Employment Practices Liability (EPL), also known as Employment Practices Liability Insurance (EPLI), provides coverage for employment-related suits brought against Companies, Directors and Officers, as well as other employees arising from actual or alleged Discrimination, Wrongful Termination, or Harassment.

Claims are brought by:
• Current or Former Employees
• Applicants for Employment
• Third Parties (Non-employees, i.e. customers)
• Governmental Agencies (EEOC)

Insurable Costs included in the EPL policy:
• Legal Fees (for both the Company and Insured Persons)
• Damages (include some limited Punitive Damages )
• Settlements (includes the plaintiff’s attorney expenses)

Employment Practices (EPLI) Wrongful Acts include actual or alleged:
• Violation of any common or statutory federal, state, or local law
prohibiting any kind of employment related discrimination
• Harassment, including any type of sexual or gender harassment
• Abusive or hostile work environment
• Breach of an actual or implied employment contract
• Wrongful deprivation of a career opportunity, wrongful failure or
refusal to employ or promote, and wrongful demotion
• Employment-related defamation, libel, slander, disparagement,
false imprisonment, misrepresentation, malicious prosecution or
invasion of privacy
• Wrongful failure or refusal to adopt or enforce workplace or
employment practices, policies or procedures, solely as respects
employment-related discrimination or harassment
• Wrongful discipline
• Employment-related wrongful infliction of emotional distress,
mental anguish or humiliation
• Retaliation
• Negligent evaluation, negligent hiring, or negligent supervision of
others in connection with any of the above points

Limit of Liability and Premiums for EPL
Capacity has increased with Limits available from $1,000,000 to $20,000,000 for EPLI.
Minimum premiums – $2,500 annually for Privately Held companies with 5 or fewer employees.

The above is a limited discussion of EPLI. HCP National is an EPL, ELPI insurance provider, or broker. This blog does not alter or change coverage, nor is meant as legal advice. HCP uses Rubicon Insurance Services as its service partner. http://www.rubiconins.com/

When a hospital decides to self-insure the health insurance that they provide for their employees, they hire a TPA to pay the claims and they buy stop loss, employer stop loss insurance, to protect themselves from catastrophic claims. The hospital will purchase two types of stop loss insurance: Specific Stop Loss and Aggregate Stop Loss. The Specific Stop Loss covers the hospital if they have an employee whose medical claims go way beyond what is expected (i.e. transplants, premature baby, and chronic condition) and exceed a defined dollar amount or Stop Loss Deductible. The Specific Stop Loss premium is very expensive.

Here is an example of how Specific Stop Loss Insurance works for a hospital:

Hospital “A” has an employee named V. V has cancer and he is treated at Hospital “A”, and his medical bills (full billed charges) are $200,000. The Specific Stop Loss deductible is $100,000. The Stop Loss insurer will reimburse the hospital $100,000.

On the surface this sounds like a great scenario. But this is a hospital that is treating its own employee and generating a bill based on “full billed charges” to submit to the stop loss insurance company for reimbursement. The goal of the stop loss is to reimburse your actual costs that exceed the stop loss deductible. When a hospital bills “full billed charges,” this includes the cost plus the mark up. Also, when a stop loss insurer pays out a claim, they will use this at renewal to increase the hospital’s stop loss rates.

Solution: Hospital “A” agrees to accept a per diem, or discount fee, for service (based on their actual costs) when one of their employees comes to them as a patient. By doing this, the hospital is now basing its reimbursement on its costs, not profit plus cost, which are full billed charges. By designing the stop loss insurance in this manner, the premiums will be lower, as will the claims.

Example of the ideal stop loss coverage structure:
For all care delivered at Hospital “A,” the stop loss will pay 30 percent of billed charges; at all other facilities it will be 100 percent of the paid amount.

This will lower the cost of the stop loss insurance for the hospital by 20 to 40 percent. This also depends on whether the hospital incentivizes their patients to use their facility by offering hire benefits when they do so. The savings will come from the fact that the stop loss insurer will know if a patient comes to Hospital “A,” it result in the insurer having a lower cost of claims and lower exposure from claims occurring.

We are not defining coverage in this blog. Your policy is your final authority. HCP National is a Stop Loss Insurance Company or Broker. We have placed over $250,000,000 in stop loss premiums since our founding.

We have found many Medical Spa’s, more commonly known as Medi-Spa’s, without proper insurance. Most buy their normal business insurance and think that their general liability insurance will cover their Spa adequately. General Liability for this type of business will cover the business entity, but will exclude coverage for anything relating to medical malpractice for a Medi-Spa. So, if a client has a burned face from a laser treatment, the Medi-Spa is not covered by general liability insurance.

The only way to cover the Medi-Spa for medical malpractice claims is to purchase Medi-Spa Medical Malpractice Insurance. This coverage can be structured to cover the techs or RN’s, the Medical Director for non-direct physician care, non-physician employees and the business entity. The policies normally exclude the MD, but they can be added under certain conditions. Also, if you have an MD who works for the Medi-Spa, in addition to ascertaining if they have their own medical malpractice insurance, ask for a certificate of insurance that specifically states they have coverage for Medi Spa procedures i.e., Laser, Botox, Fillers, et. al.

The above is a brief discussion of Medi-Spa Medical Malpractice Insurance. HCP is not a law firm and the above does not constitute an interpretation of insurance coverage. HCP National is a California Medi-Spa Medical Malpractice Insurance Company or Broker. HCP National is also a California Medical Malpractice Insurance Company or Broker. We specialize in all forms of medical malpractice, including OB/GYN medical malpractice, Surgeon medical malpractice, and Medical Group malpractice.

Why does medical insurance, HMO’s or PPO’s cost so much, and does the Obama administration and the congress have any answers? Most people do not realize that nearly all the health care dollars that are spent (about 70%), are spent by the federal and state governments.  But mostly by the Feds.  

If you doubt this, add up Medicare, Medicaid, VA, and Federal Employees health plans.  We have had socialized-type medicine for years. The only difference is they do not call it that.  The one that is the most like European health care is the VA, which anyone treated at the VA knows is not ideal.

So why does your group health insurance increase 12 to 14 percent a year or more?  There are many things driving the health care pricing; the biggest is the cost shifting hospitals and doctors are forced to do to keep the lights on.  Medicare and Medicaid pay for all services based on a fixed-fee schedule.  No hospital or doctor can legally charge more than what that schedule allows.  So how does this cost shifting work?

The Feds decide to lower a payment for a class of procedures, or DRG’s (Diagnosis Related Group) as they are called, by 20 percent.  You are a hospital and you receive $5 million a year for that DRG, and now you will receive $4 million.  You do not have overhead that can be cut, so you decide to bill more for the only patient class that is not based on a strict schedule—your patients with private health insurance.  So they charge you $30 for a ten-cent Tylenol.  This has been going on for years.  The Feds are in a sense taxing all of us who are not part of their system, because we are forced to pay more for our own private health insurance. 

So if the system that the government cannot fund itself without its cost being pushed to those with private health insurance, why would we want them providing our health care?  Also, name one thing that the Federal government does that is efficient and cost effective.  Do not say the post office; yes, they do get the mail to us, but they are billions in the red right now. 

Some things the Fed could do to help drive the cost of health care and health insurance down: 

• Stay out the health insurance business.  The private sector is not great, but it works better than the Fed’s programs do.

• Have the leading medical schools in America develop an online database of best practices for all health care treatments.  And put in some incentives, like limit malpractice exposure, for MD’s and hospitals to follow.  Example:  A person needs a hip replacement.  There are many choices for the implant with different prices, and all may have the same result.  Why should the most expensive option be used if it yields the same result as the lower cost one?

• All MD’s should have electronic medical records in one central location and one system, so multiple doctors can view the same patient’s records. This would eliminate double testing and drug interactions. The Fed’s need to mandate one system via Medicare.

• Give F-1 Visa’s to any foreign student graduating from a US college with a master’s degree in medical research fields or Bio Engineering.  We do not want to loseWeight Exercise these top minds to other countries; keep them here in the USA where they were educated, and give them full citizenship after five years. The cure to long-term cost of health care is more cures for disease (cure cancer, diabetes, heart disease and health care costs will plummet Health insurance premiums will be the cost of auto insurance) 

• Cut Federal spending and direct more money to medical research but instead of sloshing money around, create a national contest. Offer the company that cures diabetes no taxes for 10 years and a $5 billion dollar award; do the same for all the other leading diseases.

• If a drug or medical machine is approved by the FDA, then eliminate the drug maker’s liability to lawsuits except in cases of fraud. 

If we implemented these changes, we could easily keep this ever increasing health care expense from destroying our economy. HCP National is a Southern California Employee Benefits Broker.

Directors & Officers (also known as “D&O”) is better described as Business Liability. This policy provides coverage for Business-related suits brought against Companies, and Directors and Officers, which do not fall under the General Liability or Professional Liability policies.

Wrongful Act Defined: any actual or alleged error, omission, misleading statement, misstatement, neglect, breach of duty or act allegedly committed or attempted.

Insurable Costs Include:
• Legal Fees (for both the Board Members and the Company)
• Damages (including some limited Punitive Damages )
• Settlements (which include the plaintiff’s attorney expenses)

Insurable Events Include:

Suits from Competitors
• Anti-Competitive Business Practices
• Intellectual Property theft
• Tortuous Interference of a Business Relationship
• Employee Pirating

Suits from Vendors/Creditors/Customers
• Fraud or abuse
• Financial misrepresentation
• Failure to disclose material information
• Misuse of funds
• Waste or neglect of assets
• Failure to supervise or manage the organization

Suits from Shareholders (Major Shareholder v. Minor Shareholder)
• Buy-out of Minority SH by Majority SH (Major SH bought Minors out then went Public)
• Freeze-out Merger (Major SH arranges a merger which affects Minor SH)
• Sale of Company Assets to entities controlled by Major SH
• Failure of Principal to select adequate successor

Limit of Liability
Capacity has increased with limits available from $1,000,000 to $20,000,000.

Top Reasons why Private Companies should consider D&O:

Does your organization have employees?
No firm is immune from suits brought by current or former employees. Employment Practices Liability covers an Entity, its executives, and employees from Claims brought by both employees and customers (Third Party Liability). EPL is part of D & O policy.

Does your operation interact with the Public?
If your organization provides services to the public sector, your employees, independent contractors, and your firm is exposed to Discrimination and or Harassment Claims brought by customers (aka: Third Parties). Employment Practices policies which include Third Party Liability coverage is written specifically to respond to such Claims.

Does your organization issue financial statements?
Directors and Officers are liable for errors on a firm’s financial statements, which can lead to Claims brought by creditors, vendors, and other organizations that rely on the information provided in such statements.

Does your organization seek/use outside financing?
Directors and Officers can be held liable under federal and state securities laws regarding any sale of securities. Liability can arise from failure to fully disclose all material information about the organization at the time of the securities transaction.

Does your organization enter into contracts?
Disagreements between parties to a contract can lead to suits being brought against a Private Company’s Principals, who most often are the ones arranging, negotiating, and signing the contracts. Directors and Officers policies can provide defense costs for allegations of damages arising from a breach of contract.

Does your organization contemplate an acquisition or merger? What about Succession?
Major corporate transactions such as a sale or acquisition of a company are commonly second-guessed by others (i.e. “Did we pay too much?” or “Did we sell for too little?”). Even if a merger does not happen, Directors and Officers are exposed to suits from a variety of parties impacted by such transactions (or non-transactions). As more Business Owners face retirement, the issue of succession becomes an issue that will follow a former Owner’s decision into the future.

Does your organization have a Health Plan or a 401K Retirement Plan?
Such Programs are more common in this competitive Employer Market, and as more companies implement these new and complex programs, the greater the exposure to error is. Directors and Officers are not insured for such Claims in the D&O policy. Mistakes in processing these programs (i.e. failing to add a newborn to a Medical Plan) can only be covered under a Fiduciary Liability Policy.

At HCP we have been placing D and O insurance since our beginning and we adept to all forms of Directors and Officers Insurance. The above is a general discussion of D & O and not a policy analysis. Consult your policy for all questions regarding your coverage. We are not a law firm, but a D & O Insurance Broker, located in Orange County CA., whose D and O division is Rubicon Insurance.

Making money has never been more difficult than it is today. If you knew you could cut costs and add revenue to your company’s bottom line, you would be the star of your company’s next staff meeting. For 17 years HCP National Insurance Services has been saving managed care companies and providers money on their insurance products. We built our insurance brokerage business by helping our clients identify areas where they can save money, while keeping their organization fully covered.