A common question that we are asked at The Doctors Insurance Agency – (an agency for The Doctors Company) and a national broker for medical professional liability insurance is in regards to whether a physician needs to purchase a separate Medical Director Liability Insurance Policy. If you are asked to sign a contract as medical director for an Assisted Living Facilities, Pathology Labs, Endoscopy Labs, Medical Spas and other similar health care organization, you might be asked to provide your own medical director liability insurance policy.
You may need one (regardless of whether the organization carries their own liability policy); the key to understanding whether you need to purchase your own is understanding the contract language in the Medical Professional Liability Insurance Policy for the healthcare organization.
We are often asked if the medical professional liability insurance policy that ‘covers’ the health care organization also provides liability cover for the Medical Director.
The answer is: usually but it is important to look into the policy language, specifically the Definition of Insured.
The individual Medical Professional Liability Policy covering the physician’s clinical practice will almost certainly not cover them as a medical director for an outside practice (by outside, I mean a practice that is not the one underwritten and defined on the policy declaration) (the Named Insured).
Many physicians assume that their medical professional liability insurance policy will cover everything that they do. More physicians are taking time to ask these questions and thus, there is a robust market for stand alone medical director liability insurance policies. The underwriters are experienced and the policies are competitively priced to manage the expected losses without taking too much premium so as to make it not sustainable.
The reality is: especially for aesthetic, elective, independent labs, surgery centers, skilled or rehabilitation centers, etc. etc. there may be no coverage under the ‘med mal’ policy;
Which leaves the entity bare and the physician exposed. Unless..
The Facility has a quality medical professional liability policy that includes coverage for the Medical Director.
The Doctors’ Insurance Agency insures many individual and group physician practices: we insure physicians, midlevel providers and many different forms of facilities (from Surgical Hospitals to Colon Hydro Therapy Wellness Centers)
When looking at the contract, the insurance contract, we look to see if the medical director is included in the definition of insured.
Often we find that the medical director is already covered under the policy for the entity, healthcare organization or facility unless for some reason.
Definition of insured will state that the medical directors are included in the policy language, the terms outlined in the contract.
Terms of coverage for physicians will add endorsements that expands the coverage to include any person who is also ‘contracted or leased’, along with employed.
The Definition of insured reads as follows (which includes Medical Director):
1. the Named Insured;
2. your current and former employees, temporary employees, leased personnel, principals, partners, executive officers,
directors, members, managers, stockholders, students, trustees, volunteers, or Medical Directors while acting
on your behalf within the course and scope of their duties; and, if the entity carries a separate Directors and Officers Policy then the Medical Director would also have coverage as part of the management board.
Naming individuals (rather than class or position within a company) isn’t typically done.
Excerpts of definitions of Insureds from a directors and officers policy:
4. Directors and Officers means any person who was, now is, or shall become:
a. a duly elected or appointed director, officer, or similar executive of the Company, or any member of
the management board of the Company;
b. a person who was, is or shall become a full-time or part-time employee of the Company; and
c. the functional equivalent of directors or officers of a Company incorporated or domiciled outside the
United States of America.
5. Insured means the Company and the Directors and Officers.
AMENDED DEFINITION OF DIRECTORS & OFFICERS - LEASED / CONTRACTED EMPLOYEES
This endorsement modifies insurance provided under the following:
DIRECTORS AND OFFICERS AND COMPANY COVERAGE SECTION
The following is added to Section B. DEFINITIONS, subsection 4.:
Directors and/or Officers means any person who was, now is, or shall become: any natural person who is a leased employee or is contracted to perform work for the Company, or is an independent contractor for the Company, but only to the extent such individual performs work or services for or on behalf of the Company.
Determining whether you need your own coverage is important. And, these separate medical director liability policies are available for just over $ 2,000 per year annual premium; and, it is certainly possible that you could rely reasonably on the strength of the facility liability policy to provide all of the insurance necessary in your capacity as director.