Before you Sign: A Couple of Things You Should Know When You Enter Into Your First Employment Agreement

Many young ophthalmologists are understandably nervous before signing their first employment agreement with another ophthalmologist or ophthalmic group. It’s natural to wonder not only about the right path for your career, but also how to protect your interests within insurance and employment contracts. Here are a few things to consider.

You should know what you are agreeing to within your employment agreement. Look for clauses that address your responsibilities.

You should look for any clauses that specifically address issues or requirements about your insurance. The agreement may state that you are required to purchase a certain amount of coverage. The most common liability limits are $1 Million/$3 Million, which means your policy provides coverage of $1 Million for any single claim, and $3 Million for all the claims in a given policy year. Your hospital will most likely also require that you carry a certain level of coverage as a condition of employment or yearly credentialing for your surgical privileges. If you are able, or required to, secure your own coverage make sure that your policy complies with your contracts.

Look for clauses that may require you to pay for all or part of an extended reporting for claims filed related to services performed during your employment. This coverage is also referred to as a “tail” policy. Here is a short background of tails:

Why is a tail policy needed? Most malpractice policies are written on a “claims-made” form, which means your coverage will be triggered when a claim is filed, not when your patient’s visit, procedure, or surgery took place. Because a claim could be filed several months or even years after your active coverage ends (i.e. your employment has ended and your coverage ends on your termination date), additional coverage is usually required to continue the reporting time for claims to your carrier after your active coverage term ends. This is called “tail” coverage. Your employer may want to shift the cost of that to you (or have you share in that cost). That is a negotiable term of your employment and should be considered before you sign. Tails can be expensive. In general they are approximately 200 percent (sometimes higher) of your annual premium at the time of cancellation.

Must I always purchase a tail policy? No. A tail policy is not always required when you leave employment unless you and your employer agree to this in advance. For instance, OMIC’s policy is portable and can be taken with you when you change positions or geographical areas. We would simply underwrite your new practice situation, change vital coverage information and re-rate you (if necessary) for your new practice situation. You may have your policy provide continuing coverage for claims filed in the future, even if they were related to services you rendered while an employee of your past practice. This is called “prior acts” or “retroactive” coverage. You either purchase a tail or prior acts coverage, not both.

Your employer may want to require you to purchase a tail, however, so that they can make sure coverage exists for your direct liability during their employment of you. This ensures they are not found vicariously liable to cover a claim against you (your direct liability) because you failed to secure continuing coverage after leaving employment (for claims arising from the time you were employed by them). FYI: Your employer always has vicarious liability for your actions as your employer, however this is secondary to your direct liability for your actions as their employee.

You may want to have a tail provision in your employment agreement because when you terminate employment and begin practice someplace else the cost of your new policy will be significantly higher if it includes the coverage for your past employment period.

Note who is responsible not only for paying the yearly premiums while the policy is active, but also who is required to pay for a tail should employment be terminated. This may be negotiable.

Learn how to spot “hold harmless” clauses and how they may affect you.

There is a growing trend for physician employment contracts to contain language requiring the physician to indemnify a hospital or contract management group for any losses related to the physician’s employment. Such indemnification agreements can often be against a physician’s legal interests. Try to have indemnification clauses removed from the contract, if possible. If the clause cannot be removed, try to replace with a narrow, mutual hold harmless clause in which each party agrees to indemnify the other for losses arising solely from the party’s negligence. You can read more about Hold Harmless Clauses and also refer to Hold Harmless Clauses May Increase Physician’s Liability.

Confused or have additional questions? Call us at (800) 562-6642, ext 654. For more tips about early practice see:

6 Things a Young Ophthalmologist Should Know About Malpractice Insurance

Take An Active Role When Reviewing Your Professional Liability Application and Policy Documents

Be engaged when reviewing your insurance protection to avoid unpleasant surprises down the road. The average ophthalmologist will be sued two to three times during their career. Make sure you are comfortable with the company that is protecting you, the policy terms and conditions, and the process for maintaining your applications and policy forms. It’s understandable that you may not want to pay much attention to such these issues now, but you will be glad you did if/when a claim notice arrives in your inbox. Here are a couple of things to note.

Even if someone else is purchasing insurance coverage on your behalf, you are solely responsible for your professional liability.

You are responsible for defending yourself should a claim be filed against you. You cannot transfer this personal liability to another ophthalmologist, partnership, or corporate entity. You also cannot have another party initiate, modify, or terminate your coverage for you. Although your employer may have some additional vicarious, or assumed, liability as your employer, that liability is a completely different and separate issue from your own personal professional liability.

Avoid situations where a staff member simply completes all the insurance forms for you and says “sign here.” At the very least take some time to carefully review all forms if some of the form was completed on your behalf. If anything is unclear ask questions before signing a new (or renewal) application or any other document that may affect your coverage. Often physicians feel that the “business” side of the practice is better left to the staff whether it is handled by a credentialing person, office manager, administrator, or CEO or CFO. But your staff will not be the target of a malpractice claim should one be filed. You will be. You, as the physician, will be responsible for both you and the actions of your staff and your coverage could be affected if you signed a form that contains erroneous, misleading, or false information.

You have the right, and even a responsibility, to know the details about your insurance company and the policy covering you.

You may feel a little uncomfortable asking for details of the insurance coverage maintained by a prospective employer. Don’t be. As mentioned above, it is in your interest to know how your coverage works. You’ll want to know the limits of liability your policy provides, whether there is a deductible (also know as a self-insured retention), coverage restrictions or requirements, and additional benefits that would be available for you personally.

You should also do some research on the company including looking up the AM Best report to make sure that it is a reputable, highly rated, carrier. If you join a group practice who tells you “we’ll take care of all of that for you” you may want to politely thank them but also ask for either a short summary of the insurance coverage provided by the group or copies of the insurance documents such as the declarations page showing you listed along with your coverage details. Asking questions about your coverage with a sincere interest in learning about the insurance protection that is in place to protect you is in your best interest and should be looked at as a positive attribute by your employer. If they don’t know or are not interested in researching the answers to these or other questions, it may be a red flag.

Call OMIC’s sales department for answers to basic questions about insurance or visit the Insurance 101 page.

Behind the Scenes: How OMIC Considers Coverage for Procedures That Could Present a Higher Risk

When making the decision whether to offer coverage for procedures that could present an increased risk to the company or our policyholders, OMIC examines many factors we believe may affect the defensibility of claims. We collect available peer-reviewed literature that supports the safety and efficacy of the procedure and solicit input from a variety of experts in the specialty regarding standard of care issues and risks, benefits, and alternatives.  We also attempt to determine the percentage of ophthalmologists currently performing, or intending to perform, the procedure. Finally, we consult with attorneys regarding potential legal obstacles, including suggested strategies for mitigating exposure to claims or lawsuits.

Because OMIC’s premiums are directly related to the shared claims experience of our policyholders, continued review and management of identified risks is essential to maintaining OMIC’s industry-leading operating performance. Our mission is to provide comprehensive coverage for the full scope of ophthalmic practice while maintaining competitive rates and consistent above-average dividend returns.

Recent Example

After careful consideration and analysis of available data regarding the performance of immediately sequential bilateral refractive lens exchange and phakic implant surgery, OMIC has approved coverage for these procedures subject to special conditions for patient selection, informed consent, and surgical protocols. Policyholders performing these procedures require a special coverage endorsement. If you need to add this coverage or verify the current endorsements on your policy, contact your representative. To review OMIC’s required protocols for immediately sequential bilateral refractive lens exchange and phakic implant surgery, visit http://www.omic.com/policyholder/am-i-covered-for-performing-bilateral-same-day-rle-or-bilateral-same-day-phakic-implant-procedures/.

Interpreters for Limited-English-Proficiency Patients: Recommendations

Physicians are well aware of the central role clear communication plays in the physician-patient relationship.  Patients who have limited English proficiency (LEP) present special challenges to effective interactions. Ophthalmologists often have questions about how to obtain and reimburse interpreters, and whether family members can fulfill this role. Interpreters for Limited English Proficiency Patients provides some basic information on federal rules on these topics, and presents risk management recommendations on how to best meet the needs of these patients and the practice.

To access the recommendations, please click on “document” in the paragraph above, or on the “Download” button.

Interpreters for Deaf Patients: Recommendations

Physicians are well aware of the central role clear communication plays in the physician-patient relationship. Patients who are deaf present special challenges to effective interactions. Ophthalmologists often have questions about how to obtain and reimburse interpreters, and whether family members can fulfill this role. Interpreters for Deaf Patients provides some basic information on federal rules on these topics, and present risk management recommendations on how to best meet the needs of these patients and the practice.

To access these recommendations, please click on “document” in the paragraph above or on the “Download” button.