Allied medical professional liability: healthy growth to continue

As America ages and the health sector expands to accommodate it, demand for this coverage is also growing

Allied Medical Professional Liability insurance provides coverage for those risks associated with the use of Allied Health care Providers (AHPs), commonly known as “nonphysician clinicians.” This coverage is also referred to as health care consultant or specified medical professional liability insurance. It protects against risks in a variety of medical settings ranging from nurses staffing firms and diagnostic testing facilities to home health care and MedSpas.

How big is the marketplace?
People are growing older, living longer, and the health care industry is expanding. Mirroring such growth, the demand for highly skilled professionals continues to increase, and the use of AHPs such as physician assistants (PAs) and advance practice nurses (APNs) as an alternative to, or in conjunction with, the traditional physician is on the rise. The per capita supply of AHPs is projected to grow by 88 percent between 1994 and 2010, while the supply of physicians is anticipated to grow by a mere 16 percent. With the continuing growth of the health care industry and an increasing supply of nonphysician clinicians, the marketplace for allied medical coverage has reached new heights.

Professional liability coverage for AHPs is in demand nationwide. According to the U.S. Census Bureau in 1970, approximately 9.9 percent of the population was over 65; this percentage had risen to 12.4 percent by 2000; and is predicted to rise to 19.7 percent by 2030. The number of people between the ages of 40 to 60 is expected to grow to 64 million by 2010. As America ages, and the health care industry grows to accommodate it, the need for professional liability coverage for AHPs will continue to expand.

Opportunities in this area are tremendous. Insureds typically buy a standard business owner’s policy (BOP), but they often don’t look into professional liability coverage, and most general liability policies exclude this coverage. If a patient slips and falls while receiving help from a home health care professional or an employee of a nurses staffing firm improperly administers an IV, ultimately causing the patient’s death, the insured is without coverage for both of these scenarios under a standard general liability policy. Erroneously relying on a BOP policy for all the protection an AHP needs could result in a significant exposure for the insured.

Underwriting allied medical
Underwriters consider a variety of factors when selecting risks in the allied medical arena. In addition to the size of the AHP organization, they will consider what type of professional staff is employed; whether the staff is comprised of degreed or certified professionals such as Registered Nurses (RNs) and Licensed Practical Nurses (LPNs) or whether the staff is primarily composed of non-degreed employees. They will also consider factors such as the number of patients that visit per year, the type of activity the AHP conducts, and how risky the activity is. Additionally, underwriters will assess the revenues and expected receipts of the provider, as well as the type of risk management controls the AHP has implemented. Generally, the more risk management controls that an AHP has in place, the lower premiums will be.

Typical exposures include allegations that an AHP provided services beyond the scope of care; inadequately performed an exam or procedure; failed to develop and follow protocols; or failed to consult with a supervising physician resulting in delayed diagnosis of a condition or even improper medication and monitoring — each of which could result in serious injury or death of a patient.

Key coverage features and differences
Agents should pay special attention to the definition of professional services to make sure it meets the exact scope of services and activities performed by the insured. Medical malpractice markets are notorious for quoting only a partial exposure. As such, it is imperative that the agent carefully read the quotes to make sure the written policy includes all the exposures and risks for which the client was seeking coverage, specifically making note of exclusions and endorsements. Optional buybacks for sexual abuse and molestation charges, as well as defense outside the limits, can typically be added for additional premium.

The allied medical arena includes many different kinds of organizations and health care providers. One example is MedSpas, a relatively new type of AHP and an increasingly popular option for cosmetic procedures. Agents and brokers should be aware of specifically tailored endorsements for this type of AHP. Unless state law requires otherwise, many of the procedures performed at MedSpas are done by PAs and RNs. Endorsements are regularly added by carriers to restrict who can perform various procedures, including Botox injections and other injectables, as well as threadlifts and liposuction procedures. Carriers may amend this requirement if the insured is able to provide training certifications showing proficiency and experience for the PAs and RNs performing these procedures. To negotiate the best possible coverage available, an agent or broker must know what procedures are being performed and who is performing them. Understanding the specific risks faced by AHPs and the details of coverage will allow agents and brokers to ensure their clients are adequately protected.

Gregg Godde is senior vice president – broker with Colemont Insurance Brokers of Georgia LLC in Atlanta. His account expertise lies in placing standard to complex risks for financial services, professional services and healthcare services. He can be reached at 770.434.3666 or emailed at gregg.godde@colemont.com. Visit Colement at www.colemont.com.

Topics Medical Professional Liability