Don't Take Your Coverage for Granted – It's Vital to Know All the Details 

By Melanie Balestra, NP, Esq.

Most employers will tell the nurse practitioner (NP) that they are covered for malpractice through their employers, including those NPs working in the military or for a state or federal agency.  Many private employers are insured through physician-owned malpractice insurance.  Large facilities may be self-insured, which means the employer assumes the financial risk for providing the insurance.  Government employees are covered for malpractice through the Tort Claims Act which protects employees from medical malpractice lawsuit within their scope of employment. 

Many employers will inform the NP that the NP is fully covered and does not need any extra insurance coverage.  I had one NP call me stating that her employer said it was against the law to have additional insurance.  NPs mistakenly feel safe if they belong to a union because they believe the union and/or employer will protect them.

Many times assumptions are made by the NP through verbal communication with their employer.  Although the employer’s insurance may cover the NP for malpractice, it usually does not cover the NP for disciplinary actions.  If the NP employer coverage for the NP is under the employer’s name, the employer has the decision-making power on any settlements or going to trial.

Any settlement above $3,000 must be reported to the Board of Registered Nursing (BRN) and the Practitioner Data Bank.  The BRN usually sees a settlement as an admission of guilt.  Therefore, once reported to the BRN, the NP is in for an uphill battle.  The BRN uses its own standards to determine if the NP committed unprofessional conduct or gross negligence.  Many employers do not cover defense costs in a disciplinary case.  NPs without disciplinary insurance will be more likely to settle a case with the BRN, admitting guilt even when not guilty, because the NP cannot afford to pay the defense costs in a disciplinary action.

Two Types of Coverage

There are two types of malpractice insurance coverage, claims-made and occurrence.  Many physician practices, clinics, and hospitals have claims-made insurance.  Claims-made coverage protects you from malpractice claims only if that company that insured you at the time of the alleged incident is the same company at the time the claim is filed in court.  For example, if an incident occurred in 2011 when you were not covered by insurance and the claim was made in 2012, you would not be covered because you were not insured when the incident occurred.  The key to “claims-made” policies is maintaining continuous coverage, even after you leave a job or retire.  If your employer has claims-made and you have no coverage, you will need to purchase a “tail” policy to cover any previous actions.  Tail coverage can be very expensive.  Many times there is no disciplinary coverage.  Physicians and hospitals typically have “claims-made” policies which do not include disciplinary coverage.

Occurrence coverage means that the policy responds to events that occur during the policy period regardless of when the claim is made.  Once the policy is over, the policy will respond to covered claims, even if the claim is made many years after the triggering event.  For example, if the NP is insured in 2011 with an occurrence policy and is sued in 2012, the NP will be covered by the policy.

Dealing with the BRN

The government insures NPs for malpractice actions under the Tort Reform Act which does not include the NP for disciplinary actions.  Typical government jobs include the military, schools, and government clinics.

The government has control of settling the claim.  Once a claim is settled or goes to trial and loses, the information goes to the BRN.  Once again, the BRN will either send a letter or an accusation claiming you are guilty of unprofessional conduct and gross negligence.

If you belong to a union, ask for all union benefits in writing.  Unions will frequently represent you in a termination disagreement and a negotiation settlement.  However, you need to ask your union representative if the union will represent you in a BRN disciplinary action if your employer reports you to the BRN.

If you have ever received a misdemeanor for a DUI, battery, drugs or any other cause, the chances that the BRN will learn about it are high.  The BRN will then charge you with unprofessional conduct and you will most likely be placed on probation.  With a blood alcohol of 0.08 or above, the BRN considers you an alcoholic.  Even with a lower blood alcohol, the BRN can discipline you for unprofessional conduct.  Misdemeanor equals unprofessional conduct even if the conduct is not connected with the NP’s job.  Without disciplinary insurance, the NP will pay for all defense.

Choosing a Carrier

Choosing a malpractice/disciplinary carrier is extremely important.  Most malpractice insurances carry a $1,000,000/$3,000,000 or $1,000,000/$6,000,000 limit.  This means that the insurance company will pay up to $1,000,000 per incident or a total of $3,000,000 which would mean you would have three incidents and does not happen often.  However, disciplinary coverage is usually $10,000/$25,000 which means $10,000 per incident and a total of $25,000 for all incidents.  CANP endorses Nurses Service Organization which is currently the only carrier that will cover up to $25,000 per incident or a total of that amount.  Proceeding to hearing easily cost $25,000 or more.

The NP is in control if the policy has been purchased with NP’s name as the recipient.  Any policy purchased by the employer means that the employer is in control of what decisions are made to settle or go to trial or hearing.  The NP is in control when the NP owns the policy.  When the NP owns the policy naming the NP as the insured, the NP is covered 24/7.  When the employer owns the policy, the NP is only covered while at work.

Know the Details of Your Coverage

A recent case involved a FNP who was trying to be nice to her neighbor by diagnosing the neighbor’s little boy with acute otitis media and calling in a prescription of Amoxicillin.  A month later the FNP and the neighbor had a disagreement.  The neighbor reported the FNP to the BRN because the boy was not a patient of the FNP’s.  The BRN found that the FNP committed gross negligence and unprofessional conduct in making a diagnosis and treatment not pursuant to her Standardized Procedures.  She was placed on probation.  The FNP did not have her own malpractice/disciplinary insurance so could not afford to properly defend herself against the accusation.

Questions that the NP needs to ask the employer are:

1. Am I a named insured?  If yes, request a copy of the document for your files.
2. If the answer is no, ask specifically how you are covered?  Get a copy of the coverage for your file.
3. Does the policy require certain supervision requirements of NPs by physicians?  Some policies require the presence of a physician.  It does not matter what the law states.  Insurances can require whatever the company decides.
4. Who makes the decision on settlement discussions?
5. Is the policy claims-made or occurrence?  If the policy is claims-made, who pays the tail coverage?
6. Who is the insurer and what is their financial stability?
7. Are there circumstances under which you would not be covered?
8. If you are a RN working as a NP, at what level are you covered?
9. Does the policy include disciplinary coverage?  If yes, what is the amount?

Remember that you are responsible to know what coverage and how much you have.  It is not the physician’s, clinic’s or hospital’s responsibility.

This is the first in a series of articles by CANP attorney Melanie Balestra that will be a bi-monthly feature in Connections.  If there is a subject that you would like to see addressed, please contact CANP.  Future articles will include a discussion on Standardized Procedures and a discussion on the Disciplinary Process.