Medical Director Liability Insurance Costs $ 2,000 per year regardless of What State you’re in

Medical Director Liability Insurance costs $ 2,000 per year regardless of what state you’re in … Plus taxes and fees..

Unless…..(it’s always that word that starts to add cost and eliminate coverage in the insurance industry).   The more physicians feel constrained by institutional medical groups, which can restrict their practice protocol, their decision making, or feeling of independence, the more physicians sign contracts to work as independent medical directors. There is a very helpful article on ‘Seak.com’:The Biggest Legal Mistakes Physicians Make and How to Avoid them’  This was written by Karen@Seak.com in September of 2014 On Seak.com 

The executive summary is Executive Summary

Each year, physicians are signing  employment contracts to work as medical directors.  As we have pointed out, the range of contracts can run from medical spas to surgery centers, imaging and endoscopy centers to schools and paramedical departments of cities and towns. The key to the rights of both the employer and the employee are the terms of the written employment contract...the scope of service required (sometimes supervision of midlevel providers, sometimes direct supervision and instruction of medical doctors) and other contracts require direct patient care in addition to administrative services.

 Physicians need to be exceptionally careful about what terms the employment contract contains. Many physicians  have no experience negotiating contracts and make mistakes agreeing to responsibility for work that can have adverse impact on their careers and even expose their assets to a medical malpractice law suit.

 Still, we believe that the cost of Medical Director Liability  Insurance for a policy that covers you up to 1 million per claim will be approximately $ 2,000 to $ 2,500 per year.  Although regular supervision of M.D.’s bumps the premium to that next level (approximately $ 3,500), I don’t believe the oversight of mid level providers or even physicians pushes the premium up too much.

 When completing an application for medical director liability insurance remember that your words, typed, or written in the spaces of the application become part of the legal contract that outlines, informs, develops the premium and binds the policy.  Essentially, your application is a legal document that is discoverable and can provide the assurance that you’re properly covered.

 Describing the contract by copying and pasting or paraphrasing  will give the underwriters all they need in order to rate and bind.

On the application, indicate an estimate of the breakdown (estimated percentages) of the work that you will do as a medical director (i.e. 65 % administrative, 35 % supervision of RN’s providing IV infusions)…

Basically, Medical director liability insurance policies are priced according to services required under your contract.

There are three levels of coverage and premium : 

·         Administrative only.  This premium is slightly lower because the insurance does not contemplate or cover your supervision of other doctors or mid-level providers.

·         Medical director coverage, which does include supervision

·         And medical director coverage which includes supervision as well as direct patient care.

The policies are not location specific limited by number of contracts.

The biggest mistakes that physicians make when signing contracts according to Seak.com :

Mistake 1      Consulting Counsel Too Late

Physicians often agree to the terms of an employment contract offered after only brief negotiations. Some may consult with counsel late in the process or not until after the contract has been signed. By consulting counsel too late in the process, physicians forfeit the ability of counsel to provide them with guidance, checklists, demands, proposals, counterproposals, strategies

Mistake 2     Failing to Conduct Adequate Research on the Prospective Employer

It is not uncommon for physicians to concentrate so much on the salary and other proposed provisions of the employment contract that they often neglect to do “due diligence” on the employer.

Mistake 3      Overlooking the Vague Term of Contract

Physicians often overlook the number of years the contract is to run (the term of the contract), whether the contract is renewable, by whom it is renewable, and on what terms. It is not uncommon for new physicians to sign lengthy contracts with inadequate consideration

Mistake 4      Failing to Understand the Legal Significance of Defined Terms

Employment and other contracts often have defined terms. Such terms are usually recognized in a contract because they are in quotes, italics, or boldface, underlined, or made to stand out in another way. When a defined term is used in a contract, a court is likely to interpret the term according to its definition in the contract, not its common dictionary definition.

Mistake 5      Not Paying Enough Attention to Fringe Benefits

While the salary physicians will be paid is of primary importance, it is not uncommon for prospective physician employees to overlook the breadth of potential fringe benefits to be negotiated

Mistake 6      Not Specifying the Conditions of Employment

Often, physicians overlook whether the employment contract deals specifically with the actual job description. What physicians will be required to do, where, and how they will be expected to perform these duties

Mistake 7     Not Having Adequate Information on Bonus Terms

It is not unusual for physicians to sign an employment contract without having adequate information on the additional compensation (bonus) that they can expect to receive under the contract.

Mistake 8      Failing to Consider Unduly Restrictive Covenants Not to Compete

Often, prospective physician employees go into a negotiation with little or no concern about the “covenant not to compete clause” in the proposed employment contract. Operating in good faith, they have the hope and expectation of long-term employment. Many proposed physician employment contracts provide a noncompetition section.

Mistake 9      Failing to Recognize One-sided Termination Provisions

Physicians who are negotiating and signing employment contracts should be acutely aware of the full implications of the termination provisions of the proposed contract. What appears to be a generous two- or three-year employment contract with cost-of-living increases, etc., can, in reality, be terminated almost at will

Mistake 10    Not Protecting “Additional Income”

Physicians negotiating an employment contract often overlook the importance of protecting “outside or additional income.” This outside income, which can become substantial, can include:

·         Honoraria for lecturing

·         Royalties for writing treatises and articles

·         Consulting work

·         Testifying as an expert witness

·         Inventions

·         Patents

·         Copyrightable works

When applying for your  medical director liability insurance policy, make sure your company, your broker and underwriter understand how to separate the risk and your  loss experience and ultimately the premium and policy from clinical practice and the insurance that accompanies your clinical practice.

It is important to protect yourself against the large claim demands that often blindside unwitting physicians agreeing to bring their medical knowledge to clinics, non profits, aesthetic businesses, outpatient centers.  Even benevolent work for important medical entities can result in serious claim demands and expensive litigation.

 Please let us know at your convenience how we can help you.

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