Malpractice: Are you covered?

Imagine this scenario. You took an associate position a few years ago and your boss promised you that in the event of a malpractice lawsuit against you, you would be “covered” by the clinic’s hospital malpractice policy. You move on to another job eventually and, shortly after starting, you get a call from your old boss who tells you that a client, Mrs. Smith, was very unhappy with your diagnosis and treatment of her dog, Fluffy.

“She mentioned the word ‘lawsuit,’” your former employer tells you, “but she didn’t mention contacting the state veterinary board—at least not yet.”

The call leaves you very much on edge, so you get the insurance company on the phone to advise them that there could be a pending suit, and possibly a board complaint, over Fluffy Smith. After a few minutes on hold, the agent tells you that the company can’t help you for 2 reasons. First, you had no personal coverage when you treated Fluffy or any other patient while you worked at your former practice. Second, the agent explains, even if you had been covered by a malpractice policy back then, Smith’s claim was made after you left the practice, and as such the coverage would have expired due to nonrenewal.

“And FYI,” the insurance rep adds, “the practice where you treated Fluffy never had any state board license defense insurance at all, so you and your boss are both on your own if this Fluffy business gets messy at that level.”

Malpractice insurance: a double-edged sword

Veterinary malpractice insurance is one of the great bargains of all time. Compared with what our human doctor counterparts pay in premiums, we should consider ourselves lucky to have access to outstanding protection for remarkably reasonable rates. Whereas physicians may spend 6 figures on an annual “errors and omissions” policy, even exclusively equine practitioners (whose malpractice coverage is often the most expensive) pay just a thousand or so dollars in yearly premiums.

But with that said, veterinarians (especially associates) very often take their malpractice protection for granted. Many employed veterinarians are told, incorrectly in many instances, that they are insured against malpractice “as long as they are practicing for our hospital, which has a policy covering all our licensed doctors.” Even more concerning, associates and owners alike assume that all veterinary malpractice policies cover them for allegations of malpractice brought to a state veterinary licensing authority. They do not.

So, don’t let the very reasonable price of professional malpractice insurance lead you into a false sense of security. Employers: learn as much as possible about the coverage you and your employed doctors actually have. Associates: read your employment contract carefully to learn what it states about your insurance coverage (or lack thereof). Then examine the policy.

Misconceptions about malpractice insurance

When our office consults with a practice owner or associate veterinarian about an employment contract, the issue of malpractice insurance premiums and coverage nearly always comes up. The employed doctor usually wants to know if their coverage will be employer paid, whereas the owners ordinarily assume that their hired doctors are somehow “included in our umbrella” insurance package.

Here is how it actually works, based on my background in insurance defense law and my recent discussions with indemnity professionals at several insurance companies: Veterinary hospitals—the businesses themselves—are usually covered for malpractice committed by veterinarians who work there. This coverage comes either from a comprehensive business policy (along with slip-and-fall and fire damage coverage, etc) or from a stand-alone malpractice policy such as the type offered through the American Veterinary Medical Association Professional Liability Insurance Trust (AVMA PLIT).

These policies protect the business (which in many cases translates to the owner) against lawsuits for financial damages in the event that a doctor in the practice commits an act of malpractice or malfeasance. What is covered? Provable injury to the injured pet and, more importantly (and which are more costly), legal fees associated with defending the malpractice claim.

But what happens if, in the example above, Fluffy’s owner decides to sue you personally for your alleged malpractice committed upon Fluffy months ago when you worked at your previous clinic? It is virtually certain that the clinic’s coverage will not protect you and you will have to hire your own lawyer(s) and pay any verdict out of your own pocket. But if you had your own policy, you would be all set, up to the policy limits.

A second, even more serious misconception traps owners and associates alike. I speak to veterinarians all the time who believe that their malpractice insurance will “indemnify and defend” them if and when a client alleges malpractice to a state veterinary board. The truth is, such “license defense” coverage is not always in place when a veterinarian (owner or associate) purchases a basic malpractice policy. Such coverage may only be available as a “rider” or supplemental coverage—with an additional premium. It’s an add-on, like roadside assistance coverage might be in an auto policy.

What’s a confused practitioner to do?

Here are some useful steps to follow when attempting to navigate the malpractice insurance landscape:

• Generally, assume you need your own personal malpractice policy unless convinced otherwise, by a qualified, knowledgeable insurance professional.
• Always obtain a license defense rider to protect you against exorbitant legal costs associated with state board license defense. And note: All such policies have coverage ceilings depending on how much you pay for the rider, and this is no place to be a cheapskate.
• A corporate practice may cover you against malpractice claims made against you personally. But if you rely on such coverage exclusively, make absolutely sure you understand the coverage details.
• Associates, when negotiating your employment contract, make sure you have appropriate coverage even if the employer will not reimburse you. It’s that important.

Christopher J. Allen, DVM, JD, is the president of Associates in Veterinary Law PC, which provides legal and consulting services exclusively to veterinarians. He can be reached at info@veterinarylaw.com. Allen serves on the dvm360® Editorial Advisory Board.