insured on a professional liability insurance policy. But beware, a professional liability policy is focused on covering professional services arising from therapy and treatment. It is therefore not the same coverage as general liability coverage. Do not mistakenly believe that naming a landlord as an additional insured on a professional liability insurance policy equals coverage under a general liability insurance policy. You will be uninsured for general liability risk and perils in most cases.

Named Peril

The Names Peril(s) are the risks the insurance policy contract lists as perils insured under the policy contract. A peril is a cause of loss such as from fire, theft, or malpractice perils such as negligence, sexual misconduct, information breach, client or office visitor slip and fall, licensing board inquiries, depositions, and many others.

Insurance policies list Named Perils, which are exactly what is covered by the insurance policy. There are also excluded perils that are listed. This is where the contract language is very important. You must read your policy contract carefully and thoroughly. Some insurance policies are very subjective and unclear.

Some also have provision clauses that conditionally reverse of restricting the stated meaning and coverage in the same paragraph. Typically, exclusions and conditions are written in other parts of the policy contract from where peril is listed as being covered, so a coverage gap can exist without the insured knowing. This is why it is imperative that you select an insurance provider who is looking out for your best interest, and not a commission paid insurance agent or agency.

Negligence

Negligence is the failure to exercise the care that a reasonable or prudent person would under similar circumstances. Negligence includes malpractice and many other liability perils. Malpractice is the most common among practitioners. The elements of negligence are Duty, Breach, Proximate Cause, and Damage.

The overall malpractice characteristics include:

• Failure to provide the required standard of care commensurate with your particular licensed professional occupation;
• This failure results in damage, injury, or death.
• Any healthcare professional can be sued for malpractice, no matter how trivial the lawsuit complaint appears.

A patient’s lawyer can define malpractice subjectively. A lawsuit can merely refer to the patient’s perception of wrongdoing without supporting factual evidence. If the patient merely “feels” anything relating to the scope of treatment or interaction with the healthcare professional provider was carried out incorrectly or not carried out at all, it is sufficient grounds to support a lawsuit.

The following are the required elements of negligence and are described in the context of treatment that festers into a malpractice lawsuit. The plaintiff (patient who brings the lawsuit against you through counsel) must prove each element in the lawsuit. In any event and regardless of culpability, the defendant (you or your insurance carrier insuring you), must pay the legal fees to dispute the charges and defend you until the lawsuit ends, either at trial or through a settlement.

DUTY
This is created when the healthcare professional agrees to accept the patient and establishes the course of treatment with the professional relationship between the two parties. The duty is to create, maintain, and deliver professional services within the occupationally defined Standard of Care commensurate with that specific healthcare professional’s occupation.

BREACH
This is the healthcare professional’s failure, or as often referred to in lawsuits as “dereliction of duty”, to meet the standard of care and to apply the appropriate diagnostic, preventative, and therapeutic measures.

PROXIMATE CAUSE
This specifically links wrongful actions and/or non-actions arising from the healthcare professional directly connected to the outcome or resulting change. The key element is “causation”, whereby the damage arose directly from the professional’s practice behavior.

In other words, “But For” the action or inaction of the healthcare professional, there would not have been the damage. There is a distinction between the word cause. “Proximate Cause” is a legal connection of blame whereby the professional has some probability of contributory negligence to the damage arising from the duty breach.

This is debatable throughout the lawsuit and is subjective. Often times when indemnity settlements are reached, a portion of the damage is blamed on the healthcare professional, and damage claims are paid in that proportion plus legal fees. “Cause in Fact” is a stricter measure, and factually links the duty breach committed by the healthcare professional to the patient damage. This is the “smoking gun” analogy where there is absolutely no doubt of cause, and who is responsible for the damages.

DAMAGE
This is the list of harms to the patient. These include economic (hard) and non-economic (soft) categories. They can be physical, emotional, and/or financial. The main categories are Medical such as lost wages, treatment costs, and even other losses including first party and third party costs; and Pain & Suffering causing social and psychological harm.

Negligence lawsuits have two expensive components: indemnity and legal fees to defend. They do not have to be practice or therapy-related. Damages arising from negligence can be your patient’s stolen handbag in your office or in a hotel conference room in which you are conducting a session, or a stolen laptop or cell phone that has your patient phone numbers. Even a fire in your office causing property damage to your landlord, a slip & fall by a visitor to your office, or a dog bite in your office makes you potentially negligent.

Published September 2017