7 BIGGEST MISTAKES MD’S MAKE IN THEIR
MEDICAL MALPRACTICE INSURANCE
COVERAGE
Presented By :
William D. Dyer, President
HCP National Insurance Services, Inc.
“We are the Health Care Industry’s Insurance Broker”
www.hcpnational.com

THE 7 BIGGEST MED MAL MISTAKES
1. Performing procedures that you are not
covered for, and/or neglecting to state the
procedures you are performing in the Medical
Malpractice application procedure list.
The insurer may deny or cancel your
coverage for the false statement.

THE 7 BIGGEST MED MAL MISTAKES
To avoid the denial of coverage
or cancellation, take your time
and read every line on the
form.
The procedure(s) that you mark are the only
procedure(s) that the insurer is covering.

THE 7 BIGGEST MED MAL MISTAKES
Do NOT deviate unless you contact your insurer
prior to doing the new procedure(s), and obtain
written confirmation that it is now covering you.
Never assume anything.
If you have any questions—ask!

THE 7 BIGGEST MED MAL MISTAKES
2. Beware of Surgical Brokers, who are professional marketers
on the Web hustling to attract patients for cosmetic
procedures.
The patient assumes the surgical broker’s site is
a real doctor’s site and will correspond with the
surgical broker telling him/her what he/she
wants done. The surgeon is now exposed to
vicarious liability, where you
are sued since a patient can
logically assume that you are
related businesses, and thus
part responsible for anything
the surgical broker says or
does.

THE 7 BIGGEST MED MAL MISTAKES
3. You are your Brother’s Keeper.
Think carefully about renting
space to another MD., or
hiring one.
Having separate names on the door and
business cards does not protect you from the
public assuming that you have related
entities. This is called vicarious liability.

THE 7 BIGGEST MED MAL MISTAKES
OB Dr. P rents space to another OB, Dr. X.
Dr. X is sued
The defendant names Dr. P, since the patient
assumes they are related entities.
Dr. X had inadequate malpractice insurance and his
insurer denied coverage.
Dr. P’s medical malpractice insurer denies the claim
since he did not have his coverage properly set up for
this risk.
Dr. P is left with a claim on his record, and he spends
over $25,000 getting himself off the claim. Example

THE 7 BIGGEST MED MAL MISTAKES
4. Not maintaining your retro date when changing
insurers or not buying tail . . . gaps cost more in
the long run.
Most medical malpractice insurance is claims
made, which means the coverage has to be
made on, or after the retroactive date and while
the policy is current.

THE 7 BIGGEST MED MAL MISTAKES
 Example A
Dr Sanchez, OB, has a med mal policy that has a retro date
of 9/07/05. If he is sued today, 9/24/09, for something
that happened on 11/06/05 involving the birth of a child
what happens?
Result:
He is covered (assuming it is an eligible claim) since his
coverage goes back to his retro date and this claim
happened after his retro date of 9/07/05.

THE 7 BIGGEST MED MAL MISTAKES
 Example B
Dr Sanchez has had a bad year and he wants to save
money on his malpractice insurance this year.
He decides to renew his malpractice insurance with no retro
date. He has his new coverage cover him for claims that
occur from the renewal effective date going forward, not
going back to 9/07/05, which is his old retro date.
This is called the retro inception date where the retro date is
the same as the inception date. This is a much cheaper
coverage since it is more limited. The doctor saves
$15,000. He drops the coverage that was retroactive to
09/07/05.

THE 7 BIGGEST MED MAL MISTAKES
Result:
His coverage is denied for something that happened on
11/06/05 involving the birth of a child, since he dropped his
retro date.
A year later he tries to apply to the Standard malpractice
market to save money.
The Standard Market is comprised of Medical Malpractice
insurance companies that are regulated by the
government and offer the lowest prices insuring only MD’s
with favorable risk profiles and have normal practice
patterns. (i.e. TDC, Med Pro and Norcal in California).
When the Standard Insurer sees that he has dropped his
09/07/05 retro date they decline to insure him.

THE 7 BIGGEST MED MAL MISTAKES
 The reason these insurers decline, like most would in
the Standard Market, is that they fear a claim comes
up from the past that is before the new retro date and
the insurer may be forced by a court to cover that
claim. This is called a gap in coverage.

THE 7 BIGGEST MED MAL MISTAKES
5. Do not be on a constant search for the
cheapest deal . . .
Insurance Brokers shop your insurance, not you. You do
not have the time or the knowledge. You do not save
money by going directly to the insurer. Few will talk
directly anyway.

THE 7 BIGGEST MED MAL MISTAKES
The following things are what you should communicate and expect
from your broker:
Hire one broker. More Beware of doing business with
brokers do not help, they an unscrupulous broker who
hurt you since one broker preys on your “got to have the Ask for quotes or
will say one thing about cheapest deal syndrome.” He decline letters from
your risk to an insurer and will cut your coverage to all the malpractice
another will say provide the cheapest deal. You insurers.
something else. will not know this until you have
an uncovered claim or worse.
We submit our Non Standard malpractice clients to the Standard market every
year and sometimes they get in within the 1st try or the 6th try. Regardless of
however many tries, it is worth it when they do get in. We met an FP OB paying
147k a year in the Non Standard market. We got him accepted by a Standard
Insurer for 45k. His broker did not even submit him to the standard market.

THE 7 BIGGEST MED MAL MISTAKES
Ask your broker to give you a list
of insurers that he/she will shop
for you. 5 or 6 should be fine. If
he/she is a pro then he/she will If you are in the non
know the best deals for your Standard market, ask your
specialty and risk profile. broker to shop for all the
Standard Insurers till you are
accepted by one.
If you are in the Standard market, ask
your broker each year if any of the
other Standard Insurers have lowered
their rates. Otherwise, stay put! You
have the best deal.
Note: Standard insurance companies
rarely change their rates.

THE 7 BIGGEST MED MAL MISTAKES
6. Check the AM Best Rating of your insurer upfront and
periodically www.ambest.com
This is the industry rater for insurance companies. It’s
not fool proof, but it is considered good at evaluating the
financial strength of the medical malpractice insurer.
 No AM Best Rating = DO NOT BUY!
 A’s only A-, A, A+, A++
Never B category or lower, they tend to go out of
business, not worth the risk
 Do some research on the insurance companies

THE 7 BIGGEST MED MAL MISTAKES
7. Buying from a Risk Retention Group
without knowing the risks or the other
alternatives to insurance companies.

THE 7 BIGGEST MED MAL MISTAKES
 Risk Retention Groups:
 Insureds or policyholders who have banded
together to form a federally chartered insurance
company to share risk with each other.
 Regulated by the federal government and are
exempt from state regulation.
 Federal law requires that they be licensed in one
state (state of domicile).
 Can only raise capital from policyholders. They
have no means to borrow or raise capital on their
own.

THE 7 BIGGEST MED MAL MISTAKES
 Risk Retention Groups Continued:
 Each policyholder has joint and several liability for the risks assumed
and the losses developed by the RRG.
 If premiums collected are inadequate to pay claims, each member is
assessed.
 i.e. If the RRG is short 10 million dollars and you are one of the 500
members of the RRG, you must pay on demand $20,000 on top of
the premiums you already paid. This is made explicit under Federal
law, and the amount of assessment is unlimited.
 Groups may say that they are not assessable, but this is not accurate. If
the premium is inadequate to pay losses:
 Members may pay “voluntary assessments” to offset premium
shortfall or
 RRG will enter bankruptcy and a Federal bankruptcy judge will
determine what assessment amount may be needed.

THE 7 BIGGEST MED MAL MISTAKES
 Considerations before moving your Malpractice coverage
1. Make sure your retro date is maintained on new
quotes for coverage.
2. Ask if defense, in addition to the limits, is
available. A $1 million limit may not be
enough if defense is included within the limit.
3. Deductibles above 10k can cost more
than they save.
4. Check the AM best rating.
5. Ask for a complete copy of the policy and all
endorsements. Pay special attention to what is
not covered.

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