Areas of Exposure Related to Medical Directorships
Physicians are often called upon to become medical directors for surgicenters, hospitals, medical spas, clinics, labs and long term care facilities. They may assume that their medical directorship duties are covered by their professional liability insurance policy. However, almost all professional liability insurers now exclude this exposure. Generally, the Professional Liability policy provides coverage for direct and indirect patient care as a physician but not for duties performed as medical director outside of one's own practice. Therefore it is necessary to verify that the facility maintains liability insurance that responds to the exposure presented by the many duties and responsibilities assumed by the medical director.
First, check with the facility to determine if the medical directorship position is an "Insured" under the facility's Professional Liability, Clinic Package or Directors & Officers (D&O) insurance policies.
Medical directors may want to do the following to ensure coverage for their medical director responsibilities:
- Request a Certificate of Insurance that names you, the medical director, as an Insured under the particular policy.
- Require the facility to notify the medical director in writing if the facility's coverage or the policy is changed or canceled.
- Require the facility to add an indemnity clause to your contract with the facility.
- The facility policy should contain the following details:
- Limits of Liability available for defense and indemnity in the event of a claim
- Description of coverage for the medical director regardless of facility culpability
- Whether "Tail" coverage is going to be needed and which party is responsible for the purchase of that extended reporting period endorsement
- Whether there is any coverage extended to physicians making administrative decisions for the medical director in the medical director's absence
- Coverage/support for the medical director if deemed either negligent or innocent of alleged issues
- Amount of coverage available for associated risk in your role, such as regulatory issues, fines and penalties, including federal and state oversight committees and organizations
However, if you find the facility cannot produce a Certificate of Insurance for you and your position, you may want to contact your own insurance broker for assistance. Some professional liability companies may be willing to extend coverage in relatively low-risk settings – such as being named medical director for your child's summer camp, for example – and it is worth asking the underwriter about the availability. If you determine there is no existing coverage for you in your medical directorship, your broker may be able to obtain a "miscellaneous" professional liability policy that could be tailored to your particular circumstance.
Why do you need coverage for the medical directorship? The medical director can be held personally responsible for certain acts of the facility/organization. Allegations may run the gamut from wrongful termination to sexual harassment to failure to properly credential, improper training of staff, discrimination and any number of legal, compliance and education issues. In fact, Employment Practices suits constitute the single largest area of claim activity under Directors & Officer policies, with over 50% of D&O claims being employment practices related.
Be sure you understand the responsibilities and risks associated with agreeing to accept a medical directorship, so that any additional costs to you are offset by the remuneration package. For more information, please call PIAM at 800-522-7426.
The American Medical Directors Association, Danna Gracey, The Defender