Advertising Services

Anne M. Menke, RN, PhD, OMIC Risk Manager

Digest, Summer/Fall 2004

Allegations related to physician advertising are surfacing with increasing regularity in medical malpractice claims. In addition to alleging lack of informed consent, patients are using state consumer protection laws to claim that the physician defrauded them. This exposes the physician to punitive damages and other uninsured risks.

Physician advertising is regulated by state law as well as by the Food and Drug Administration (FDA) and the Federal Trade Commission (FTC) under provisions of the Food, Drug, and Cosmetic Act and the Federal Trade Commission Act (FTCA). The American Academy of Ophthalmology (AAO) and the American Society of Cataract and Refractive Surgery (ASCRS) have issued guidelines to advise their members on relevant ethical and professional standards.

Advertising “includes any oral or written communication to the public made by or on behalf of an ophthalmologist that is intended to directly or indirectly request or encourage the use of the ophthalmologist’s professional medical services … for reimbursement” (ASCRS Guidelines). These guidelines therefore apply to print, radio, and television advertisements as well as to informational brochures, seminars, videos, and the Internet.

The FTCA prohibits deceptive or unfair practices related to commerce and “prohibits the dissemination of any false advertisement to induce the purchase of any food, drug, or device.” The FTCA and the professional guidelines state unequivocally that advertising for medical and surgical services must be truthful and accurate. It cannot be deceptive or misleading because of (1) a failure to disclose materials facts, or (2) an inability to substantiate claims – for efficacy, safety, permanence, predictability, success, or lack of pain – made explicitly or implicitly by the advertisement. It must balance the promotion of the benefits with a disclosure of the risks and be consistent with material included in the informed consent discussion and documents.

Lack of Informed Consent Allegations

When not carefully crafted, advertising runs the risk of overstating the possible benefits of a procedure and potentially misleading patients into agreeing to undergo surgery without fully understanding or appreciating the consequences and alternatives.

In a sense, an advertisement becomes a ghost-like appendage to boiler-plate informed consent forms. If an advertisement overstates the benefits, misrepresents any facts, or conflicts with other consent documentation or patient education material, it can potentially make a jury believe the physician may have overstepped the line of ethical propriety by creating unrealistic patient expectations. Legally, such a scenario might allow a jury to conclude the patient was not given a full and fair disclosure of the information needed to make a truly informed decision.

Punitive Damages and Other Uninsured Risks

Another pitfall for the ophthalmologist who markets medical services are state laws that may allow the plaintiff to ask for punitive damages, which could double or treble the amount of money awarded to the patient by the jury. Physicians should be particularly concerned about such allegations since most professional liability insurance policies, including OMIC’s, do not pay for such damages.

OMIC’s underwriting guidelines state that advertisements and marketing materials must not be misleading, false, or deceptive and must not make statements that guarantee results or cause unrealistic expectations. In addition, insureds are required to abide by FDA- and FTC-mandated guidelines and state law. OMIC has specific policy language limiting its professional liability coverage to defense costs for claims related to misleading advertisements. No payment of indemnity will be made.

Therefore, if a plaintiff is alleging medical malpractice and has an added allegation of fraud, your OMIC policy will provide defense for both the allegation of malpractice and fraud but would limit any indemnity payment to awards related to the medical malpractice allegation of the lawsuit.

Review of Advertisements

OMIC has developed tools to prevent and/or minimize the risk of these complex cases in the first place and strongly encourages its insureds to evaluate their own advertisements for compliance with policy guidelines. For online assistance, download the attachment. Under Advertisements for Medical/Surgical Services, you will find a “Review of Advertisement” form to help identify aspects of your advertisement that may be misleading or deceitful. OMIC policyholders who have additional questions or concerns about advertising may contact the Risk Manager at (800) 562-6642, ext. 651.

1/2014 Bylaws & Update

Bylaws Jan 1, 2014

Changes to OMIC’s Bylaws

OMIC’s Board of Directors implemented several changes to the company’s governance structure effective January 1, 2014. It added a Nominating Committee and a Reinsurance Committee and changed some of the term limits and nomination procedures for various other committees. Minor revisions were made to the Bylaws on September 13, 2014, to update the charges of the Treasurer and Secretary. Click on the bylaws image to download a PDF copy of the bylaws.

See the 9/2014 Bylaws changes here: BYLAWS CHANGE 9.13.2014-Bylaws Insert

2013 Policy Booklet

OMIC is pleased to announce that the Broad Regulatory Protection and e-MD Protection coverages provided in OMIC’s Professional and Limited Office Premises Liability Insurance policy have been enhanced for 2013 at no additional charge. This article is a summary; for a complete review of your coverage, please refer to the OMIC policy.

Highlights of Changes in 2013 Additional Benefits in the 2013 OMIC Professional and Limited Office Premises Liability Policy: 

Peer review coverage

OMIC’s Broad Regulatory Protection (BRP) reimburses insureds for legal expenses relating to regulatory proceedings, which include billing errors, DEA, EMTALA, HIPAA, covered licensing, and STARK proceedings. BRP also covers fines or penalties related to billing errors, EMTALA, HIPAA, and STARK proceedings. While OMIC’s policy already covered actions by regulatory agencies and state licensing authorities under its Disciplinary Proceeding Protection and BRP, in 2013, it added peer review bodies to the list. Under BRP, OMIC now reimburses legal expenses for professional review actions by the review body of a hospital or other health care facility that could adversely affect the insured’s clinical privileges there.

e-MD additions

As insureds continue to move more of their records, communications, and marketing online, coverage for cyber liability risks becomes more crucial. OMIC’s e-MD Protection now provides seven different coverages. One of the 2013 additions is Multimedia Liability Coverage. It covers claims made against the insured for the display of any electronic or print media by the insured that directly results in defamation, invasion of privacy, plagiarism, or copyright infringement.

Another new coverage is Network Asset Protection. It covers digital assets loss, that is, the expenses necessary to restore or replace the insured’s damaged or stolen data and computer programs, because of accidental damage, operational mistakes, or a computer crime that an insured failed to prevent. It also covers the insured’s income loss and interruption expenses incurred during the time it takes to restore these digital assets.

e-MD Protection now also includes Cyber Extortion and Cyber Terrorism Coverages. Under Cyber Extortion Coverage, OMIC pays money to stop the person responsible from executing a credible threat to release confidential information or corrupt the insured’s computer system. Cyber Terrorism Coverage pays income loss and interruption expenses during a period of restoration of the insured’s computer system required because of an act of terrorism.

e-MD enhancements

While the following provisions are not new, they have been enhanced. The e-MD Security and Privacy Liability Coverage covers claims made against the insured for security and privacy wrongful acts. The Security and Privacy Regulatory Defense and Penalties Coverage covers legal expenses and regulatory fines, penalties, or compensatory awards the insured must pay because of such acts. Many acts fall within the definition of security and privacy wrongful acts. For example, a security and privacy wrongful act occurs if an insured fails to prevent unauthorized access to or infection of the insured’s computer system (a “security breach”) that results in destruction of electronic data stored on the insured’s computer system, unauthorized disclosure of confidential information that is in the insured’s care, or unauthorized access to a computer system other than the insured’s. The insured’s failure to prevent the transmission of computer viruses from the insured’s to a third party’s computer system is also a security and privacy wrongful act. A privacy breach, i.e., a breach of confidence, a violation of rights to privacy, or a violation of laws associated with the control of personally identifiable financial or medical information, also constitutes a security and privacy wrongful act.

The Security and Privacy Breach Response Costs, Notification Expense, and Support and Credit Monitoring Expense Coverage now covers the cost of employing a public relations consultant to mitigate damage to the insured’s reputation due to a publicized report of a privacy or security breach. It also covers the expenses of notifying affected individuals in the event of such a breach. Finally, it pays for the provision of customer support in the event of a privacy breach, including credit file monitoring and identity theft assistance.

The BRP and e-MD per proceeding/claim and aggregate (all claims in a policy period) limit is $50,000. The BRP and e-MD Protection coverages also include a two year extended reporting period if the insured acquires tail coverage for the policy.

If you have questions about these policy benefits, please call 800.562.6642, ext. 661.

If you need to report a proceeding or claim, contact OMIC’s Claims Department at 800.562.6642, ext. 672.

Checklist for Risk Analysis of Unapproved Devices

By Anne M. Menke, RN, Ph.D., OMIC Risk Manager

Revised 7/2003

DISCLAIMER:  This information is intended solely to provide risk management recommendations. It is not intended to constitute legal advice and should not be relied upon as a source for legal advice. If legal advice is desired or needed, an attorney should be consulted.

This information is not intended to be a modification of the terms and conditions of your OMIC policy of insurance. Please refer to your OMIC policy for these terms and conditions.

The FDA approves and regulates the production, sale, and clinical research of medical devices.  It does not directly regulate the practice of medicine.  Prior to using an unapproved device, use this checklist to perform a risk analysis to determine the patient safety and professional liability risks associated with its use.

• What is the device?
• What is its FDA status?
  • Unapproved but undergoing clinical trials under an IDE (Investigational Device Exemption)
  • Unapproved but not yet undergoing trials
  • Unapproved and unlikely to undergo trials
• Who is manufacturing the device
  • A manufacturer or compounding pharmacy
    • Is the manufacturer or compounding pharmacy reputable and known to you?
    • Does the manufacturer or compounding pharmacy follow industry guidelines for sterility and quality assurance?
      • Keep material documenting the sterility and quality in your file on the device
• Are you distributing or reselling it?
  • If the device is labeled, promoted, or distributed in US, it is regulated by the FDA and subject to pre-marketing and post-marketing regulatory controls to assure safety and effectiveness
  • Distributing or selling greatly increases risk of FDA action
• How are you using it?
  • Research:
    • Gathering new information on multiple patients for publication purposes, or to obtain approval for a new device or a new use of an approved device, is probably research and requires an IDE
    • Part of an IDE (Investigational Device Exemption) to collect safety and effectiveness data required to support the PMA (pre-market approval) application to the FDA
      • Follow federal and state requirements for
        • obtaining approval of an IRB (Institutional Review Board) for the trials and
        • obtaining informed consent of the patient for research on human subject
        • disclosing any financial interests/incentives
  • “Practice of medicine”
    • Not for research AND
    • Use based on firm scientific rationale and sound medical evidence
    • The “practice of medicine” is theoretically unregulated by FDA but some case law exists limiting the use of unapproved devices as part of the practice of medicine
• What role does the device play in the treatment?
  • Does the treatment consist primarily of using this device?  If so, the risk of using it prior to FDA approval is greater
    • Example:  Restylane, used for lip augmentation and facial contouring
  • Does the device play an ancillary or supportive role in the performance of a procedure or treatment?  If so, there is less risk.
    • Example:  use of the dye, trypan blue, to stain the anterior capsule to facilitate visualization during cataract surgery
• What are the patient safety risks and how do you know about them?
  • Has a federal agency or state regulatory agency specifically banned the use of the device because it was determined to be unsafe?
  • Is there sound medical evidence supporting the use of this device?
  • Have peer reviewed articles been published supporting the use of this device?
    • Keep a file containing these articles and presentations
  • Can its use be expected to bring good results without a higher complication rate?
  • If there is an increased risk, do a reasonable number of physicians in your specialty use the device?
  • Is the use of the device in the best interest of this particular patient?
• Is the procedure “therapeutic” or cosmetic?
  • Therapeutic use of an unapproved device is less risky than cosmetic
  • If cosmetic
    • Does the patient have reasonable expectations?
    • Has the patient had problems with other treating physicians in the past?
    • Is he or she set on a certain procedure because of advertisements and recent popularity?
    • What are the patient’s motivations for having this procedure?
    • Does the patient fully understand what this procedure entails and the possible outcomes?
    • Does the patient understand that he or she will have to pay out-of-pocket not only for the procedure but also for any enhancement or follow-up?
• Informed consent discussion
  • Content of the discussion
    • Nature of the device or technique
    • Scientific basis for its use
    • FDA-unapproved status
      • It is always prudent to respect patient’s right to obtain the information needed to make reasoned decisions about his or her own health care
      • If physician reasonably believes that the approval status of the device will be a factor in the patient’s decision, disclose the information
      • Benefits
      • Risks
      • Alternatives
      • Possible drawbacks or criticisms from other practitioners
      • Especially with cosmetic procedures, other options and possibility of obtaining 2^nd opinion
  • If part of research or IDE
    • Must follow federal and state guidelines for informed consent
  • If not part of IDE
    • Consult legal counsel about whether state law requires physician to disclose the device’s unapproved status to the patient as part of informed consent discussion
  • Document the informed consent discussion of the risks, benefits, and alternatives, and include the fact that the patient was informed of the device’s unapproved status
    • If the treatment consists primarily of using the device, consider developing a specific consent form for the device that outlines the risks, benefits, and alternatives, and the FDA status, and give the patient a copy
• Verify coverage with your professional liability insurance carrier
• Consequences of violating the FDCA (Food, Drug and Cosmetic Act)
  • May be evidence of breach of the standard of care and result in determination that medical malpractice has occurred
  • May constitute negligence per se, due to statutory violation
    • Easier to prove if state law is stricter than FDCA and specifically prohibits the use of unapproved devices
  • Prosecution by FDA
    • Unlikely if only practice of medicine, and no distribution or sales

Large Loss Indemnity Payments and Limits of Professional Liability

By Paul Weber, JD

[Digest, Winter 1997]

An area of great interest and concern to OMIC insureds and prospective insureds is that of large indemnity payments against ophthalmologists. This subject often comes up when ophthalmologists are deciding what limits of coverage they should obtain. Many ophthalmologists want to know the “worst case scenario” so they can select sufficient limits to protect their personal assets should a claim arise. This article briefly reviews ophthalmology claims statistics and OMIC’s large losses; however, this information is just one component of the detailed analysis necessary to correctly determine specific individual coverage limits.

Overview of Claims

First, it is important to understand that the overwhelming majority of claims against ophthalmologists are settled with no indemnity payment to the plaintiff or claimant. Of the 479 closed claims in OMIC’s database, approximately 77% (368) were resolved with no payment to the plaintiff. A review of the Physician Insurers Association of America (PIAA) claims database of 3,714 closed claims against ophthalmologists also reveals that approximately 70% of those closed claims were settled with no indemnity payment to the plaintiff. Second, the average (mean) OMIC indemnity payment is approximately $113,880; the median payment is approximately $50,000. The PIAA data average (mean) payment is $123,823.

Approximately 15% of OMIC’s paid claims (17 cases) closed with a “large loss,” that is, $250,000 or more. While these claims make up only 15% of all paid claims, they represent 59% of OMIC’s total paid indemnity. OMIC’s average (mean) “large loss” is $433,285. Interestingly, there is a striking similarity between OMIC’s and PIAA’s large ophthalmic losses: 15% of all paid PIAA ophthalmic claims are $250,000 or more and represent 54% of the total indemnity paid; the average (mean) large payment is $454,578.

OMIC’s Large Losses

One notable aspect of OMIC’s large losses (see table) is the variety of procedures and treatments from which claims arise and the different subspecialties represented. The largest number of losses (8) has occurred against general ophthalmologists – not surprising since this is the largest group OMIC insures. However, four subspecialties are represented in the top five large losses, indicating that these large losses occur across a broad range of subspecialties.

The assortment of procedures and “medical misadventures” (e.g., failure to diagnose, improper performance, etc.) is also quite diverse. Failure to diagnose or delayed diagnosis resulted in the largest percentage (40%) of the paid large losses. But medication errors, improper performance during surgery, and failure to refer or manage patients show that there are various ways in which large losses can arise against ophthalmologists.

One significant factor that can affect large loss cases is when multiple defendants are sued. Unfortunately, this can have the effect of codefendants blaming each other for the injury caused to the plaintiff. This often occurs in cases of ROP when there is a breakdown in communication over who is managing treatment of the baby (e.g., the pediatrician or neonatologist) during and after hospitalization. This problem is not limited to ROP cases, however, as evidenced by the four other large loss cases where multiple defendants were involved.

In conclusion, there are many factors to consider when selecting coverage limits of professional liability, including the fact that large losses can occur across the spectrum of subspecialties and procedures. At the moment, however, OMIC has not paid any loss in excess of $1 million in its ten year history, although some doctor-owned companies have reported ophthalmic indemnity payments over $1 million.

Note that indemnity payments are predicated on many complex medical and legal factors. Similar procedures and outcomes could result in significantly different indemnity payments.

*Indicates other codefendants in case; additional indemnity over and above the OMIC payment was made to plaintiff.