Risk Management

Malpractice Coverage Extended to Eye Banks

By Betsy Kelley, OMIC Underwriting Manager

[Digest, Spring 1999]

Qualified eye banks may now purchase professional liability coverage from OMIC for direct and vicarious liability arising out of services they render. There are close to 100 eye banks in the U.S. to which OMIC might offer coverage and which might benefit from OMIC’s extensive expertise in ophthalmic underwriting, claims handling and risk management.

OMIC began exploring the feasibility of insuring eye banks last year at the request of a large insured network and its affiliated eye bank. A major factor in being able to sign on networks and other large ophthalmic groups is an insurer’s ability to provide coverage for eye banks, surgery centers and other related provider organizations affiliated with the network or group. After assessing the coverage needs and potential liability exposures of eye banks, the Underwriting Committee and Board of Directors determined that eye bank coverage would be a reasonable expansion of OMIC’s services to the eye care profession.

Who Qualifies?

Unlike other carriers that treat eye banks like any other “medical entity,” OMIC has carefully tailored an application form and underwriting guidelines specific to the activities and exposures of eye banks. To qualify for coverage, an eye bank must be a member of the Eye Bank Association of America or the American Association of Tissue Banks. As members of these organizations, eye banks must adhere to the medical standards developed by these organizations. OMIC has adopted these and other guidelines intended to reduce the likelihood of potential claims and to aid in the defense of any resulting claims. Additionally, the medical director or at least one board member must be a member of the American Academy of Ophthalmology for the eye bank to be eligible for coverage.

What is Covered?

OMIC also has crafted an Eye Bank Amendatory Endorsement to modify the standard policy terms and address the special liability issues of eye banks. For example, the definition of “professional services” has been modified to specifically include activities that eye banks perform: procuring, processing, testing, storing and distributing donor ocular tissue. In addition, the definition of “injury” has been broadened to include the possible allegations of disfigurement or mutilation of a cadaver and wrongful removal of tissue. Claims against eye banks are not common, but when they occur, most generally revolve around allegations that the donor tissue was obtained without the permission of authorized next of kin.

Coverage applies to the eye bank and its non-physician staff for their direct liability arising out of services they render. In addition, the eye bank is insured for its vicarious liability arising from services rendered on its behalf. Vicarious liability coverage arising from services rendered by employed or volunteer physicians applies provided these physicians maintain professional liability coverage themselves.

Policy Limits

Premiums for eye banks are based on a per-donation rate and vary based on the limits of liability selected and the eye bank’s retroactive date. OMIC offers a variety of limits ranging from $500,000 per claim/$1,500,000 aggregate to $5,000,000 per claim/$10,000,000 aggregate. (Lower limits of liability are available for eye banks that participate in their state’s patient compensation fund.) Limits apply on an indemnity-only basis. Defense costs are paid in addition to the limits, and unlike the coverages offered by other carriers that write eye bank coverage, OMIC’s coverage is “first dollar.” No deductible applies.

In addition to professional liability coverage, qualified eye banks also are eligible to purchase other insurance products available through OMIC, including coverage for directors and officers, errors and omissions, employment practices, Medicare/Medicaid fraud and abuse, workers’ compensation and business owners liability.

For more information on OMIC’s professional liability coverage for eye banks or other OMIC insurance products, please contact Betsy Kelley at (800) 562-6642, extension 630 or bkelley@omic.com.