Business and Management Liability Insurance Medical Group Providers:

March 02, 2012

CM&F Insurance Brokers, describe Directors and Officers Liability Insurance as a policy designed to provide financial protection for the directors, officers, and the corporate entity which they serve in the event that lawsuits alleging mismanagement of the corporation are brought against the directors/officers, either individually or collectively. Since virtually all corporations have bylaws in which the corporate entity, in the vast majority of cases, bears the financial responsibility of indemnifying directors/officers for their alleged misdeeds. A D&O policy is a financial tool through which the corporate entity can be reimbursed for its costs in defending and settling lawsuits against its directors/officers. In certain circumstances, such as bankruptcy or derivative lawsuits, where the corporation cannot indemnify its directors/officers, the D&O policy affords front-line financial protection for the directors/officers.

So, what on earth does that mean??

To our Doctors’ Company Physicians and Physician Group insurance policyholders, it means to take a moment in these rapidly changing times to consider adding business and management liability insurance.

If you are hiring, firing, investing in, or bringing on investors, deciding to grow or shrink, …if you’re Selling or buying a practice, as the owner, partner or managing officer making these financial decisions it is important to be protected. The financial condition of the company is represented to the interested party merging, working with, buying, working for,-- any connection that you are pursuing brings with it a financial ‘fiduciary’ responsibility.

In these times of healthcare delivery change, it is more important than ever to obtain business and management Liability Insurance. This is commonly referred to as D&O insurance, The Doctor’s Company has worked hard with a Lloyd’s Program to provide this coverage at our insured’s at discounted rates.

Even signing reimbursement contracts could result in a company ‘shrinkage’ lost revenue, discord within the ranks. If you have a large business loss, or if you decide to let go some key partners, employees, partners, You could be sued as a managing director of the company.

Our policies of business and management liability insurance are written to protect the personal assets of the owners and officers.Lately, some healthcare groups are extending their reach and in the process, unwittingly, opening themselves up to these actions.

So, take a moment, consider how easy it is to provide this peace of mind by adding (usually at less than $ 300 per month, this protection for your Board of Owners, Directors, Managers:

  • Protect the personal assets of a company’s directors and officers;
  • Protect the company’s assets;
  • Provide reimbursement to the organization to indemnify D&O’s for their losses; and
  • Help the company monitor and provide defense costs associated with responding to lawsuits and investigations.

Some examples of claims against Board’s of Directors are the following:

Plaintiff, security company, alleges that one of its client companies is defaming it by telling other building tenants that its employees are stealing personal property. As a result, its contract with the property manager was cancelled. Plaintiff alleges interference with contract, defamation and slander.

Plaintiff agreed to help form and work for a company as its Chief Operating Officer. He alleges that his employment was terminated without cause. Further, it is alleged that the company hindered his attempt to find new employment by telling third parties that the plaintiff is prohibited from using trade secrets and intellectual property that allegedly belongs to the company. A complaint was filed against the company and a D&O which included causes of action for breach of contract, and unfair and deceptive trade practices.

Defense costs and settlement for the individually named defendant exceeded $180,000.

Creditor Claim:

Plaintiff filed a complaint against individual D&Os of a company alleging that its CEO, CFO, & COO conspired to use the plaintiff’s services to furnish, install and repair the company’s equipment knowing that it was insolvent and was planning to file for bankruptcy protection. Causes of action included: (1) fraud, misrepresentation and non-disclosure; (2) deceptive trade practices; and (3) civil conspiracy.

Total settlement and defense of the individually named defendants exceeded $100,000.

Additionally, by adding a separate ‘crime limit’, you can cover the organization, actually insure against embezzlement, fraud, or theft coverage to this package.

These are times that have been surprisingly good for medical malpractice insurance claims frequency, severity and premiums,

Take advantage of this good time in lower premium rates to encourage this purchase.