The Cooperation Clause
By Kimberly Wittchow, JD
OMIC Staff Attorney
Digest, Winter 2005
In order to properly investigate and defend a medical malpractice claim, the professional liability company and the insured must cooperate. The participation of the insured, who is the subject of the lawsuit and holds first-hand information about the incident, is crucial to his or her own defense. Without such cooperation and assistance, the insurer is severely handicapped and may even be precluded from advancing any defense.
While the litigation process nearly always progresses successfully, there are times when some insureds thwart the resolution of their claims by failing to cooperate. Insureds may believe they have done nothing wrong and therefore avoid any work to counter the plaintiffs’ allegations. Or, afraid of the consequences, they may keep vital information away from their defense attorney until late into the case development. They might not understand the importance of their presence at litigation proceedings (such as depositions, mediations, or arbitrations) and worry about taking time away from their practice. Some attempt to handle matters “on their own” by discussing the case with plaintiffs’ attorneys against the advice of defense counsel or making payments without their insurers’ consent. Others may not want to tarnish their record and thus refuse to participate in settlement talks even when there is strong evidence that the standard of care was breached.
Investigation and Defense
That is why many professional liability policies contain Cooperation Clauses that require insureds to assist in the defense of claims made against them. OMIC’s policy has such a clause and, broken down, it requires the insured’s assistance on three levels. First and foremost, the policy requires that insureds assist in resolving the claim brought by the patient by helping with the insurer’s investigation and defense of the claim at trial or through settlement, as appropriate. This includes producing medical records, spending time with defense counsel, coordinating the appearance of staff at depositions or at trial, and attending court proceedings.
Coordination of Payment
The second situation is related to the coordination of payment among various legally responsible parties or insurers. The insured is required to cooperate in enforcing a right of contribution (where the loss will be shared) or indemnity (where another party is responsible for the entire loss) against someone else liable for the claim. For example, an insured may give notice under his or her OMIC professional liability policy for an office premises claim that might also be covered under the insured’s business owners or general liability policy. In this case, OMIC would ask the insured to help coordinate the defense and resolution of this claim with the other insurer.
Unauthorized Payments
Finally, the insured is prohibited from making payments, incurring other expenses, or assuming any obligations except at the insured’s own cost and with OMIC’s permission. OMIC wants to participate in its insured’s defense and work with the insured to come to the best resolution possible for the insured and the injured party. If the insured does not allow OMIC to participate, OMIC cannot be responsible for expenses the insured incurs. One example of this situation is where an insured decides, without the advice of defense counsel, to hire a private detective to track a malingering patient. This can be problematic for the defense because the defendant may be compelled to provide the plaintiff with this information. If nothing was revealed through the investigation, this could undermine the insured’s defense. Another example is when an insured, believing it is in everyone’s best interest, makes an out-of-pocket payment to the patient after a lawsuit has been filed. Again, if the case proceeds, this early payment to the patient may jeopardize its defense.
Even with the notice of required cooperation provided in the policy, some insureds still may not comply. The risk for these insureds is that they may be prevented from recovering under their insurance policies for the particular claim or they may lose their coverage altogether.
Before the situation reaches this level, however, the OMIC Claims staff would work diligently to educate the insured regarding the importance of his or her participation and cooperation in the defense of the claim and discuss what specific action is needed from the insured to bring him or her into compliance.
OMIC understands the issues that may impede a physician’s cooperation with his or her insurer and has several ways to assist its insureds with the upset of a lawsuit. First, OMIC provides access to one-on-one personal counseling (under the direction of the defense counsel in order to preserve attorney-client privilege) to help insureds deal with the emotional impact of litigation. OMIC also offers litigation and deposition handbooks to help insureds better understand the process. Finally, OMIC’s policy pays insureds for reasonable expenses incurred at OMIC’s request in the investigation or defense of a claim and for earnings lost as a result of attendance at court hearings or trials (see policy provisions for details).
The Impact of a Claim on Your OMIC Policy
By Kimberly Wittchow, JD
OMIC Staff Attorney
Digest, Winter 2006
Stress and worries abound when a patient sues or claims malpractice. One concern of insureds is the effect such action will have on their insurance coverage. Although claims can and sometimes do have an impact on insurability, understanding how a claim is handled at OMIC may provide insureds with some peace of mind.
Each department at OMIC has a different responsibility when a claim arises. Risk Management encourages insureds to be proactive and contact the department when medical incidents or issues occur so the risk manager can help them appropriately respond to the incident and incorporate any necessary changes in their practices or procedures. The Claims Department, in cooperation with the insured, wants to resolve the claim or lawsuit as efficiently and cost effectively as possible. Underwriting, meanwhile, must make certain that OMIC insures good risks. Insureds may therefore get several seemingly conflicting messages from the company depending on the status of their claim. Rest assured, however, that there are checks and balances in OMIC’s operational protocols to balance these priorities. Most importantly, OMIC’s Board of Directors is made up of ophthalmologists who not only approve company processes but also conduct claims and underwriting reviews.
Physician Review Panel
OMIC employs a continuous underwriting process, monitoring the claims activity of all insureds not only in anticipation of policy renewal, but also during the course of the insured’s coverage. Whether an insured’s claim(s) will warrant further review by OMIC’s physician review panel depends upon the insured’s history of claims frequency the number of claims or suits) and severity (indemnity amounts) and on the specific circumstances surrounding the claim(s). This could include indications that an insured is performing experimental procedures outside of the ordinary and customary practice of ophthalmology or has provided substandard care, followed poor informed consent techniques, or failed to cooperate during the claims-handling process. OMIC’s reviewers consider the insured’s entire claims experience, including his or her experience with insurance carriers other than OMIC.
After consideration, the physician review panel may determine one of several outcomes, including any of the following:
• The panel may continue the insured’s coverage without any conditions placed on his or her policy.
• The panel might continue the policy coverage with conditions, such as endorsing the policy to exclude coverage for certain activities or reducing the policy limits.
• The panel could also conclude that the insured’s risk profile falls outside of OMIC’s conservative underwriting standards, and that OMIC, therefore, is no longer in a position to cover the insured beyond the expiration of the insured’s policy.
• Finally, the panel, in rare circumstances, might determine that the insured’s actions warrant mid-term cancellation if the reasons for the cancellation fall within the policy provisions. These include fraud relating to a claim made under the policy and a substantial increase in “hazard insured against,” such as claims frequency or severity or unacceptable practice patterns.
Insureds are provided the opportunity to appeal coverage and termination decisions to the full Underwriting Committee. OMIC would not generally apply a policy surcharge (higher premium) because of claims experience.
Reporting a Claim or Medical Incident
The policy requires that an insured report to the Claims Department any claim or medical incident that occurs during the policy period which may reasonably be expected to result in a claim. The reporting of such an incident triggers coverage with OMIC. Even if the insured doesn’t obtain an extended reporting period endorsement (tail coverage) when he or she leaves OMIC, OMIC will continue to insure him or her for all covered claims and incidents reported while the policy was in force. An incident that does not develop into a claim will have no effect on the insured’s premium and will not be included in claims history reports provided to hospitals or other third parties. Claims or incidents reported to OMIC’s Risk Management Department are kept confidential: they are not shared with the Underwriting or Claims Departments without an insured’s permission and are not considered reported to OMIC for coverage purposes.
Finally, any indemnity payment made by OMIC on behalf of an insured will result in the removal of the insured’s loss-free credit upon renewal and for two policy terms. Then, if no further claims payments are made on behalf of the insured, the insured will begin earning loss free credits again, beginning at 1% and increasing 1% annually to a maximum discount of 5%.
Defending Claims, Selecting Counsel
By Kimberly Wittchow, JD OMIC Staff Attorney
Digest, Spring 2006
Ophthalmologists inquiring about professional liability insurance often ask how OMIC selects defense counsel when a claim or lawsuit arises. They want to know which attorneys OMIC uses in their city, how OMIC chooses the attorneys it appoints, and if insureds can select their own counsel.
Selection of counsel is not specifically addressed in OMIC’s insurance policy. The policy does explain, however, that OMIC has the right and duty to defend each covered claim brought against the insured. In order to protect insureds against even frivolous claims, the policy requires that OMIC defend claims “even if wholly without merit.” The reciprocal duty of the insured is to immediately report the claim or any circumstances that might give rise to a claim. Without timely notice, OMIC may not be able to adequately exercise its right and fulfill its duty to defend the insured. OMIC must be involved from the beginning of the claim in order to actively participate in the insured’s defense. In the experience of OMIC’s Board and staff, if OMIC does not have control of the defense process from the earliest stages of litigation, its mission of effectively defending ophthalmologists is frustrated, which ultimately works to the detriment of the insured and the company as a whole.
Expert Defense of Ophthalmologists
Implicit within OMIC’s right and duty to defend each covered claim is the right to select and appoint defense counsel. Currently, OMIC has approximately 190 attorneys and law firms on its nationwide list of active counsel. These are the most qualified and consistently successful medical malpractice defense attorneys in the country. Most have worked on several OMIC cases and many are considered “subspecialists” in the defense of ophthalmologists. Given this large base of competent attorneys, assigning defense counsel has been a relatively smooth process in all of the claims OMIC has handled since its inception.
For their part, most OMIC insureds handle the stress of emotionally charged medical malpractice litigation very well and do not allow their anxiety to spill over and adversely impact the selection of counsel and defense of their claim. Mutual trust and a professional relationship between the insured ophthalmologist and his or her attorney are fundamental to a successful defense. OMIC carefully monitors this relationship throughout the course of litigation and surveys every insured after a claim is closed to get feedback about the insured’s experience with counsel.
On rare occasions, the fit between an insured and an attorney is not right. When this occurs, insureds are encouraged to make OMIC aware of any issues they are having with their counsel. Oftentimes, these issues are a natural consequence of the stress of litigation and frequently resolve themselves without OMIC intervening. However, in a few circumstances, OMIC has felt that an insured’s defense would be better served by a change of counsel and has appointed a different attorney.
The Need for Separate Counsel
There are some occasions during litigation when OMIC may have the duty to advise an insured to retain his or her own separate counsel. This happens when some of the allegations in the lawsuit are not covered by the OMIC policy or when the policy pays defense costs but not indemnity for certain allegations. Sometimes OMIC must advise the insured to retain separate counsel if the claim is likely to result in a judgment in excess of the insured’s policy limit or if the judgment may include non-covered sums, such as punitive or other exemplary damages. In many of these situations, the uninsured allegations are dismissed before there is a need to retain separate counsel. Unfortunately in other cases, the allegations remain and the insured must bear the cost of any separate legal defense.
In a handful of cases, OMIC has learned that the insured has engaged his or her own private counsel prior to reporting the claim to OMIC or without OMIC’s approval. Insureds have even tried to settle cases themselves without informing the company of the claim. In these situations, if the insured engages counsel directly without OMIC’s approval, the defense costs accrued will not be covered by OMIC. In addition, any indemnity payments made by the insured without OMIC’s approval also will not be covered by the company.
For more information on this subject, please see OMIC’s Litigation Handbook for the Ophthalmologist or the following articles, which can be found on the OMIC web site at www.omic.com:
• “Choosing Defense Counsel,” by Mary Kasher, MSN, JD, OMIC Digest, Winter 2001.
• “How to Survive a Malpractice Suit,” by Paul Weber, JD, Review of Ophthalmology, July 1997.
• “Anatomy of a Claim,” by Marilys Fernandez, RN, JD, OMIC Digest, Winter 1991.
Advertising for Medical 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.
2021: Updated advertising medical services
Underwriting the Multi-state Practice
By Betsy Kelley, OMIC Underwriting Manager
[Digest, Summer, 2002]
Recently, OMIC has seen an increase in the number of ophthalmologists who routinely practice in more than one state. No longer are such practices limited to satellite offices located in a neighboring border town. Instead, physicians may now have practices hundreds or even thousands of miles apart. While OMIC, as a nationwide carrier, is able to accommodate this growing trend, ophthalmologists who practice in multiple states present unique underwriting exposures. Factors such as licensing, coordination of patient care, and rating issues all must be taken into consideration.
Physician Licensure
While some states may grant exceptions to physicians who limit their interstate practices to consultations, most, if not all, states require any out-of-state physician performing professional services within their boundaries to maintain full and unrestricted licensure in their state. Ideally, the physician also should maintain hospital privileges in each location of practice. If a physician chooses not to maintain hospital privileges in a satellite location due to his or her restriction of services in that location to non-surgical activities, the hospital’s on-call or emergency room requirements, or other reasons, it is essential that the doctor have appropriate arrangements in place with another physician locally to admit patients when needed.
Patient Care
Whether a physician alternates between locations every few days or spends weeks at a time at one location, there will be situations in which a patient requires care during the physician’s absence. To ensure that patients receive prompt medical attention and to reduce the likelihood of claims of abandonment, delayed diagnosis, or delayed treatment, it is essential that the physician establish a protocol for the treatment of such patients. Depending upon the distance between offices, the physician may be available on short notice to care for such patients personally or may need to arrange for a local physician to treat patients in his or her absence. In any event, it is critical that these arrangements be coordinated before the need actually arises and that patients be made aware of the physician’s schedule and of whom to contact for interim care.
When planning the schedule, it is important for the physician to consider the special needs of surgical patients. It is the surgeon’s responsibility to determine whether the patient is an appropriate candidate for surgery and to have an informed consent discussion with the patient prior to surgery. Therefore, the physician should plan to be in each location frequently enough to conduct these preoperative visits within a reasonable period of time prior to the date of surgery. Similarly, the physician should arrange to stay in each location long enough to perform the necessary postoperative care.
Premium Rates
Provided that the physician’s practice protocol falls within OMIC’s underwriting guidelines, the insured’s policy will extend coverage for claims arising from services rendered in either state. The premium that will apply to the policy will depend upon the physician’s practice situation. Some carriers apply the higher-rated territory’s premium regardless of practice volume in that territory while others charge a blended premium based upon the amount of time in each rating territory. OMIC generally rates the policy based upon the premium applicable to the primary location of practice. Provided that the percentage of time spent and the percentage of income generated in the higher-rated territory does not exceed 25% of the physician’s total activities, the premium for the lower-rated territory will apply.
If you have questions about OMIC’s coverage of multi-state practices, please contact an underwriting representative at (800) 562-6642 or by email at underwriting@omic.com.
Updated Guide to Refractive Surgery Requirements
OMIC has updated its Guide to Refractive Surgery Requirements to reflect expansion of coverage to new refractive surgery procedures and to clarify certain underwriting requirements. To obtain a copy of the updated guide, please contact an underwriting representative at (800) 562-6642 or by email at underwriting@omic.com or visit our web site at www.omic.com.
