Caption Corner Part 15 – Two Important T’s of Insurance
As licensed practitioners, there is no doubt that you should have a professional liability insurance policy to cover you for malpractice, a cyber or data breach insurance policy to insure you for HIPAA violations arising from third party information breach, and a general liability insurance policy covering your office, fire perils, bodily injury, and third party property.
Third Party (Risk and TPAs)
A third party is someone other than the insured (the first party), and the insurance carrier (the second party). The purpose of liability insurance is to defend the policyholder from third-party claims and for the first-party to use the insurance contract to shift risk to the second party.
Typically and initially, the first-party is responsible for its own risks such as damages and losses whether caused by itself or the third-party. When you shop for malpractice professional liability insurance, consider the first and third-party protection that is, or is not, covered by the policy. Virtually all carriers exclude this coverage.
For example, to our knowledge, no insurance carrier except for the RRG professional liability policy, covers first-party records breach such as a breach by a burglar simply opening the social worker’s file cabinets looking for valuables, or the social worker accidentally faxing client records to the wrong telephone number.
The RRG Cyber Liability policy suite covers third-party records breach regardless of their being on paper or digital records. HIPAA 45 CFR Part 160 holds the social worker accountable for third-party information breach. This includes paper records as well as digital records. Civil penalties range up to $25,000 per offense and up to $1,500,000 for willful neglect. Criminal penalties from your vendors breaching your client records result in 1 to 10 years in prison and fines up to $250,000.
A related liability term is called the third-party administrator. These are businesses that are not insurance carriers. They are insurance agencies and/or services providers who provide billing, collection, policy fulfillment services, and call center customer services. They do not take any underwriting risk which the insurance carrier takes.
Often times some policyholders incorrectly believe that the third-party administrator is the insurance carrier which is a mistake because the insurance carrier is the key resource for the insurance coverage. When shopping for insurance, make sure that you find out what sales commissions that the third-party administrator takes, because it comes right out of the premium dollars that you pay. Some of these agents and third-party administrators collect 30% of the premium, which comes out of the premium that you pay.
The Preferra Insurance Company RRG does not charge sales commissions so the RRG policyholders receive better benefits, more liberal claims adjudication, and lower premiums.
A tort is a civil wrong, not a criminal wrong. A tort causes someone to suffer a loss or to sustain harm. In clinical professional services, negligence is the tort that occurs most commonly. This tort arises from the breach of the duty of care owed by the social worker to the client.
The elements of tort negligence are the duty of care, breach of that duty, proximate cause where the action or inaction of the social worker caused the injury to the client, and damage. For more detail on the negligence, tort see the September 2017 Tip of the Month.
Tort law is less stringent than criminal law. Tort lawsuits have a lower burden of proof including “preponderance of the evidence” as opposed to “beyond a reasonable doubt” in criminal cases. Basically, this means that torts are easier to prove in court than criminal charges, so the chances of a verdict and judgment against you as the defendant are more likely.
As a clinical social worker, if a lawsuit is brought against you, the plaintiff must show that the actions or lack of actions were the cause of harm and damages. Evidence is required, which is supported by testimony and case records. That is why it is important to start with detailed documentation in your case files and follow established ethics and protocol. See the Tip of the Month from March 2016 for Documentation Pointers to Avoid Liability and Malpractice.
If or when you are named in a lawsuit, immediately contact your insurance carrier. Do not respond to any requests for information, records, or subpoenas until speaking with the attorney provided by your insurance carrier. Immediate notification to your insurance carrier is critical because there are time constraints.
Published February 2018