Malpractice lawsuits loom large in television dramas, but the truth is that healthcare practitioners like nurses, nurse practitioners and physician assistants are more likely to face a complaint to a licensing board than a malpractice claim.
Personal liability insurance helps you protect your professional healthcare license in the case of a medical license complaint. “Legal fees to defend your license can be costly and the stakes are high,” says Hahnah Williams, a nurse turned attorney who owns Hahnah Williams Attorney at Law, a law firm in Atlanta, Georgia that defends healthcare professionals facing licensing complaints.
When beginning a new medical job, knowing what insurance you need to protect your professional license and assets is important. The following are nine questions to ask about personal liability insurance and employer liability insurance.
9 questions healthcare practitioners should ask about personal liability protection and employer liability protection
1. Does the insurance cover the cost of defending my license?
As a healthcare practitioner, your license is the cornerstone of your profession. That’s why you’ll want to protect it at all costs. Fortunately, personal liability insurance that protects your license is not costly. Not having it is.
If you’re a nurse reported to the board of nursing for professional misconduct, you will receive notification that you are under investigation. In this case, you will be liable to cover the cost of an attorney to defend your license, regardless of whether there was any wrongdoing. This is why having personal liability insurance is imperative.
Most employer liability protection plans do not protect your professional license, says Williams. “A suspended or revoked license is stressful after spending years of effort to obtain that license. Having a personal liability policy helps to reduce that overwhelm if you ever face a complaint.”
Licensing complaints typically come from practitioners’ own employers. With nurses, for example, any employer who has reasonable suspicion of a violation of the nurse practice act is required to file a complaint due to mandatory reporting laws.
Examples of causes of complaints include the following:
- Substandard care
- Impairment on the job
- Drug diversion
- Violent encounter with a patient
- General unprofessional conduct
- HIPAA violation
- Charting violation
Filing a complaint against a nurse or mid-level health professional is easy. All it takes is filling out an online form. But defending yourself against a complaint is overwhelming and expensive. “You can be a good, conscientious nurse and still can have a license complaint filed against you even if the allegations are completely false,” says Williams, who practiced as a registered nurse for over 9 years before graduating from law school.
Plus, in some states, like Georgia where Williams practices, an immunity law makes it hard to sue an individual for filing a false complaint, requiring you to prove the complainant filed the complaint in bad faith. “If you have a license protection insurance policy, you are less likely to worry about paying legal fees to defend your license,” says Williams.
2. What state do you practice in?
States have different laws regarding healthcare liability insurance. For example, the North Carolina Supreme Court in August 2022 struck down a 90-year-old precedent that protected nurses from liability. Providers in that state can be sued, even when following physicians’ orders. The judge considered the case an appropriate time to reconsider liability because of the “increased, influential roles which nurses occupy in medical diagnosis and treatment.”
Some states set up guardrails to eliminate baseless claims and excessive settlements. They may require healthcare providers to carry a certain professional liability limit, or there may be patient compensation fund (PCF) requirements. Indiana has a PCF requiring patients to undergo a Medical Review Board before suing. You should also be aware of whether or not your license is protected by an interstate compact.
3. What areas of healthcare do you cover?
All healthcare practitioners can be at risk for a malpractice claim, but some areas of medicine are more risky than others. Responsibilities that pose the greatest vulnerabilities include patient monitoring, fall prevention, medication administration and management, pressure-injury prevention and patient-related communications.
4. Is my coverage adequate for my professional work?
Many healthcare providers change jobs throughout their careers and forget to notify their insurance companies. This could mean practicing without proper coverage or no coverage at all.
Following are some examples of work status that require you to notify your insurance carrier:
- You’re a nurse practitioner student who still works as a nurse. Does your coverage include your work as an RN or exclude it?
- When you graduate, you need to update your coverage for full practice.
- You start working at an ER on the weekends to earn extra income. Are you covered by your current plan or do you need another one?
5. Do you have consent to settle?
The consent to settle doctrine is a consent clause in your policy form. You should ask your insurance company where this is found and to relay what the parameters are for that clause in the policy. As a healthcare practitioner, you always want a “pure consent to settle” provision in your malpractice insurance. The carrier must obtain your written permission before settling on your behalf.
Be sure you don’t have the “hammer clause,” which limits the amount the insurance has to pay if you refuse to approve a settlement offer. A hammer clause is a provision in an insurance contract that gives the insurer the right to refuse payment beyond a certain amount and shift all responsibility for additional costs onto the insured party. Depending on the wording of your policy, this can mean that you may end up paying out-of-pocket for damages or other costs associated with a malpractice lawsuit or investigation if they exceed your coverage limit.
6. Are there limitations or exclusions in your coverage?
Some insurance carriers will exclude specific procedures. If you provide these procedures, you must know immediately or before you start performing them. To know if a procedure is excluded, you should request to see the exclusion list.
7. Who is your advocate in your time of need?
In the case of a malpractice claim, who calls the shots? If the policyholder is the business entity, that’s who is protected. Any other party is secondary to that legal promise from the insurance company. If you are named in a malpractice suit, you want to be the primary insured so that you have someone with wisdom and the strength to advocate for you.
8. Is coverage limited to your scope of practice?
While personal liability insurance can provide some peace of mind, it’s important to understand the limitations of your coverage.
Liability insurance typically covers claims that arise from your professional practice. This means the policy will not cover claims arising from activities outside your scope of practice. For example, if you are a nurse answering the nurse triage line, and you prescribe a medication you know the attending physician always prescribes in specific cases, you maywill not be covered if something goes wrong.
9. Are you covered after you leave your job?
Once you leave your position at a hospital, for example, you want to be sure you’re still covered by any incident that may have occurred while you were still an employee. This is called an occurrence policy, which covers any incident while the policy is in effect.
A “claims made” policy only covers claims made while the policy is in effect. If this is the case, you’ll want to purchase tail coverage. Typically, when mid-level professionals, like nurse practitioners and physician assistants, leave a job, they must purchase a tail policy. In some cases, the employer may pay for the policy. You’ll want to carry that policy for as long as the statute of limitations.
Before beginning a new healthcare job, it’s important to carefully review your liability insurance policies and ask questions about how you’re protected if your license comes under attack. Knowing what kind of coverage you have can help ensure you are properly prepared when something goes wrong.