Ask Me MD: Medical School for the real world
Ask Me MD: Medical School for the real world
Jim Patterson - Business Insurance 101
Jim Patterson of Agape Healthcare Partners, a member of the CoVerica network, discusses different types of business insurance integral to physician practices. For more information about Agape Healthcare Partners, please visit https://www.agapeins.com/
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Ask me MD medical school for the real world with the MD Dr. D.J. Verret.
D.J. Verret, MD, FACS :Thank you again for joining us for Ask Me MD, medical school for the real world. I'm Dr. D.J. Verret. Today we are joined by Jim Patterson of Agape insurance, a member of the Coverica network. Jim's going to talk to us about all those types of insurance that you never knew you needed, but you absolutely do. We'll be right back with Jim after this quick break. Welcome back to ask me MD medical school for the real world. I'm Dr. DJ Verret. And joining me today is Jim Patterson with CoVerica. We're going to talk to Jim about all of those insurance policies that you never knew you needed. But you actually do. Jim, thanks for joining us.
Jim Patterson :You betcha.
D.J. Verret, MD, FACS :In preparing for this segment, I went through my list of coverages as well as thinking about some others that our listeners might be interested in. So maybe you can start it off and talk about employment practices insurance for us.
Jim Patterson :So first off, and I have a list of coverages to touch on, that the the that we look at, and we've talked about before, as the biggest, the biggest or most formidable risks that a physician's office may face. Employment practice liability is in the top three. Actually, it's, it is something that has, is with the hashtag Me too, with everything going on with COVID. With everything going on with with they just want to say they change title, handle seven to include LGBT. So there is as far as the risks a doctor may face on on this particular line of of liability. It's up there and we get we get about one of these every every other week. We have one recently where a patient came into a doctor to re employ him into a doctor's office. Like hammered. He was four times at noon, he was four times a legal legal limit. I can't imagine what he was when he came in the office, but he was still practicing still doing what he's doing. So the doctor called What do we need to do to get rid of them? One of the things was we made sure that confirm that she had employment practice liability in place. What with Mexico, what it covers is, it's going to provide defense costs, and you're gonna pay judgments or settlements for sexual harassment, wrongful termination,hostile work environment, and then all the title, the title seven. And I believe that I'm saying that I'm hitting the number correctly on that. But the federal discriminationlawsuits or the federal discrimination protection for employees, that that is that is currently in place. So it's extremely wide. It's not too terribly expensive. You can buy it on a standalone basis or you can buy it in conjunction with directors and officers liability insurance. But it is it is in my opinion, more you have a bigger risk as a physician of getting a a six plus figures judgment against you on employment practice liability moreso than medical malpractice in today's environment.
D.J. Verret, MD, FACS :And you touched on something there directors and officers insurance. So kind of where this, this whole discussion came from? I looked at all of the different insurance varieties and coverages that I had. And that's one of them was employment practices. Can you also touch on directors and officers insurance? What is that in which physicians should be looking at potentially getting directors and officers coverage?
Jim Patterson :Directors and officer coverage, It's much like your medical malpractice is your medical professional liability insurance. The directors and officers as a business professional liability insurance for an easy way to put it where it's it's to protect the decisions a business or a board of directors would make in the course of doing business.It is the coverage is structured to where there is they can't You can't go after board members on Honduras about my thinking. I don't know if I can get away with it. Stop it from when emails Come on. Anyway, the crux of the coverage it's going to provide protection for for owners and/or board members for decisions they may make. And I'm usually when we're looking at DNO insurance. If a practice has outside investors, where you you are bringing folks in purely to invest, and they're not a an owner, because what ends up happening is if you only 10% of the business, you're not there's not going to be any coverage if there's a suit against another board member. So, board member suits against board member suits are not going to be covered. But suits that are brought against the board by an investor if the investment is bad if the investment goes south, if there's anything nefarious going on with it with how to structure the company is that that's where the DNO insurance comes into play. And so it sounds like individual physician practices that prompt directors and officers probably doesn't, doesn't apply to it would be probably larger groups or when you talk about outside investments, like a building that the that the the practice may be investing. It sounds like that's a little bit more topical for the DNO insurance, is that accurate. It is it and I've been I have had individual physicians that are that are very business oriented, that that have that may have their hand and in quite a few things. It's more you look at how the how the liability is going to come at you. So if you have investors, absolutely, definitely want to have DNO insurance.
D.J. Verret, MD, FACS :And one of one of the other one of the other instances for DNO I think physicians, a lot of our physicians may be on boards of directors for volunteer organizations or nonprofits. DNO insurance is pretty important for those folks in for the entities that they're on the boards of is that correct as well?
Jim Patterson :No, absolutely. And one of the services that we do provide for our visit for clients is we will go in and review and assess the insurance that of any nonprofit or any company that may be asking our clients to serve either as a board member or medical director, the directors and officers liability coverage. It's it can extend to outside board members and it can extend to to medical directors. But it's only for their their duties as their their their duties for setting policy and procedure as a medical record. It does not cover any any any of the professional exposures that may be there as a medical director.
D.J. Verret, MD, FACS :Well, let's talk. You know, one of the other big areas, obviously, is HIPAA and online presence. What kind of insurance coverages are available to protect in those realms?
Jim Patterson :Well, there's actually a lot, this is probably the fastest growing area of risk that we see. This is also just about every carrier out there has a cyber liability insurance policy. But you got to be careful because you've seen one you've seen one, it's very easy because of the way the policy structure, you can you can make it look like it's a it's an absolute pristine policy. They we I've seen I've consulted on on on claims and on coverage, where the policy looked great up to the point that it excluded intentional acts by employees, which they would consider a phishing campaign where the employee opens up the email that causes the system to be locked up. carriers, we consider that an intentional act by the employee. So we got to really careful and you got to review the coverage pretty extensively, as it would relate to not only to the cyber liability, but also to health care. Every malpractice policy includes a little bit and I would I would caution every physician out there that the limit you get from the carrier does not even come close to be what you would need for any type of a significant breach. And when I say significant breach, I mean over maybe 20 to 30 breached, breached patients or breached PHI. I would there's a there's a buyer, you can get absolutely from every carrier malpractice carrier, and I would encourage every physician to to to implement none of that coverage but also to make sure you have what you need in place from from the compliance standpoint. HIPAA privacy and HIPAA security. We have we have brought in the Office of Civil Rights to speak on many occasions, and they do not mess around it is and it's even more so today than any time in the future. So it's it is I would put cyber liability. If you're looking at it that at the top five risks a physician has I would put cyber liability second employment practice liability third.
D.J. Verret, MD, FACS :What would be number one, then?
Jim Patterson :Number one would be would be an exclusion this claim if a physician takes medicare medicaid. And in fact, if you fill out your medical aid applications, there are two questions on there. One of them says, one of them and you have to warrant, you have to sign each. After each question you have to sign and warrant. That question is true to the best of your knowledge. With the two questions that they asked them Medicaid is you have a compliance plan and they're talking about billing compliance. And do you check the exclusion list the exclusion list of the checks and balances for anybody that takes Medicare, Medicaid, and Medicare, Medicaid and TRICARE, your there's 38 state and to federal, we were supposed to be able to prove you checked each one of those lists monthly, or your violation of your agreement of what's required to take to be qualified to take Medicare, Medicaid and TRICARE. We recently had a situation with a client and this is why I say it's the biggest risk because they can it's the exclusion list and the way that law that surrounds at its administrative law with with within CMS, they can come back against physicians, and recoup what that doctor owes. If they determined they did not qualify to take Medicare, Medicaid, we had that happen. We had a doctor that had an addiction problem in 2010. He went he went to treatment, he got cure, and I cured him. He went through the medical board program called conditions didn't lose his license. In 2019, CMS came back and recoup everything that doctor build out from 2010 to 2015. This particular coverage, it's called med defense that protect they can protect the practice, it will provide defense costs, it will provide the known actuarial but mathematical resources to able to go back and challenge the algorithms that CMS may come up with or that the payers may come up with, to extrapolate against a statistical viable sampling of your practice, when they would extrapolate that you ever charged on on these CPT codes. We're going to extrapolate that to your entire practice. And it sends you a bill for a million dollars. It helps fight that it helps, it helps also it will defend you up into the point that you get indicted. I mean, the reality is every doctor that was indicted by the by Forest Park, their carrier should have paid them up to $100,000 within defense costs. That was that was included within each policy malpractice policy, those doctrines and so it's extremely broad coverage. But it's a it's something that we have seen we have not seen many many very many practices at all that that are that would be able to weather investigation with regard to how the billing compliance side of things.
D.J. Verret, MD, FACS :Let's take a maybe a little bit of a broader step out and talk a little bit about just commercial business insurance. Why would a medical practice look at having commercial business insurance and and what kind of coverages does that offer?
Jim Patterson :those practices. It's called a business as a business owners policy or a BOP policy B-O-P. It combines property, your contents, everything within your practice and and the premises liability. The reason why a physician would have to have this coverage is anytime you sign a lease, you're required to have a premises liability insurance. And in fact, a lot of the payers are now also requiring that you carry where you prove you have on top of malpractice insurance, general liability insurance or premises liability insurance. The good news is you can also include your computers you can include. If you have an MRI, or a CT or a C-arm, anything along those lines, we can include that coverage under your business owners policy. If you leave that coverage, you don't have you can you don't have to buy the insurance from the company you lease it from. We can include that coverage for you under the business owners policy and much cheaper rate. But we also can include building insurance. For for if the physician owns either the building or a condominium, we can include coverage for all that under that one with that one covered structure. Now, let's talk on that policy. So we've talked before obviously my dad's in an insurance agent as well. And he's told me in the past his largest payout, he's a commercial, commercial and residential lines. rider, he doesn't do malpractice. So that kind of thing. But he said his largest payout outs, even with houses burned down with floods, he's in South Louisiana, his largest payout was actually a employee who tripped and fell and had a bookcase fall on her. And that ended up being a huge payout for the business. And that was covered under the business policy, which is filled with a worker's comp, but it was a business owners policy. Yes, yes. With those kinds of liabilities, though, for instance, if you have a patient that walks in the door happens to trip and fall. Where does that like, Where Where is that coverage? Is this the business owners? Are we looking at something else? Well, no, it's going to be the business. And it's a really good question, the reality, the reality for every medical practices, the covers the premises liability policy, and this is every carrier out there. And we've had a couple of these come in, where it's a seven fall from the front door to the door, going back to the patient area patient, the patient rooms, if it's a slip and fall there, then it's going to be covered by by the premise aside, literally, if you're walking down the hallway, and they trip, it should also be covered. If you're in the exam room, they're not going to cover it, there's on the end, what ends up happening is there's a section of the general of the premises liability policy called medical payments. medical payments, are they when you when you use them, they do not you don't have to prove liability, it's there's either five or $10,000, that if the patient falls, it's enough money to get them in an ambulance and give them the hospital or the ER to get them treated. Anything over those amounts, that patient would then have to see the practice for any additional relief. But the five to $10,000 should cover the expenses surrounding this a simple slip and fall where they have to go to the ER and get it fixed up or get a cash or whatever.
D.J. Verret, MD, FACS :Within that business, business policy. Sometimes I've also seen business interruption insurance what what all does that cover because I think that's an important topic right now during COVID. Time.
Jim Patterson :It is. And I will note for the because we've done we've looked at the COVID very closely as far as pandemic insurance. And there has not been any available or any readily available in the commercial market. The only time that we've seen any kind of coverage for a pandemic like this, and the only the only coverage that we've seen responding on this is event insurance, like the Olympics, they had a covered for that for for for a pandemic, a lot of people are pushing the seeds to get the carriers to to cover business interruptions due to a covered cause of loss, unfortunately, it's going to cover you if the business interruption section, if you have a fire if you have a hurricane, if you have a if you have a tornado, something that's a covered cause of loss on the building insurance, that that has to shut your business down. It's going to cover both the extra expense of if you have glass breakage or you you have damage to your MRI, and you have to have it drop shipped. It's going to cover those extra expenses. But then I'll also cover the business interruption, basically which what they're looking at is what did you make last year? And what did you make this year and that difference would be the business interruption that they would end up paying.
D.J. Verret, MD, FACS :One of the other one of the other coverages that I have, it's actually part of disability as business overhead coverage. Can you maybe talk a little bit about that as well in because that covers in addition to in addition to my disability, it'll cover office expenses. So maybe put that in light of who needs to be looking at those kinds of coverages.
Jim Patterson :I mean, given given the because we've talked a little when I got I'm a certified medical compliance officer. So when I got my credentials through Practice Management Institute, we talked a lot about about the fact that this was this is relative to a physician that may take medicare medicaid, if there was an issue with administrative law, the lawyer who was teaching the class in every practice should have at least one month if not two months in savings to cover any issues that may come up from if in essence, if the siphon if the if the water pump gets shut off orwhatever reasons we get cut back, you got to be able to have enough money in the bank to be able to keep the practice going. That's that's that that's really true with COVID. But that's that's what business overhead insurance is. If a physician gets injured, do or gets gets gets sick or injured, like a disability policy, that overhead insurance is what's going to cover the expenses for that physician, individual physicians, it's imperative, but also improves where you have, where you have different partners that may pay for different portions of the practice, that business overhead is critical, because the other partners are paying for their part if if one physician gets sick, but gets injured, even with COVID-19, I think it's even more critical now. Because if someone gets sick, and they're down for a while, you don't want to have the business lose your business, because
D.J. Verret, MD, FACS :Let's talk let's talk worker's comp. Because that in the state of Texas, you aren't actually required to have workers comp. But but I think it would probably be a really bad idea not to so maybe you can kind of fill us in on some of the liability that that helps to cover.
Jim Patterson :Absolutely. Workers Compensation is it's a twofold in the state of Texas, you can opt out of out of the workers comp system, the beauty of workers comp is it gives you a complete solution for any claim against an employee may have. So if an employee gets coded, if their employer and they can entire, they tie it back to the practice, if they slip and fall, if they get a needle stick and get get and get injured somehow in the practice. A big one is if they're driving, to get lunch or driving to go to the store to the bank, and they get in a car wreck, anything they're doing on the clock, the the either the physician or whoever employs them, is absolutely responsible for their actions or for for their safety, whether on the job, if you have workers comp, that employee cannot turn around and bring suit back against the employer. If the employer does not have workers comp, technically, what you're supposed to do is use a form you're supposed to fill out with been filed with the Secretary of State, opting out of comp, when you opt out of comp, then you lose your statutory defenses, which are which are that again, that that that complete solution for that claim, you lose that and that employee can then sue you directly for employers liability, because of what happened on the job. And so it's the cost, the cost used to be extremely cheap, because of COVID, the class code 8832, which is for physicians, the prices are going up. So it's it is in that the fat tells you anything that when the rates go up means you're paying more claims. And they're seeing a lot more claims activity within this area of insurance for physicians offices
D.J. Verret, MD, FACS :During during that discussion. You mentioned physicians being responsible when employees are on the clock and somebody's running to get lunch. What happens if the employee gets in a wreck? And what liability is there to the person that the employee got in a wreck with?
Jim Patterson :Well, we asked a great question because it's called hired and un-owned auto liability insurance. It's a you can include that within the business owners policy, there's some additional coverages you can include that we always recommend, in fact, I we we actually have to have clients give us in writing, they do not want the higher non-owned auto liability insurance because it's such a big, it's so cheap to buy, it's like $500-$600 a year. And it gives provide such a large a large amount of coverage, that we want to make sure that anybody that does not does not buy it, they they recognize that there is liability in that liabilities back on them. Because if that employee is on the road, and they're on the clock, and they hit and kill somebody that whoever that employer is they are responsible for their actions and their they will be absolutely 100% responsible for that death claim. And that's where you see Jim Adler and the Texas hammer and all those guys, that's what they're going after. And I will tell you I've had I've personally been involved in claim law on the clock. And the numbers they they pay out is astronomical. I mean it's it's just a fender bender, the the plaintiff ended up getting a couple hundred thousand dollar data. So it's something that that that it is very it's a critical component of any risk management program for a physician's office.
D.J. Verret, MD, FACS :One of the other things that that I've seen discussed on message boards a lot and I have one of the policies is a is an umbrella liability policy? Can you kind of speak to what what those are what they cover, and the differences between a personal umbrella liability and a business umbrella liability?
Jim Patterson :That's a good question in as far aspersonal liability, the that's going to be on the homeowner side. And in fact, our we had if there's ever any questions along those lines, I can put any physician in touch we have a very robust homeowner side and and high net worth individual for people that own property. There's there's very specific programs that are available for them. As far as the the the umbrella, your pressure umbrella is going to extend the liability limit from what you have in your primary policy, it extends it up to whatever that limit you buy. on commercial umbrella with that with that provides coverage for is there's three areas it's premise sustainability, worker's compensation, and business auto liability insurance. And so it extends those limits that you currently have up to whatever the umbrella limit is. So if you have a million dollar umbrella, and you have a million dollar underlying on your business policy, well, then you can then the the workers comp, the employers liability, the general liability, or premise visibility and the higher not on auto liability. If your business owners policy all can have claims up to that $2 million limit, you can also raise individual limits, if you don't want to buy the whole thing, you can raise individual limits up to two higher limits if you want to as well, kind of achieving the same goal. And when you're talking about cost on that, if you gave the example of the business policy having a million dollar limit, and then an additional million dollar umbrella, are you talking about that umbrella being the same price as the business liability, or are the umbrellas more or less expensive than the underlying coverage, it's gonna be less, it's gonna be less expensive, because it's an excess policy. And you don't, you don't, you don't see many claims on premises liability, or even a higher number, auto liability piercing that initial, that underlying limit of me call it a million dollars. So you're the pricing gears goes way, way down on that. But you're looking for an umbrella, anywhere from 500 to $1,000, just depending. Now, I will say my largest claim that I've that I've ever been involved with was a was a unfortunate, very sad situation, that a lady got raped in a parking lot. And that parking lot, the building owner of that parking lot was hit for $10 million. And so I always recommend that if you have a straight prep business, a strict practice we might need may not be as as have as great of a need for an umbrella, it's going to depend on the risk tolerance of the of the other physician or the practice. But if you own a building, we always recommend it. Because that parking lot is probably the biggest liability risks that you face. Whatever happens in that parking lot is going to be back on the business owner. So if the physician owns the building, then we highly encourage an umbrella because it gives an additional limited liability. If something bad happens in the parking lot someone pulls up. You could have an active shooter you could have anything involving that those kind of things, where the liability just goes off the charts. So that's that's one of our top recommendations.
D.J. Verret, MD, FACS :Well, Jim, thanks for all of the information. Is there anything else any other takeaway or policy or coverage I may have forgotten to mention that you think are physicians would be interested in?
Jim Patterson :Well, there is and it's something that a lot of doctors are having to do now just because of the time because of the times is if a physician is is providing a medical director or providing oversight for the nurse practitioner, physician's assistant, whatever, whatever entity whether it's a med spa or or a power scene, a lot of nurse practitioner run practices with a physician provides oversight. There's only one carrier out there will provide the director the the medical directorship coverage that's needed to protect the physician because what ends up happening is you can't just get a include the medical director ship on a standalone basis or as part of the professional liability for let's say the Med Spa because it unless you unless you really ask and make sure it covers covers the physician for direct patient care because the malpractice claims that will come in as it would relate to medical directorship. It's going to come in not as a medical suit against them. Medical record but a suit against the physician for the for the for the the oversight of that direct patient care. So it's a lot of actors are doing it now and they're not covered correctly because none of the non practice carriers team on team is the only carrier that will offer medical direct ship coverage m will extend to if that if that physician is involved in the case of in sued for direct patient care, none of the other malpractice carriers will provide that coverage. So you either have to go to a third party or you have to make sure that that nurse practitioner physician assistants are meant for whatever it is, is writing that coverage. Let's begin one of the things we do is help our clients drill down on that and make sure they're covered proper.
D.J. Verret, MD, FACS :Well, Jim, I really appreciate you joining us. You've been listening to Ask Me MD, medical school for the real world. We've been talking with Jim Patterson of Coverica about all of those insurance policies you didn't know you need, but you did. I'm Dr. DJ Verret make it an awesome week. T
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