By William D. Dyer

The Department of Labor has issued an administrator’s interpretation regarding the definition of a son or daughter, for the purposes of FMLA. The new interpretation provides a somewhat broader definition than many employers may typically consider. In particular, this document explicitly extends the definition to include employees who assist in raising a child but are not the biological or legal parent of that child under the principle of “Loco Parentis.” FMLA has always had a provision to accommodate individuals who stand in “Loco Parentis” but did not provide a clear definition. This new interpretation specifically addresses the applicability of this provision to same sex domestic partners.

Our position at HCP National has always been that the “Loco Parentis” provision has broad applicability and that employers should be very cautious when interpreting this provision. Call your labor attorney whenever in doubt. The new guidance from the DOL provides an expansive definition that should aid employers when making this determination.

HCP National specializes in compliance in FMLA, CFRA, EEOC, and more. Our office is located in Aliso Viejo, CA. We are not tax or legal experts. We are insurance brokers and advisors. Please check with your CPA and attorney prior to implementing any of the above mentioned in this blog.

By William D. Dyer

Q: What is EPLI Insurance?
A: EPLI Insurance or Employment Practices Liability Insurance covers the employer for exposures relating to employment (i.e. discrimination, wrongful termination et al).

Q: What’s the difference between term life insurance and whole life insurance?
A: Term insurance is for people who do not want life insurance to be paid when they die of old age. It is normally purchased to cover a ten or twenty year period, like when someone with young children wants coverage in case they die prematurely. The premiums are cheap, but they skyrocket at the end of the term, so most people cancel the coverage. It seldom results in a claim, since most people who buy term buy it when they are young and healthy. If there is a term life death claim, it is usually the result of an accident or a premature death due to an unexpected disease.
Whole Life insurance is as the name implies, it covers your entire life. This insurance is for someone who wants coverage for their entire lifetime. Since this has a greater coverage period, it is more expensive. But on a net basis, whole life is cheaper than term life. When you pay your premiums, a small portion goes to the cost of the life insurance and most goes toward an investment. As you pay your premiums after twenty or thirty years, you likely will have double what you paid in premiums in the investment portion of the policy, called cash value. You can use the cash by borrowing it, or you can leave the cash alone, and it will likely (depending on the design) pay for your premiums for the rest of your life.

Q: What is the average cost of malpractice insurance?
A: We get this question all the time, and it depends on which state, specialty, the year of the retro date and the doctor’s claims. If you want a ballpark, in CA, a non invasive specialty, fully mature, with no claims is $10K a year, and an invasive specialty is $45K. If it is NY, multiply those numbers by three or four.

Q: How much is the most basic professional liability insurance for a small business?
A: It’s tough to say because it depends on what they do for a living, but a ballpark small business is $5K to $10K a year.

Q: What is Personal Injury Medical Malpractice?
A: This is a new insurance that allows the patient to buy life, and a product similar to AD&D for claims arising from complications related to a recent surgery. For example, if you die from complications of a surgery, then your family will get a death benefit. If you lose your limb(s) or other functions, then you get a benefit. This new insurance may lower the chances of claims against the surgeon. First, if a family or patient suffers a loss and they get paid under this policy they may be less likely to sue the doctor since they received compensation. Also, this may help negate a patient or family’s lawsuit claim alleging that the doctor did not provide adequate information regarding the surgical risk, and therefore never obtained informed consent. How would a patient claim that he/she did not know the risks if he/she buys insurance to protect himself/herself from the surgical risk?

Q: FMLA versus workers comp?
A: FMLA is the Family Medical Leave Act. This provides job protected leave for non job related illness or leave to care for an immediate family member. Workers Comp provides benefits for job related injury disability or death.

Q: Are most ASO also stop loss?
A: ASO is administrative service only. These are the services that the employer needs to self-insure its health insurance; the business that performs this is called TPA, or third party administrator. ASO includes claims processing, utilization review, case management, PBM-pharmacy benefit manager, and PPO.
Stop Loss is the insurance that the employer buys to cover himself/herself for catastrophic claims that exceed a defined dollar amount (i.e. $50K or $100K). He/she would also purchase Aggregate Stop Loss Insurance. This covers the employer if his/her total annual claims exceed a defined amount of money. So do all ASO plans have stop loss? Not always. There are large employers who have thousands of covered employees that may feel they do not want to purchase stop loss, since their risk is very predictable. When it is not predictable, they have the necessary funds to cover bad years.

Q: Why do you have to issue a broker of record to a broker?
A: This is done when you want to hire a new broker to handle your insurance. Perhaps you currently have the best deal on your insurance, but you find another broker who provides more services than your current broker, and you want to change. You simply sign a letter addressed to all your insurers with your policy number which states, “I am appointing broker X as my new broker and please pay him/her the normal commissions that are being paid in relation to my insurance.” You should think about why you are changing brokers. Some clients sign this without knowing what it means or they think it is no big deal. It means the person who is handling your insurance now is going to be fired. It is similar to firing an employee. You would not do this for any particular reason. Also, do not do this midway into the policy if it is for group benefits. Inform your current broker, and make the change thirty days prior to renewal. Since the current broker did the work of shopping for all your coverage for free, and he/she is paid a monthly commission throughout the year, if you fire him/her midway into his/her policy then that money goes to the new broker for doing nothing. For all other insurance coverage you can make the change anytime after the renewal, since the broker gets paid the entire commission at the time of binding your renewal.

Q: What are reinsurance triggers in healthcare?
A: Not sure, but reinsurance can trigger on a specific basis, meaning a defined deductible amount or it can be a quota share where the reinsurer takes a percentage of risk over a certain dollar amount.

Q: What does D and O insurance mean?
A: Directors and Officers Insurance protects the current and former officers, directors, managers, and employees for claims arising from the operations of the company (not professional liability).
Example: an anti-trust claim or misuse of corporate assets or business interference.

Q: What does a statutory limit mean on a worker’s comp policy?
A: Workers Compensation covers all employees for work related injuries at 100% of the medical bills. It has a disability benefit and life insurance. In return for these free benefits, the worker cannot sue the employer for more than what the statute says. In California, this is $1 million. The only way to get more than this limit is if the worker can prove gross negligence.
Example: an employer knew he had a faulty machine and let an employee use it and he/she is severely injured or killed. This is why all employers, especially those who can have a big worker’s comp claim should buy umbrella liability insurance, since this is the coverage that may respond if you have a claim that exceeds the workers compensation statutory limit. General Liability will not respond.

HCP National Insurance is a provider of Errors and Omissions, Professional Liability, and General Liability Insurance for small businesses. We are experts in small business insurance, health care insurance, D and O and E and O insurance, medical malpractice insurance, and all other insurance coverage. Our home office is located in Aliso Viejo, CA.

NOTE THE ABOVE IS A GENERAL DISCUSSION ABOUT HOW COVERAGES MAY WORK. YOUR INSURANCE POLICY AND ALL ADDENDA ARE THE ONLY AUTHORITY OF HOW YOUR COVERAGE WORKS. DO NOT RELY ON THIS ARTICLE AS AN EXPLANATION OF YOUR COVERAGE. HAVE YOUR ATTORNEY REVIEW YOUR ENTIRE POLICY WITH YOU TO DETERMINE WHAT IS AND ISN’T COVERED.

It’s April, so it’s time for another round of health insurance Q&A.

Q: Can my employer stop my health care when on comp?
A: Yes, unless you are on FMLA, CFRA or (CA Only; FEHL/PDL). The health insurer contract will often state that to be eligible for health insurance you must work full time and be actively at work. This may change with the healthcare reform, so stay tuned.

Q: Do FMLA and CFRA run concurrently in cases for pregnancy?
A: Yes they do, and if you are disabled from pregnancy and you are in CA you also have FEHA, which if combined with FMLA and CFRA can get you greater time off.

Q: Does the company need to retro FMLA when a manager did not tell an employee he/she may be eligible for FMLA?
A: This is a legal question, so we cannot respond. Contact a labor attorney because you may have a case.

Q: What does capitation mean in provider excess loss?
A: Capitation is where an HMO pays a group of providers a defined amount of money to provide healthcare. If the money they collect is not enough due to a catastrophic patient, then the group will hopefully have in place a provider excess loss insurance policy (AKA Provider Stop Loss, Managed Care Excess and Capitated Stop loss, or Stop Loss Reinsurance). The policy allows the group to submit any claims they have usually after $15K or $20K is paid by the group for reimbursement.

Q: What happens when my employer denies my FMLA in California?
A: He/she may be in big trouble if he/she were wrong to deny it. Call a labor law attorney. The employer and any manager or supervisor, who is involved, is liable if they were wrong to deny your leave.

Q: What is the difference between Standard versus Nonstandard Malpractice Insurance?
A: Standard insurance companies provide insurance for a certain risk profile: minimal claims, no medical board issues, and typical practice patterns. These insurers charge the least for coverage. The standard insurers have their rates filed with the department of insurance and they cannot charge more or less than those rates without COI approval. If a doctor does not fit the standard insurers underwriting requirements, then they are rejected in the standard market since the insurers cannot charge more than their filed rates.

Example: Dr. A is a general surgeon and a doctor who meets the standard underwriting. He would be charged $45K a year for his premium. However, Dr. B, another general surgeon, has lots of claims thus the standard insurer calculates that it should charge him $80K a year. But the standard insurer cannot charge $80K since the most it can charge is $45K, because these are the rates it has filed with the department of insurance. Thus it cannot accept Dr. B since he is a non standard risk. Now the non standard malpractice insurer does not want to be limited to filed rates so it does not file and does not have the oversight of the insurance department. It charges Dr. B $80K to insure him. The non standard market is the place for doctors, who cannot be accepted by the standard market. At HCP National we work to get all our clients into the standard medical malpractice insurers. While a doctor is stuck in the non standard market, we shop them every year to find them the best deal possible.

Q: How does stop loss insurance work and best practices?
A: One needs to analyze your past shock loss claims. If you have a group that has a 1000 or more employees, your experience should be somewhat predictable. Also, you should have past claims experience to set your specific level. In addition, see if you can reduce the stop loss premium by sharing some of the defined risk with the insurer (aggregating specific or retro).

Same for your aggregate, take your ECC (expected cash claims) plus trend, add 120%, 125% or 130% and compare it to what the insurer wants to charge. Also, hire a broker who has done millions of stop loss deals. Your broker’s job is to find the best deal on stop loss insurance for you and advise you on which stop loss levels to purchase.

HCP National Insurance is a provider of Stop Loss Reinsurance and Professional Liability Insurance. We are experts in small business insurance, health care insurance, D and O and E and O insurance, medical malpractice insurance, and all other insurance coverage. Our home office is located in Aliso Viejo, CA.

NOTE THE ABOVE IS A GENERAL DISCUSSION ABOUT HOW COVERAGES MAY WORK. YOUR INSURANCE POLICY AND ALL ADDENDA ARE THE ONLY AUTHORITY OF HOW YOUR COVERAGE WORKS. DO NOT RELY ON THIS ARTICLE AS AN EXPLANATION OF YOUR COVERAGE. HAVE YOUR ATTORNEY REVIEW YOUR ENTIRE POLICY WITH YOU TO DETERMINE WHAT IS AND IS NOT COVERED.

Here are the 2009 Stats: (per the Employee Benefit Adviser, Feb. 2010)

• 93,000 workplace discrimination charges filed with the EEOC

• Age related claims were the second highest, resulting in 22,772 total awards, adding up to $72 million

• 21,451 ADA claims, up 10% from 2008

• Charges alleging discrimination

All of this can be mitigated through training. Human Resource cannot be everywhere. It is the supervisors and managers who need to be trained and reinforced on FMLA, EEOC, ADA and Harassment compliance because they are legally liable, which means a judgment can be levied on them. If a supervisor or manager knew it was their house and savings on the line, how quickly do you think they would want to learn?

With the new economy and those over 60 staying employed, it is imperative that all those who have any managerial power, in an enterprise, are trained and kept up to speed on HR Compliance. Profits can be eroded by the right lawsuit that goes uncovered by EPLI.

HCP National is a Compliance Educator and trainer in FMLA, FEHA, CFRA, EOC, OSHA, IRCA, Section 125, COBRA and more, as well as a full service health insurance brokerage company whose home office is located in Orange County, CA. We do not give legal or tax advice since we are not attorneys or CPA’s.

NOTE THE ABOVE IS A GENERAL DISCUSSION ABOUT HOW COVERAGES MAY WORK. YOUR INSURANCE POLICY AND ALL ADDENDUM ARE THE ONLY AUTHORITY OF HOW YOUR COVERAGE WORKS. DO NOT RELY ON THIS ARTICLE AS AN EXPLANATION OF YOUR COVERAGE. HAVE YOUR ATTORNEY REVIEW YOUR ENTIRE POLICY WITH YOU TO DETERMINE WHAT IS AND ISN’T COVERED.

We get calls from all around the country from employees who want to know if their Family Medical Leave Act (FMLA) or Americans with Disabilities Act (ADA) rights have been violated. We explain that we are not attorneys. But here is one of the stories I was told by a caller:

I am 52 years old and I worked for (one of the biggest pet store chains in the US) XYZ as a store manager. At work I slipped on some water, fell and hurt my hip. I have a bad hip, and the doctor said I needed hip surgery. I went to my regional manager and told him I needed two weeks off for surgery.

I asked the caller, “Did they offer your FMLA paper work, and explain to you your FMLA rights? Did they give you the forms, et al?”

No, all he said was that he could not give me two weeks off but only one week. I had the surgery, came back and my doctor told me not to lift anything more than 20 pounds. I told my manager this restriction. Things went fine until one day some of the guys, who move dog food around, did not show for work and the manager told me to move them. I reminded him of my restriction of 20 pounds and he said “just bend from the knees, and move it all.” I reinjured myself and as I could barely move, things were not getting done in the store as fast and my regional manager fired me for bad performance.

Again we could not give him legal advice, but this is a classic example of a company not training its management/supervisors in Family Medical Leave Act and Americans with Disabilities Act. This man was entitled to up to 12 weeks of job protected leave and should have been given the forms and an explanation of his rights. Supervisors are personally liable for violating FMLA. Also, when he came back to work the weight restriction was a reasonable accommodation and should have been made via the ADA.

This is why at HCP National we provide FMLA and ADA training for managers/supervisors. It is not enough that the HR department knows these federal laws, the front line managers have to know these laws too, so they do not violate them and get the company and themselves into a lawsuit.

Imagine the lawsuit the man above might initiate. This all could have been avoided by having a 1 hour training session, twice a year with every manager and supervisor of XYZ.

HCP National is a Compliance Educator and Trainer on FMLA, FEHA, CFRA, EOC, OSHA, IRCA, Sect 125, COBRA and more, as well as a full service employee benefits insurance brokerage for employers with 50 or more covered employees, located in Orange County, CA.

NOTE THE ABOVE IS A GENERAL DISCUSSION ABOUT HOW COVERAGES MAY WORK. YOUR INSURANCE POLICY AND ALL ADDENDUM ARE THE ONLY AUTHORITY OF HOW YOUR COVERAGE WORKS. DO NOT RELY ON THIS ARTICLE AS AN EXPLANATION OF YOUR COVERAGE. HAVE YOUR ATTORNEY REVIEW YOUR ENTIRE POLICY WITH YOU TO DETERMINE WHAT IS AND ISN’T COVERED.

Shopping for any sort of insurance is daunting work, especially Medical Malpractice insurance. You should start about 90 days prior to renewal. Below is a nine step process to achieving the best deal for your coverage.

1. Assemble a list of all your insurance companies for the past 10 years with dates of coverage and policy numbers so your broker can obtain your loss runs (history of loss/claims), which normally should be requested within 60 days of your renewal (anything older may not be acceptable to the insurer).

2. Make copies of your licenses, update your CV, and assemble your letter head and any marketing pieces. The CV is important, since a potential insurer wants to see that you have adequate training. The letterhead, website and any marketing pieces are there for the underwriter to see if you are advertising services that may not be apparent on your application.

3. Write narratives on all claims for the past 10 years, as well as any medical board issues, if applicable. This is your opportunity to give your brief version of the events that occurred. Be concise and brief.

4. Your broker should give you one application, which he/she will use for your renewal and to shop for your coverage. Take your time filling this out, pay attention to the procedure list and mark all procedures that you perform (do not add things that you do not). Never delegate your application to your assistant. If you leave a procedure off in the application or there is a material misrepresentation, though unintentional, the insurer can deny your claims. Also, do not leave any blanks on your application rather add NA if something does not apply.

5. Your broker will send you letters to sign, which will be addressed to your former and current insurer(s) for the past 10 years. List your policy number, sign, and send this back to your broker first thing, prior to finishing your application since obtaining the loss runs can take some time. The purpose of loss runs is that the insurer wants third party confirmation on your losses.

6. Once you get your renewal and other quotes, read them carefully and ask lots of questions. Also, check your retroactive date to make sure it matches your current policy. Some people miss this and stare at a cheap price, while ignoring the terms of the quote. If you lose coverage to save money, you are not saving much.

7. If you are in the non standard market, a market reserved for doctors with malpractice claims, you will want to review premium finance options. The interest rate should be lower than a credit card. If it is not, start asking questions. Also, the norm is that you pay 25% as a down payment and finance the rest over nine
payments. Ask your broker for a 10 payment plan. Most finance companies will do this as a favor to the broker.

8. Send your down payment right away to your broker, and make sure you have the funds in the bank. If you are late, the insurer may pull the quote. The broker will not bind coverage without the down payment, because the insurance company can require the broker to pay it. If this happens, then your policy will not be activated.

9. Pay your premium early. Don’t ever be late. This is the one bill to never float. The insurance company can cancel and refuse to reinstate you for coverage. May sure your book keeper knows to pay this bill first and foremost.

HCP National is not a law firm and does not provide legal advice. We are a medical malpractice insurance broker and risk manager.

Occurrence Medical Malpractice Insurance

An occurrence malpractice insurance policy covers any claims that occur during any policy year. The only event where occurrence coverage will apply is when the incident occurred during the policy year.

Claims Made Medical Malpractice Insurance

A claims made policy covers any claims brought during the claims made policy period. There are two events for claims made medical malpractice coverage to apply. The incident must have occurred during the policy year and it must be reported during the policy year.

The average time to report a medical malpractice claim is approximately one to two years, and a tail is required, or reporting endorsement is to be purchased to provide coverage for claims which have occurred but are not yet reported if the insured is non-renewed or decides to change carriers.

(Note: This is not meant to be legal advice; we are not a law firm, but we are HCP National is a medical malpractice insurance brokerage in Orange County CA.)