Liability Coverage and Risk Management Resources for the Medical Director and Attending Physician

Know Coverage Options, Minimize Risk

AMDA Testimony Before Senate Aging Committee July 15, 2004

Is Your State at Risk?

Sample Medical Director Indemnity Clause

How is the Liability Crisis Affecting You?

Update August 2, 2005 On July 28, the House of Representatives passed liability reform legislation, HR 5 with a vote of 230-194. The move came swiftly, only a week after the bill was introduced. The bill is essentially the same as that which the House passed last year, with a $250,000 cap on non-economic damages and a cap on punitive damages of $250,000 or two times the economic damages, whichever is higher. Punitive damages could be awarded only in circumstances of malicious intent to injure the patient or deliberate failure to avoid foreseeable unnecessary injury. The bill would also protect drug and medical device manufacturers from punitive damages if the companies complied with FDA standards. In addition, the bill would also limit the amount attorneys can charge in contingency fees. Liability reform is expected to have an uphill battle in the Senate again this year. AMDA will continue its work with other health care groups to support liability reform.

Liability Outlook for 2005 - Updated 5/20/05

Despite President Bush's priority on tort reform, neither the House nor the Senate has devoted serious attention to medical liability reform during the first several months of the 109th Congress. Although legislation from last year (companion bills S. 354 and H.R. 534) have been reinforced, even Senate majority leader Bill Frist (R-TN) acknowledges that he does not have sufficient votes in hand to push legislation forward. Sen. Frist has indicated a willingness to consider other options for medical liability reform, including raising the cap on non-economic damages.

The 2004 national election had raised hopes for immediate tort reform legislation, particularly in the Senate, which had been the stumbling block in prior years. The Republicans, who generally support tort reform, increased their majority from 50 to 55 senators. But that majority has not yet proved sufficient to enact medical liability reform.

AMDA will continue to work in coalitions with medical groups, as well as a broader health care liability coalition, to secure statutory changes to address the liability problems our members face.

Liability Insurance: Medical Directors Must Know Their Coverage Requirements

Liability coverage for medical directors and attending physicians is unfortunately a rapidly changing issue that will have serious ramifications on quality patient care for the frail elderly in this country if problem is not soon resolved.

AMDA members need to be aware of their responsibility to hold liability coverage for both their administrative roles as medical director and for clinical/patient care as attending physicians. Fortunately, AMDA is able to utilize its strong alliances in the physician community and the long term care industry to make inroads on both issues.

Coverage for Your Work as Medical Director

As a medical director, you should be covered by your facility's general liability policy for your administrative work in this position. This coverage is separate from your medical liability coverage as a physician or attending physician. Most facilities should maintain this coverage for this position. However, now that nursing homes are forced to go bare as another result of the crisis, many medical directors are left without this coverage. AMDA conducted a survey of its members in January 2005 to find out how the issue has continued to affect medical directors and long term care physicians nationwide. The results of the survey reveal the following:

• 56% of respondents are listed on their facility's liability coverage policy under the title of "Medical Director";
• 13% of respondents are covered through an indemnity clause in their contract with their nursing facility:
• 11% of respondents are covered through the facility's policy via having their responsibilities listed on the policy;
• 9% of respondents are listed on their facility's liability coverage policy under their own names;
• 4% of respondents are directly covered through an insurance carrier on a medical director coverage policy; and
• 24% of respondents are not certain whether or not they have liability coverage.

If you are medical director of a nursing home, AMDA suggests that you ask the facility administrator to verify your medical director coverage through the facility policy. Ask to have either your title added to the policy or your responsibilities listed as being covered. In some cases, the facility may be willing to add your name to the policy. However, this is rare as owners and administrators find it easier to list title, in the event of a change medical director personnel.

AMDA suggests that regardless of your status, you seek to add an indemnity clause to your contract with the facility. This will ensure coverage for you in the event that the facility is unable to cover you through one of the aforementioned methods or if the facility is "bare" (without coverage itself).

Medical Professional Liability Coverage

Coverage for your clinical work in a nursing home--either as an attending physician or if you intervene clinically as a medical director--is another issue of concern to AMDA members. A number of AMDA members have contacted the national office during the past several years to express concern about their inability to obtain renewal policies due to their work in nursing homes. Others have complained that their renewal policy premiums have skyrocketed up to 300 times the previous policy cost. This issue spans medical specialties and is especially prevalent with ER and OB/GYN physicians.

AMDA's 2005 survey revealed the following about members' medical liability coverage:

• 29% of respondents had problems obtaining or renewing professional liability insurance in the last year. High premium costs accounted for 42% of these problems, and 26% of these problems were due to because carriers pulling out of their state. Carriers refused coverage because of nursing facility practice in 31% of the respondents who had problems, and in 24% of those cases, the carrier refused coverage because more than a certain percent of the physician's patients were in a nursing facility.
• At least 25% of respondents have seen their premiums increase by 30% or more in each of the last three years.
• 39% of respondents indicated that they had made changes to their practices or work due to liability pressures in the last 1-3 years.
• 19% of all AMDA physicians plan to discontinue or limit the types of services they will provide in 2005 due to liability pressures and concerns.

AMDA is working on all fronts to help resolve the liability crisis as it affects medical directors and long term care. In the meantime, we suggest you educate yourself on some important risk management strategies (see "Articles" in box at right) that can not only improve patient care but also help shield you and your facility from liability.