Medical Entities, changing ownership: Question about policy

What do you do to your medical malpractice insurance policy when your ownership changes?

The answer, the short answer that is:  Nothing.

Just call your agent, make sure the insurance company knows about your changes.

If you’re concerned about whether you have to cancel, close or change your medical malpractice insurance policy due to that upcoming change of ownership, Medical Malpractice Insurance policies (also referred to as Errors and Omissions for Health Care Providers) are written on broad forms, with general coverage terms (such as : Named Insured includes all owners, officers, agents, employees of the First Named Insured while acting under the supervision and for the benefit of the entity.

This means that while you do have to keep your insurance carrier apprised of changes of medical group ownership, new partners, shareholders, employees, etc.

It is not essential in order to confirm coverage under the professional liability policy.

Medical  Groups being purchased, Hospital Foundations Purchasing Medical Groups, New Partnerships, Venture Capitalism in Health Care Organizations:

Certainly, the trend lately is to align, by acquisition or merger with nonprofit hospital foundations or other groups.  resources attached to it that last year were not available to us.  It seems that aligning with Medical Foundations and hospitals provides resources that otherwise are not available.

Uninterrupted physician medical malpractice insurance

Whether it is a  VC group or a local nonprofit Healthcare organization, the important tasks are to document properly and to know that you do not have to interrupt the underlying medical malpractice insurance policies.

Physicians insurance is much more conditioned upon a continuous calendar of coverage, without  break. Insurance carriers are underwriting the individual practitioner, not the entity so much.

Although, we will name the appropriate entities along with the physicians,  we are more interested in protecting the licensed care providers of the organization.  That is where the risk is:  Medial Groups purchased and associating with  new partners will  continue  to be covered with its own separate limit (you pay a 10 % additional premium per physician so that the entity has its own 1 Million / 3 Million limit of insurance (plus defenses) to respond to claims alleging the corporation or group was responsible for the injury or loss).

The change of ownership does not affect the coverage that we provide your business entity:

  • We simply name the medical entity on the policy as well as the healthcare providers who we have underwritten.
  • The policy language is general as to who is covered, which allows for some changes in personnel, ownership, shareholders, employees, etc.
  • In this instance the ‘First Named Insured’ is: the medical center and group.

 First Named Insured means the person or Entity designated as the First Named Insured on the Coverage Summary or in an Endorsement issued as part of this Policy. 

Coverage B–Entity Professional Liability

If Limits of Liability are shown in the Coverage Summary for Coverage B, this provision b. Coverage B–Entity Professional Liability applies. We will pay on behalf of the First Named.  Insured shown in the Coverage Summary those sums that it becomes legally obligated to pay as damages for Claims covered by this Policy resulting from Review Incidents or from Professional Services rendered by a Protected Party for whose acts or omissions the First

Named Insured is legally responsible:

One Pathology group aligns with hospital And splits into four smaller, C Corps.

We recently had a medical group of Pathologists sell to a hospital.  Our office (the agency representing the pathology group) made the effort to add the  purchasing entity to the policy as a protected party.

Additionally, the pathology group had formed four separate professional C corps, which we added to the policy.

So, they now have one entity separate limit, naming the additional c corps, the original pathology medical  group and the larger healthcare system by manuscript endorsement.

The hospital is already insured, we simply added the hospital name as a cert holder and additional protected party. When a claim is presented against a medical group  affiliated larger health care system, or network, it is essential that the company is aware of the additions, the insurance carrier needs to have all of the separate corporations, articles of incorporation as well as the request to add each entity.

As in risk management, effectively adding endorsements to your professional liability insurance policy requires careful documentation of the new corporations, the purchasing entity, midlevel practitioners, employed medical technicians, physician shareholders and independent contractors.

 

 

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