PA MALPRACTICE INSURANCE: OPTIONS & RECOMMENDATIONS

Jeffrey G. Nicholson, PhD, PA-C

Not all medical malpractice liability policies are the same. Understanding the difference between
a “claims–made” policy and an “occurrence” policy is an important consideration when reviewing
your coverage. This article is focused on helping PAs to decide what policy is right for them and
helps to answer the question, “Do I need my own malpractice policy separate from my
supervising physician or employer?”

In brief, an occurrence policy 1) covers for claims arising from the policy period even if those
claims are filed years after the policy period, 2) covers for claims in the pre-policy period, 3) is
more expensive than a claims-made policy because the cost of prior acts and tail is built in and
4) is becoming less common and available. A claims-made policy 1) covers you only during the
policy period, 2) is less expensive for the first 4 years as its cost is graduated as the policy ages,
and 3) allows for the options of retroactive dating and tail coverage.

It is clear that an occurrence policy is the better option if available. In terms of cost, the claims-
made policy is only less expensive for the first several years but that savings is lost when
appropriate retroactive date and tail coverage is applied. The only drawback to the occurrence
policy is that its coverage limits may be inadequate if a claim is made years down the road. For
example, coverage limits on a policy in place several years ago may have been
$500,000/$3,000,000 (per occurrence/aggregate) while the recommended limits today are
$1M/$6M. Either a new claims-made policy with retroactive date at the higher limits or new
occurrence policy at the higher limits should be purchased to ensure adequate coverage.

Whether PAs should carry their own separate malpractice insurance in additional to what is
provided by their employers is controversial. Some of the articles you will read in AAPA
publications that are written by insurance sellers appear to recommend it, but it would be wrong
and inappropriate to make a blanket recommendation that all PAs should carry their own
policies in addition to that provided by their supervising physician or employer. These articles
are often written by the brokers the AAPA has a financial relationship with. The AAPA benefits
monetarily by allowing a single insurance broker to sell PA liability insurance using the AAPA
Insurance Services name.

Most PAs would assume the more insurance the better right? Not so when it comes to a
medical liability policy. It really depends on the type of policy that is being provided to you by
your supervising physician or employer. If you and your supervising physician are included in
the same policy, you will ordinarily both be represented by the same law firm if you are named in
a malpractice suit. You and your supervising physician are a team and will ordinarily be
represented as a team. This will benefit you in that it becomes difficult for a supervising
physician to point the finger and place the full or majority blame on his or her PA. When you are
defended as a team, there is no benefit for defense attorneys to point the finger at one of their
own defendants. On the other hand, the mere fact that you have your own policy may give your
supervising physician or employer the opportunity to deny fault, settle out early, or be dismissed
early and leave you to be defended alone. Why else might you NOT want to purchase your own
additional or supplemental policy? This author has reviewed hundreds of PA malpractice cases,
given testimony for dozens and developed relationships with multiple trial attorneys over the
years. The attorneys are all in agreement that you will be of greater interest and more likely to
be named in a malpractice suit if you have your own separate policy. This attribute is referred to
in the field as a “deep pocket.” If you are not a deep pocket, you are more likely to be dismissed
from a case if the evidence against you is weak. Please remember that liability insurance is the
bread and butter that feeds the attorneys and litigation industry, and that selling it is the bread
and butter of the brokers and agents.

Sometimes insurance agents and brokers will argue that you should have your own policy
because even though you and your supervising physician are on the same policy, your
supervising physician will still try to proportion the majority blame on you. For this and any other
reason put forth, they will argue that you should have your own representation during litigation.
The reality is that it is quite rare for a PA to need their own separate representation if they are
included in the supervising physician or employer policy and represented by the same law firm.
And if a PA is found to bear the majority negligence in a malpractice case, it is may well be
justified. In this writer’s experience, when this happens it more often than not is justified. As
PAs, we acknowledge that it is our responsibility to know our practice limits and to seek
assistance as needed to meet the standard of care. I often use the following phrase when
explaining this to attorneys, that the “direction of supervision” in our profession is from the PA to
the physician, not the other way around.

It is becoming more common to see a clinical or hospital entity itself listed in the National
Practitioner Data Bank as the party at fault in malpractice actions. This is known as the
“corporate veil”. If you have only the corporate policy coverage, you decrease your chances of
being named individually or specifically in the data bank. Keeping your name out of the NPDB is
the best thing you can do to preserve your reputation as a safe provider or medical care.

For PAs who would be more comfortable or still desire to have personal representation should a
malpractice allegation arise, there are better alternatives than purchasing a separate
malpractice liability policy. One option would be to pay for representation out of pocket on a
limited or as needed basis for depositions and mediation sessions. The cost for limited
involvement at critical times in the litigation process can be kept to a reasonable amount. A
second option that is becoming popular are the so-called prepaid legal services. For a
reasonable monthly fee, one can be covered for any legal representation needs. Think of it as a
small monthly retainer to have an attorney on-call for you if the need arises. The fees for such
programs are usually under $20 per month compared to the cost of a separate malpractice
liability policy that can cost thousands annually and which come with the undesirable affects
outlined above.

So when should you purchase your own separate policy? There are instances when you may
need a personal policy: 1) if your limits of liability or dates of coverage are not adequately
provided by your employer group policy, and 2) if you do any part-time work “moonlighting” or
clinical practice as a private contractor where coverage is not provided by the employer, and 3)
if you do any volunteering and are not otherwise covered by your current policy or a government
program or statute. If you are not covered adequately in terms of limits or dates of coverage by
your employer policy, you may either amend the employer policy or consider a separate
personal one. If you purchase a separate additional personal policy, be sure not to duplicate
your employer’s current coverage – address only the shortfalls in the additional policy.

Summary Recommendations

The best policy to have is an occurrence policy that provides adequate coverage limits and
where you are fully included in a single employer group policy.
1) Know what kind of policy you have. Insist that your employer provide you with a copy of the
declarations page of your policy or provide you with a certificate of coverage. If you have a
claims-made policy you need to know whether you have full tail coverage, or if your employer
will agree to provide for full tail coverage in the event of your leaving. Due to long duration
statutes of limitations, a five year basic tail may not be enough in some states.

2) Know what kind of policy you had in your previous job when applying for a new job. As you
can see there are options for ensuring that you have no laps in coverage even with claims-made
policies. Negotiate with your employer to help you pay for a tail of your old policy or provide a
retroactive date on the new policy. This is unnecessary if they will provide an occurrence policy.

3) Do not duplicate your existing employer policy with an additional one of your own. This may
a) increase your chances of being named party to a suit or decrease your odds of being
dismissed early on b) allow and increase the odds of your own colleagues or supervising
physician to pointing the finger at you and c) is unnecessary if you have adequate group
coverage. In fact group coverage alone may protect you in that your name may not specifically
be listed in the National Practitioner Data Bank.

4) If you really want separate representation distinct from the legal team provided by your
employer or group policy, consider purchasing a pre-paid legal service such as Legal Shield. Its
cost is much less than a separate policy, and it does not carry the risks of owning a separate
personal policy.

5) You will need your own liability policy for part-time “moonlighting” if not provided by the
employer. Many PAs work part-time as private contractors where malpractice insurance,
benefits and social security taxes are not included in your compensation. In situations like this,
the so-called moonlighting policies are available at a current cost of $1500 or less for 10 hours
or less of private work per week.

6) Be sure you have insurance for volunteer activities, even if on a limited basis. You may enjoy
volunteering at the local free-clinic a couple times per month or as a health officer a week or two
every summer at a scout or youth camp. You will need malpractice liability insurance for these
activities. You may already be covered by your employer policy. Check with them first. If not,
insurers will usually offer riders on supervising physician or employer policies for short periods
or limited practice. Additionally, some states like Wisconsin have a program through its
Department of Justice, where PAs and physicians can apply for cost free liability protection
when they work at free clinics. You may wish to inquire whether such programs exist in your
state.

7) Shop around for the best policy rates. Rates do vary from broker to broker, and most
independent agents will work with you to devise a policy that meets your specific needs. Check
with your local state medical society as well as brokers on the web.

For more information on PA malpractice insurance, two 15 minute ReachMD radio show
interviews with the author are available at http://www.aapalm.org/Education.html

Jeff Nicholson, PhD, PA-C is a former PA Program Director, Past-President of the American
Academy of PAs in Legal Medicine and Founder of the PA Experts Network, a Medical-Legal
consulting firm on Physician Assistant Medical Practice.