There are distinct differences between Medical Malpractice insurance for medical providers and Errors and Omissions (E&O) (also referred to as Professional Liability) and Directors and Officers insurance for managed care organizations (MCOs).
Med Mal insurance vs. Managed Care Professional Liability insurance
Medical Malpractice insurance applies to the actual physician’s direct 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. These two types of coverage are very different, but both are necessary for the respective insured types.
At times, there may be cases where a medical malpractice suit not only names a physician or a hospital, but also names a managed care organization, such as an IPA or HMO. This spread of risk is often referred to as “vicarious liability” and it is one of the main reasons why such organizations must carry managed care Professional Liability insurance (or E&O and D&O insurance).
What is vicarious liability?
“Vicarious liability” is 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 an employee, 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 party’s 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.
Other MCO exposures
The other risk exposures that are common for MCOs are utilization reviews and credentialing.
If the managed care organization denies a referral or greatly delays a utilization review, a patient may sue the MCO. In addition, when an MCO credentials providers, they can be sued if they do not follow their protocols and credential a provider that should not have been. Later, that provider may cause a medical malpractice tort, and the MCO would be held liable for its error.
Purchasing your professional liability policy
Whether you need to purchase an insurance policy for Medical Malpractice, Professional Liability, E&O, or D&O, we can help. HCP National has been serving clients nationwide since 1994. It is our top priority to help you decrease your costs and improve your coverage.
We built our insurance brokerage by helping our clients identify areas where they can save money, while keeping their organization fully covered.
Please contact us today for a quote.
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 broker.
