NORCAL Mutual has been approved by the California Department of Insurance for an overall 7.07 percent rate decrease in Medical Malpractice Insurance rates. I would like to elaborate on a few points for you.

•The full implementation of the new Med Mal rates will be completed by July 1, 2012. The new malpractice rates apply to all new and renewed policies effective January 1, 2012 and later. All adjustments will be made by July 1, 2012.

Two other changes were made as part of the rate filing:
• The entity premium increased from 11 percent to 12 percent.
• The claims-made step progression has been changed from six years to five years to achieve policy maturity.

Please note that the changes in the entity rate and the adjustment in the claims-made malpractice insurance step process will become effective for new and renewed business on July 1, 2012 or later, and will not be applied retroactively. Either of these two changes may, in some cases, increase an account’s overall premium or offset what otherwise might be a premium reduction.

For those clients eligible for NORCAL Mutual’s five percent risk management discount (solos and 2–4 groups), the rate filing may mean additional savings. If the client is an active member of one of NORCAL Mutual’s endorsing medical societies, they can receive an additional two percent discount by completing a minimum of three NORCAL Mutual CME credits. We have worked with the county medical societies to obtain their membership lists, to ensure that those eligible medical malpractice policyholders who earned three or more CME hours in 2011, will receive the new 7% discount beginning January 1, 2012.

Also, as a reminder, we have waived the age requirement for the med mal retirement tail waiver rule. All other provisions remain unchanged.

Nothing in this blog changes or alters coverage terms. Always check your policy and call your insurer if you have any questions.

HCP National is a national medical malpractice broker appointed by Norcal. HCP National’s Medical Malpractice Insurance brokerage is located in Orange County and Riverside CA and NY, NY. HCP does Colorado malpractice insurance, New York malpractice insurance, and California malpractice insurance.

By William D. Dyer

Q: What the meaning of equal employment opportunity?
A: This typically applies to a business with fifteen or more employees that prohibits discrimination in any aspect of employment and harassment in the workplace based on race, color, age (40 and over), sex, pregnancy, gender, religion, disability, national origin, ethnic background, military service, and/ or citizenship.

Q. What is the ballpark estimate for directors and officer liability insurance?

A. It can be as low as $1,200 for a small business, to millions for a public company

Q. What is the typical annual premium for D&O in small business?

A. Typically it is $1,200 to $5,000.

Q. What is the cost for errors and omissions coverage?

A. This depends on the limits, industry, geographic location, and past claims experience. Some of the most expensive professions would be MD’s, Real Estate Brokerages, and Appraisal Firms, Insurance Brokerages, Engineering Firms and Law Firms.

Q. How do you apply for errors and omissions insurance?

A. You contact an insurance broker with expertise in E&O (it is an insurance specialty). The broker will have you complete an application; if you have coverage currently they will obtain your loss runs for the past five or ten years. The broker will shop your coverage to multiple insurers.

Q. How much is a $100,000 of general liability?

A. Assuming you are not in something risky, an estimate would be $100 to $500 a year. Most companies buy this coverage with limits in the millions.

Q. What is product professional liability?
A. As it implies in its name, it protects you from suits relating to the products that you produce, or a private label.

Q. Can an employer stop group health benefits during workers compensation claims?

A. Yes; and the employer should. You have to check with your health insurer to see what the contract dictates, but most have a limitation that coverage is for full time employees working twenty-five or thirty hours a week. If an employee is on Workers Compensation, he/she is not working, so therefore, he/she is no longer eligible for group health insurance. You should offer him/her COBRA. If you do not do this, the health insurer can deny the claims of the employee. We know of an employer, which is not our client, who kept an employee on his/her group health insurance while the employee was on Workers Compensation. The employee had a massive heart attack while he/she was disabled. The employee mentioned it to the doctor, and it was entered into his medical record that he was out on a Workers Compensation claim. The employee was given open heart surgery that yielded a big bill, which the insurer denied since the employee was not eligible for health insurance at the time of the claim. The employer was sued for the bill and lost in court.

Q. Can you run a CA Family Rights Act with the Federal Family and Medical Leave Act?
A. Yes, CFRA and FMLA can run concurrently.

Q. Is excess workers compensation a liability policy?

A. Not excess, which usually refers to reinsurance – a self insured Workers Comp. However, if the question is, can you buy excess coverage or umbrella insurance to supplement the liability portion of Workers Compensation, the answer is yes. This is one of the reasons why one buys an umbrella for one’s company. If the Workers Comp limits are breached or used up, then the umbrella may respond. Please note that most states limit the liability for the employer to the limits of the Workers Comp policy unless there is gross negligence.

Q. What is worker’s comp aggregate retention?

A. If you self insure your Workers Comp and say if the past five years show your average claims with an inflation of $3,000,000 then a reinsurer may sell you an aggregate reinsurance policy that will pay all claims that exceed the expected claims of $3,000,000. The $3,000,000 is the aggregate retention or deductible.

Q. Where can you buy medical malpractice coverage while on the US rotation?

A. If you are a resident of the US, you can buy it from a typical malpractice insurer. The problem is the policy will be for one year, so if you are here for less than one year, you will want to pay the premium and request a refund for any unused premium and buy tail insurance. Tail insurance is to cover you for any claims that occurred during the time you were covered. If you are returning to your home country and never plan to live in the US, you will want to consult an attorney to see what your exposure is versus buying tail insurance. When in doubt, buy tail insurance.

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.

There are distinct differences between Medical Malpractice insurance for Medical Providers and Managed Care Errors and Omissions (Professional Liability) and Directors and Officers insurance.

Malpractice Insurance applies to the actual physician’s treatment of patients, whereas Managed Care E&O and D&O Insurance provide a distinct and separate layer of insurance for exposures that may occur in association with the business activities related to managed care operations.

At times there may be cases where a medical malpractice suit not only names a physician or hospital, but goes on to name a managed care organization such as an IPA or HMO. This spread of risk is often referred to as “Vicarious” liability and is one of the main reasons why such organizations must carry Managed Care Professional Liability insurance or Errors and Omissions.

• Vicarious Liability is defined as: When one person is liable for the negligent actions of another person, even though the first person was not directly responsible for the injury. For instance, a parent sometimes can be vicariously liable for the harmful acts of a child, an employer sometimes can be vicariously liable for the acts of a worker, and a managed care organization can sometimes be vicariously liable for the acts of a contracted provider. In all of these cases the party causing the tort is seen as under the third parties control.

In the above scenario, a Medical Malpractice policy would respond for the physician or medical facility named in the suit and the Managed Care Insurance policy would respond for the managed care organization.

Note: HCP is not a law firm and we are not giving legal advice, or defining coverage; your insurance policy is the final authority. HCP National is a Medical Malpractice Insurance and Managed Care E&O and D&O Insurance Company or broker.