By William D. Dyer

Medical Malpractice insurance is intended to cover the MD/DO for claims arising from direct patient care; but there are other kinds of malpractice insurance that cover other things. As mentioned in prior blogs, medical malpractice is the name we give to professional liability insurance or errors and omissions insurance for physicians. However, there are other medical professional liabilities or medical malpractice insurance that covers others besides the MD/DO for their direct patient care.

Entity Liability Insurance or Entity Malpractice Insurance is malpractice insurance that protects the entity from claims that it is pulled into, based on vicarious liability.

Entity Liability Insurance Example:

Dr. D. hires a doctor, Dr. PT, to work with him in his office on a part time basis. Dr. D. has the part time physician provide his own medical malpractice. Dr. PT misdiagnosed a patient for cancer and the patient sued the doctor for the mistake. The patient names Dr. PT and Dr. D. Dr. D. is named although the patient never met Dr. D. The patient sues Dr. D. because Dr. D.’s name is on the door of the practice; therefore Dr. D. is seen as responsible for Dr. PT’s actions.

Since this is not direct patient care, the business entity is the one being named in the lawsuit, so this will trigger the entity liability coverage. If Dr. D. has set up his entity liability insurance coverage, which is usually included in the doctors medical malpractice insurance, he will be covered. This is assuming that Dr. D. purchased entity coverage from his insurer, and that he informed his insurer that he was adding Dr .PT to his practice, and has him covered.

The other alternative is Dr. D. could have purchased stand-alone entity coverage, which is necessary if his medical malpractice insurer would not offer the coverage.

Clinic Malpractice Insurance is another common form of medical malpractice insurance. This is for clinics and has many unique features. First, the entity can require that MD’s have their own malpractice insurance and the clinic malpractice insurance will cover the entity. Also, the clinic policy will cover its PA’s and NP’s while they work for the clinic for no additional charge. In addition, the coverage will cover the employees and nurses of the clinic. Lastly, it will cover the medical director for non-direct patient care. Many MD’s are not aware that their medical malpractice insurance only covers direct patient care, and it does not afford coverage for medical director activities.

Allied Professionals Medical Malpractice Insurance is another form of malpractice insurance. These typically cover the NP’s and PA’s. The coverage is almost identical to the medical malpractice for the MD/DO. It covers the allied for claims arising from direct patient care. It also can include entity coverage.
Medi Spa is a more recent area of malpractice insurance. Many of these ventures think that their general liability insurance affords them coverage for a malpractice claim. It most certainly does not provide coverage. Medi Spas need coverage similar to the clinic coverage. They need entity insurance coverage, allied coverage (if applicable), and medical director coverage. This industry is the least insured of all the medical providers.

HCP National is a malpractice insurance company/ broker. Our medical malpractice department is located in Aliso Viejo, CA. We specialize in surgeon medical malpractice and OB GYN medical malpractice insurance and all other specialties. The above is a general discussion of insurance. It is by no means a promise of coverage or anything definitive. Always read your policy and review it with your counsel to determine how your coverage w

[Credit: NORCAL Mutual Insurance Company, Spring 2010 Issue]

Californian physician have some of the lowest cost medical malpractice insurance in the country, as a result of MICRA. Though many MD’s feel they pay a fortune, this is primarily due to the fact that they earn less in CA than MD’s who practice in other states.

The Medical Injury Compensation Reform Act (MICRA), the 1975 California law, that helps control healthcare costs, is safe for another year, at least on the legislative front. The deadline to introduce legislation in California this year has passed, so barring a last minute “deal,” MICRA will not be under attack in 2010. However, there are currently at least three cases challenging the MICRA cap on noneconomic damages in the California courts. NORCAL Mutual is encouraged by the recent Van Buren v. Evans decision in the Fresno Appellate Court that upheld the cap.

The relatively favorable climate in California is in stark contrast to the dismal situation in Georgia and Illinois, where the courts recently tossed out caps on noneconomic damages. The Georgia Supreme Court held that the cap violated the Georgia State Constitution’s equal protection clause, while the Illinois Supreme Court ruled that the cap ran afoul of the state constitution’s guarantee of right to trial by a jury.

These setbacks to tort reform in other states remind us that we must remain vigilant in defending MICRA in California. As NORCAL Mutual Board Chair, David Holley, MD, recently told executives of our endorsing medical societies, “Organized medicine is doing a good job of defending MICRA in California, but we can’t become complacent. The threats are ongoing and real. NORCAL Mutual is actively involved with several broad-based coalitions to augment the efforts of organized medicine in defending MICRA in forums spanning the legislature, courts and public opinion.”

HCP National Insurance is a national medical malpractice and medical professional liability broker appointed by Norcal. HCP National’s Medical Malpractice Insurance brokerage is located in Orange County, CA.

We’ve seen questions go through our que quite a bit, so we decided to do a monthly Q&A to get these questions answered. Feel free to ask follow up questions or even new questions, in the comments.

Q: When filing a worker’s comp claim in California, when will the employer stop health coverage for an employee?
A:If the employee will not be actively at work or working full time, 30 hours a week in general, (please check your health insurance plan document), then the employer should put the employee on COBRA . Be aware that some workers comp insurers will advise you to keep the employee on health insurance for an indeterminate length of time. They advise this as a way to not anger the employee. This is very bad advice. If your health insurance states, which many plan descriptions do, that to be eligible for health insurance you have to be working a certain number of hours a week on a full time basis, it means it. Just because you choose to keep them on the plan and pay their premium does not mean they are covered.

Example: We heard of an employer who kept an employee on the plan while an employee was out for 6 months due to a work related back injury. The employee had a heart attack, while on his WC leave, and needed open heart surgery. In the physician’s notes, the patient told him he had been on WC leave. The health insurer denied the claim, since the employee was not eligible for health insurance. The employee sued the employer for the $150,000 hospital bill.

Q: What is HMO reinsurance?
A: It is insurance that an HMO would purchase from an insurance company who agrees to share in a defined part of risk for a defined premium. One of the most common types of HMO reinsurance is stop loss reinsurance. An HMO might feel that it can pay all claims for the first $200,000 of medical expenses for any one member, but it does not want to absorb expenses beyond this level. The HMO agrees to pay an outside reinsurer who will reinsure the HMO, and reimburse it for claims above $200,000. The HMO will pay that reinsurer a per-member, per-month premium (pmpm). The pm pm pricing is the basis for the premium. The other typical reinsurance option is quota share reinsurance.

Q: What coverage do I need for my medical malpractice?
A: In California the norm for medical malpractice insurance is $1 million per occurrence and $3 million per policy aggregate. Other states have higher or lower limits depending on the rules and regulations within the state. If a doctor has privileges, his/her hospital will dictate the limits, and the hospital will know of any laws relating to these limits. If you do not have hospital privileges, ask your medical malpractice broker what is typical. There are 2 kinds of medical malpractice claims made: medical malpractice insurance and occurrence medical malpractice. Most doctors purchase claims made since it is more affordable.

Q: Employee benefits rescinding broker of record, who gets commission?
A: Commissions are paid monthly by the insurance company as you pay your premiums. If you fire agent A on 2/28 and hire agent B, and 2 days later, on 3/2, you rescind the broker of record on Agent B and rehire Agent A, odds are Agent A will not lose any money and Agent B gets paid nothing. The norm is that the insurer will give the current broker, in our example, Agent A, 10 days to receive rescindment of the broker of record. After 10 days the commission for March will be paid to Agent B. After 10 days if you fire Agent B and rehire Agent A, then Agent B will have 10 days to rescind the broker of record.

Q: How can public entities save money?
A: Competition is the key to saving money on insurance. You want a few insurance brokers working on your insurance. It is a lot of work, but the best way is to get multiple bids from 2 or 3 brokers including the incumbent. However, you need to be available to give the non-incumbent brokers the information they need to quote. We find many public entity purchasing departments favor the incumbent broker since he/she has all the loss run information and applications necessary to shop the insurance. The outside broker has little chance of competing unless you have a very diligent purchasing department at the public entity, which gets you the necessary information and answers questions in a timely fashion. We have seen very good purchasing departments, and many who are unresponsive, so the insurance stays with the same broker forever because you cannot get the necessary information to give a competitive quote and the public entity is then left paying more. Other ideas include hiring an insurance consultant to review your RFP to make sure that every item necessary to shop the insurance is included. This includes typical Q & A’s, and have the brokers provide their #1 through #3 favorite insurers for your risk, along with the premium that they have with those insurers. If more than one broker picks the same #1 insurance company, allow the broker with the most premium to have the #1 choice. The more premiums that a broker has with the insurance company, the better their relationship will be.

Q: What is excess workers comp?
A: This is for large to medium sized employers who want to self insure their workers compensation. They can purchase excess or stop loss reinsurance. This protects the employer from large claims.
Example: The employer has very predictable experience, but he/she wants to buy excess workers compensation insurance with a $100K deductible. So for claims below $100K, the employer pays. For any claims that exceed $100,000, he/she submits for reimbursement to the excess workers comp carrier with whom he/she purchased the excess reinsurance policy.

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.

DO NOT DO ANY OF THE FOLLOWING:

*Overreact to the claim made against you. Even the best doctors will be served with a claim at least once. It is likely not your fault. Though this is of no comfort, being sued is the cost of doing business.

*Alter the patient’s record in anyway, leave it alone. The alterations you make can be used as evidence in court. Also, this act raises doubts on your character, and it will help the plaintiff paint you as some evil person.

*Discuss the suit with anyone who is not involved in the claim, since anyone you talk to can be called as a witness to what was said. Your lawyer is your priest/rabbi. Tell them everything – the good and the bad, but no one else including your spouse. We saw a doctor client who told his wife all about his medical malpractice case, she filed for divorce while the case was going on and testified against him.

*Admit wrongdoing or fault and offer to pay. Do not dig the hole deeper. Let your attorney, insurer, and medical malpractice broker work the case. They are the pros.

*Provide any documents to the plaintiff or their attorney without clearing it with your own attorney.

*Discuss your insurance coverage and what your coverage levels are; you do not want to increase the plaintiff’s greed factor.

*Handle this suit yourself, call your medical malpractice broker and report your malpractice claim the moment you receive it. Follow up till you are contacted by the insurance company’s attorney.

DO THE FOLLOWING:

*Organize all records related to the case and make two copies, one for your file and one for the insurance company’s attorney. This is a war of documentation.

*Write down all the facts of the case for your attorney. You will always know more of the facts than the attorney. Keep the lawyer fully aware of all the facts at all times.

*Consider hiring a therapist since a lawsuit is very stressful. You are under attack and it helps to have someone to talk to who is bound to patient confidentiality.

*Comply with all the policy terms and conditions of your insurance so read it carefully.

Note: We are not attorneys; the above is standard risk management advice. Consult your attorney regarding the validity of this article and all things related to the law.

HCP National is a provider of Group Medical Malpractice Insurance for groups and solo surgeons. We are experts in health care insurance, D&O and E&O insurance, Group Medical Malpractice Insurance, and all other insurance coverage. Our home office is located in Costa Mesa, 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.

Most HMO’s, non staff model, get sued for medical malpractice via vicarious liability. This means the patient perceives that the HMO employs the doctor, or at least vets the doctors they provide. So if something goes wrong the plaintiff’s counsel sues the doctor and the HMO since it is perceived that the doctor is an agent of the HMO, and therefore, the HMO is responsible for the doctor’s actions.

1. Do not advertise that this hospital or medical group is a provider of XXX HMO. Also, do not advertise in the doctor’s office. The more you advertise that a provider is yours the greater the likelihood the patient will feel the same and sue you and the provider.

2. Make sure that the medical groups and IPA’s have adequate Errors and Omissions and Directors and Officers insurance and ask for proof of coverage. If the IPA or medical group gets named with you, you want to make sure that it has real insurance and that you and the HMO are not the only ones with coverage.

3. Make sure your credentialing is very tight and that you get proof of medical malpractice insurance for all MD’s that you contract directly with and/or indirectly via a group or IPA. Make sure that they are insured with $1 million-$3 million limits with “A” rated insurer or higher (AM Best). Some doctors purchase insurance from weak insurers or risk retention groups. If they make an error and you get named with them, again, you do not want to be the only one with coverage who responds.

4. Make sure you hold harmless agreements with the providers you contract with, providers and hospitals alike.

5. Educate the public that the providers are independent and not your employees. Put in your provider directories that all providers and hospitals are independent businesses not employed by your HMO.

HCP National provides risk management and insurance to the health care industry and others. We are experts in health care insurance, D&O and E&O insurance, Group Medical Malpractice Insurance, HMO reinsurance, provider stop loss insurance and all other insurance coverages. This is not legal advice. This is only a risk management tool. Always review all risk management tactics with your attorney prior to implementation.

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.

Many doctors do not realize that by forming a group of 5 or more MD’s, they can reduce the cost of their medical malpractice by 20% or more. Also, you can get another 5% off, and CME credits, for taking risk management classes through your malpractice insurer. Additionally, by being board certified you can get another 5% off. Lastly you can add your PA’s/NP’s to the group policy for no extra charge, so they will not be charged any premiums.

Let’s look at a case study:
5 Surgeons, who were with the same insurer, formed a corporation to contract with PPO’s, IPA’s and HMO’s. Each MD maintained his/her own practice.

Originally, the combined premiums totaled $275,000. We negotiated a group discount with a prospective risk management credit (the insurer gave them a RM credit with the promise that all doctors would complete the online course within 12 months).

After discounts the combined premium totaled $165,000. The doctors did not have to complete applications, or move insurers. They received their own bills, and each doctor saved $22,000 per year.

These are some of the creative ideas that we provide at HCP National. We are “The Health Care Industries Insurance Brokers.” We are experts in group medical malpractice insurance and solo surgeon malpractice and obstetrician malpractice in CA, AZ, CO and NV.

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.

We’re on the social networks! Now what? Well, we just joined this new realm a few months ago and are eager to engage with you. Our clients and prospects are very important to us, which is why we decided to be a part of social media. We understand that the age of web 2.0 requires a level of conversing, Q&A, dialogue in order to build and improve relationships, as well as spur innovation and the sharing of ideas. So write, message, or talk to us about your concerns, questions, comments, etc. in the various social networks we are participating in which includes Twitter, Facebook, Friendfeed, and Linkedin.

Our expertise is in the healthcare industry and we offer excellent coverage at affordable rates for doctor’s who need medical malpractice insurance and hospitals and businesses that need group health coverage. We also specialize in business liability insurance such as Errors and Omissions and Directors and Officers insurance. You can check out our other offerings here.

Looking forward to chatting with you!

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.

The old adage holds true: a person who represents himself/herself in a legal battle has a fool for a client. The same applies to medical malpractice insurance. Unless you want to spend years learning insurance brokering, it is best to consult an expert malpractice broker. The brokers are paid the same commission, which is typically 10% (in some cases 15% to 20%). This is built into the price of the insurance, thus it costs you nothing directly. Also, if you go directly to the insurer, skipping the broker, the insurer will not reduce the premium by the broker commission since it is built into the price. Again, having a broker will not cost you anything.

A good broker also can shop your insurance to make sure you have the best deal. They can be an advocate with your insurer if you have issues with them. They also can explain how your coverage works.

The challenge is how to find an expert broker in medical malpractice insurance in the California market. You need to find someone who is ethical and will look out for your interests. I wish a prospect for insurance could sit in our office for a week and see how hard all of us work to do the right thing, because there are many competitors who do not.

Finding a good broker:

• Ask a colleague who he/she uses

• Respond to a mailer asking the company for the name and number of their Norcal or Medical Protective representative. Call the company marketing representatives at Norcal and Medical Protective to confirm that the company is appointed with both insurers. This is a good indication that the broker does a lot of medical malpractice work and that they have been vetted by these insurers.

Note: I do not mention The Doctors Company (TDC); since they appoint very few agents and those they do appoint are often direct writers (can only place with TDC). So the fact that the agent does not have an appointment with the TDC does not indicate that he/she is not an expert in medical malpractice. Also, a non appointed broker can give you a TDC quote through an intermediary.

• Once you have spoken with Medical Protective and Norcal, ask the broker how many clients he/she has currently. You want someone with 50 or more clients, which indicates his/her expertise. Then ask for access to a list of all his/her insurers that he/she can go to on your behalf.

How do I know my broker is doing the right thing by me?

• If you are in the standard market (TDC, Norcal and Med Pro), you have the cheapest deals. These standard insurers are the lowest cost insurers and have the best terms, so in most cases there is no reason for the broker to shop for your insurance coverage since you have the best deal. If you are in the non standard insurance market, then your broker should shop for your insurance coverage every year, as well as try to help you re-apply into the standard market with the hope that it will accept you.

• Assuming you are in the expensive, non-standard market, you want your broker to go to at least 5 to 8 insurers. You want a list of the responses and quotes if applicable. Also, if you want proof of inquiries, ask for evidence like emails or letters the broker received from the underwriter or intermediary.

• Check all quotes to ensure your specialty is listed and your retro date is included. Sometimes underhanded sales people will sell coverage with no retro date. We had a client who left us for a cheaper deal, which he received as a result of his new broker dropping his retro back to 2004. Any person who was harmed prior to the effective date of the doctor’s cheaper policy can sue the doctor today for a past event, and the doctor will not be covered.

• Look at the fees that you are charged. Brokers are permitted to charge fees, but they must identify them as a broker fees. Most range from $350 to $500. There is a broker who we have encountered, who charges not only the usual fee, but also numerous other fees calling them processing fees, policy fees et al. Inquire about these fees and if the broker does not give you valid reasons for the charges, find a new broker. This broker received the normal 10% commission plus broker fees disguised as something else, running away with 30%-50% on a deal which is obscene and disgraceful to our profession.

• Watch out for brokers offering Risk Retention Groups (RRG’s). These are deals where you are part of a self insured deal. They will say they have reinsurance and other items of security. But in reality if they run into financial problems they can come back and ask for more money, more than the premium that you paid, and you have to pay as much as they need. We had a client who joined RRG’s, before coming to us, who went bankrupt and had to pay over $250,000, including legal fees, to pay what he owed the RRG. If you come across brokers who offer this option and do not tell you the truth about the downside of an RRG – RUN! Buy from a real insurance company where you pay your premiums and that is all you owe.

Do I need more than one broker?

• If the above criteria are met, then no you do not need more than one broker. Allow the person, who is doing the right thing to do his/her job and you will develop a relationship with that broker. If he/she does not meet these criteria, then find a new broker. If you want more than one broker to bid for your insurance, then choose two. Have this outside broker shop 30 days prior to your renewal date and not any sooner. If your current broker is truly shopping your insurance, then he/she should have started 30 days prior to your renewal date. The insurance companies release quotes to the first person who submits his/her risk to them. Those who come later are denied access. If your broker is doing his/her job, this outside broker should be denied a quote. When this happens the outside broker may call you asking for a broker of record letter, which is a signed document from the insured stating that a broker or agent is representing the insured. Do not grant this! Conversely, if the current broker finds he cannot access all his insurers that he/she went to, and if he/she comes asking for a broker of record letter, do not grant this either! If your current broker did his/her job properly, then he/she should have submitted your risk to all the insurers prior to the 30 days. You may also receive a call by either broker saying that it’s bad to have another broker (all sales talk). You will get calls saying, “I am blocked” (not a lack of fiber). It means your current broker or the outside one did the job properly, therefore do not undermine him/her by issuing a broker of record letter.

• If a broker brings you his/her bid that he/she put hours of work into obtaining without any compensation (since brokers do not get paid till they get your order to place the coverage), then please do not give his/her quote to someone else. This is not a good business practice, nor is it ethical. We all have families to support and businesses to run. This is a small market thus you will get a bad reputation for doing this, and no reputable brokers will work with you again.

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