Protect your practice from lawsuits

Imagine some of your worst-case scenarios as a rehabilitation therapist: You turn away from a patient who is seated on a stool to retrieve a piece of therapy equipment and he or she falls. Your ultrasound machinery is too hot and burns a patient's skin. A patient trips on a loose piece of carpeting in your practice's lobby.

What if these patients file lawsuits against you? Are you covered?

That's a question that rehab therapists need to ask themselves, said Tammy Richmond, MS, OTRL, a private-practice consultant at Ultimate Rehab LLC, in Pacific Palisades, CA.

Richmond spoke during the American Occupational Therapy Association (AOTA) national conference advising therapists how to protect their private practices from lawsuits.

Forty-six states now require that OTs be licensed and 41 states require licensure for OT assistants, said Richmond during a recent interview.

While licensure is important to the profession, it can also bring an increased risk of exposure from lawsuits, she warns.

Some of the common excuses therapists give for not purchasing professional liability insurance don't necessarily hold true, she said. One example that's heard often is the belief that "my employer covers me." That's not always the case, and even if it is, coverage may not always be adequate, she said.

It is smart when you go to work at a private practice to ask about liability insurance coverage. "You should ask during your job interview and before you perform clinical services," she said. However, if you are already employed, ask your employer whether you are covered by the company's insurance or if you need your own professional liability insurance. Ask for a copy of the coverage your employer provides and read the policy carefully. "Purchasing your own professional liability insurance is still advised," she said.

Other therapists may think that the "Good Samaritan" laws give them legal immunity. That may be true, but remember that you will need legal counsel to defend a lawsuit, Richmond said. You may also think, "I have no assets." Not having assets now, such as a house or large bank account, should not deter therapists from purchasing insurance, said Richmond. Someone could make a claim against you in the future that would affect your future assets-not the ones you had at the time of the claim. Then there's the argument, "If I don't have insurance, I won't be sued." A plaintiff's lawyer, however, will not know that you don't have insurance, Richmond said. You still have to defend yourself if you're named in a suit. That's high risk with no safety net for your legal counsel.

You may think that insurance costs too much. However, it costs pennies compared to the expense of defending yourself against a claim, she said. A typical retainer fee for an attorney can be as much as $2,500. "You can get insurance for as low as $215. Buy it. If money is tight, give up buying the shoes at the mall," she said.

When it comes to liability insurance, there are two types of policies, Richmond said.
The first type is a "claims made" policy. This covers you only for claims filed during the term of the policy. You must renew the policy annually. It takes into account the likelihood of a claim being filed from your current or previous policy periods.

The second type is an "occurrence" policy. This covers you for any incident that occurs during the policy term, regardless of when someone actually files a claim. This offers long-term protection. For example, if someone sues you five years after you have treated him or her, or after you left a particular job, you'll be covered.

Each therapist needs to decide what kind of insurance is best, Richmond said.

There are some common terms that people need to understand when talking about insurance and policies, Richmond said. Consider the following:

1. The definition of a claim. This is the report of an incident that could result in a lawsuit. It can also be a complaint to an institution. A claim is the receipt by the insured of a demand for money or services, that names the insured and an allegation.

2. Limits of liability. This is expressed in two amounts. The first represents the maximum amount of protection for a single claim and the second represents the limits of the amount to be paid for all claims filed during the term of the policy.

3. Effective date. This is the date on which the insurance company has accepted your application for coverage. Be sure you pay any premiums on time to maintain coverage, Richmond said. In this case, "the check is in the mail" won't cover you if you allow a policy to lapse and a claim is filed during that window of time.

4. Activities covered by your policy. Each insurance company should send you a list of activities that your policy does and does not cover. You need to carefully go through the list and review all exclusions. Also understand the term "scope of practice," which is used by your insurance company. Scope of practice defines what you can and cannot do as an occupational or physical therapist. Also, review your professional liability v. general liability. General liability covers you for a patient falling on an icy sidewalk while coming into your clinic, rather than for a claim based on your professional, hands-on treatment.

5. Exclusions. These are the items your policy does not cover. The insurer should have a section on your policy listing all exclusions. "Go to your exclusions list first" when reading through your policy, Richmond advised. Typically these include: defamation, personal injury, assault and battery, and practicing outside the scope of practice. Exclusions can also include activities that you do independent of your employment, such as volunteer or per diem work.

A key to managing risk
Obtaining professional liability insurance is one of the key ways of managing risk to you and your practice. Check with your professional association, such as AOTA or the American Physical Therapy Association, for the insurance companies they endorse. It's important to be thorough when applying for insurance coverage. Make sure you get adequate coverage and follow these tips:

 Discuss and understand your policy with your insurer

 Assess your practice for any activities that you perform that aren't covered by your insurance

 Purchase what's called "tail coverage" to allow an extended period to report claims

 Purchase additional coverage to cover "other activities," such as specific exclusions

Once you have insurance, stay up to date with your coverage. File your policy in a safe-but-accessible place, Richmond said. Pay your premium on time. Evaluate your practice and policy annually--have you added new services and are those covered?

For instance, when Richmond took on consulting work she needed to be sure her insurance covered her career move. If you move, check to make sure your present policy complies with the requirements of your new state location. Also, when it's time to renew your insurance, see what else your insurance company may offer by checking its Web site.

Consider other necessary insurance. OTs and PTs often buy general liability, errors/omissions, business owner's packages, equipment insurance, worker's compensation, commercial auto insurance, and employment practice insurance.

What happens when someone enters a claim against you? If someone files a lawsuit against you, he or she needs to show certain parameters of negligence on your part. The patient must prove by a preponderance of evidence the following four elements:

1. The defendant/therapist had a legal duty to care for the patient

2. The therapist violated that duty

3. The therapist's breach of duty was the direct cause of the patient's alleged injuries

4. There were injuries that are legally recognized by a judge or jury

Breach of duty is the key here, Richmond said. For instance, did the patient fall off the stool because the therapist failed to lock a safety device and the seat moved? Or had the patient been left impaired by a stroke, so the therapist should have recognized that it was not safe to turn away and leave the person alone on a stool.

So what do you need to do if a claim is filed against you? The first thing to do is immediately notify your insurer, Richmond said. Then preserve all clinical records and related evidence, including letters, memos, notes to patients, and other related paperwork.

Make a list of potential witnesses, just like you would if you were in a car accident. If the claim involves a piece of equipment, it is very important you have maintenance information and operating manuals.

Don't discuss the claim with anyone except your legal counsel and insurance company.

You can assist your counsel by doing the following:

 Provide timely assistance and access to your files

 Show a willingness to work toward reasonable settlements

 Educate your counsel about any complex clinical matters

 Admit to your counsel any mistakes in judgment

 Make recommendations about qualifications of necessary experts who can testify on your behalf

Richmond said it is always advisable to pay for legal counsel and never try to represent yourself in a lawsuit. Your insurance company has lawyers, but you may also want to get your own counsel, she said.

Richmond said therapists need to know what to do if a state medical investigator shows up at the door. This can happen if someone claims, for instance, that you engaged in fraudulent billing. In this case, be polite, cooperative, and ask the investigator to return with a subpoena. Don't answer questions. Then call your liability insurance carrier and your legal counsel.

Where are rehabilitation therapists most vulnerable when it comes to liability claims? According to statistics obtained by consultant Tammy Richmond, MS, OTRL, one large insurance underwriter reported 367 claims involving OTs and PTs from 1993-1997. The claims involved the following types of allegations:

 Negligent evaluations-23%

 Negligent treatment involving activities of daily living (ADLs) or exercise-23%

 Negligent treatment involving modalities-20%

 Negligent failure to monitor patients during exercise or ADLs-10%

 Negligent failure to monitor patients during modalities-9%

 Miscellaneous allegations-9%

 Negligence to refer to other providers-7%

 Sexual misconduct-2%

Other less common areas of exposure reported included the following:

 Practicing across state lines

 Failure to maintain continuing education

 Alternative therapies not covered by insurance

It is important to be thorough and ask the right questions when applying for professional liability insurance, says Tammy Richmond, MS, OTRL. The following are nine tips to follow in order to make sure you get the coverage that you need:

1. Talk with other rehabilitation therapists about the carriers they are using. Have they had any situations where they had to work with the insurance company?

2. Shop around. Speak with representatives from all the insurance companies offering coverage for therapists about your particular needs. You may check to see whether your professional therapy association endorses an insurance company.

3. Obtain the appropriate forms and information.

4. Carefully read the policy information. Understand all the inclusions and exclusions for what your policy covers and does not cover.

5. Be sure to find out what kinds of notice you are required to post in your clinic or private practice, such as patient rights.

6. Fill out the application. Be complete, even if it means including embarrassing information, such as any previous claims against you or alternative therapies you may provide.

7. Don't leave questions blank. Use "N/A" for "not applicable" when a question does not apply to you.

8. Talk with the insurance agent if you have questions while filling out the application.

9. Once you receive your proof of insurance, make copies and store them in a safe and accessible place.

When it comes to protection from lawsuits and insurance claims, some rehabilitation therapists may have a false sense of security. There are some questions to ask your employer/insurer as you try to determine whether you have adequate protection against the risk of legal action, according to consultant Tammy Richmond, MS, OTR. Pick out the questions from the following list that apply to you:

 Am I covered by a claims-made or occurrence policy? For instance, if my employer were to change policies, would a later claim for an incident that occurred during the previous policy's term be covered by the previous policy? If my coverage is a claims-made policy, are there any gaps in coverage?

 What is your definition of a "claim"?

 If I were named as a defendant in a lawsuit against my employer, would I be assigned my own attorney?

 What are the limits of liability for each incident?

 How many other professional employees or support employees share in the limits of liability?

 What are the aggregate limits of liability each year for the practice setting?

 What coverages are excluded?

 If I terminate my employment, will the coverage provided by my former employer's policy protect me from claims resulting from an incident when I was employed there?

 If my employer merges with another employer, what assurances do I have that I will be covered for incidents prior to the merger?

 What happens to my insurance protection if my employer (or I) closes the practice or goes bankrupt?

 What happens to my insurance protection if my employer (or I) fails to pay the insurance premium on the employer policy?

 Will my employer's (or my) policy cover me for therapy practices other than at my place of employment?

 Will I be covered for acts construed to be outside the scope of my employment?

 Will I be supported by the employer's policy only if the employer supports my conduct at the time of the incident?

 Do I have personal injury protection for acts of libel, slander, or defamation?

 Do I have personal liability protection for acts that can be construed as nonprofessional?

 Will I be covered for legal representation if I am brought before my state licensing board for a disciplinary hearing as a result of a professional liability incident?