What Will OMIC Pay for if I Am Sued?

You probably know the limits of liability you carry for your medical professional liability insurance. But have you wondered what these limits pay for? 

Many insureds carry $1 million per claim/$3 million aggregate limits. This means they have $1 million to pay damages for each claim that comes in that policy year, and the total coverage for claims made that policy year is $3 million, no matter how many claims are made. So, if five claims were made that policy year and each settled for $200,000, the insured would have used $1 million of their total $3 million aggregate. If three claims were made that policy year and each settled for $1 million dollars, the insured would have reached their aggregate limit and no more funds would be available to pay other claims made that year. (Remember that the aggregate only applies to claims made in a single policy year; each year there is a separate aggregate.) Exceeding one’s aggregate limit would be very unlikely to occur. No one in OMIC’s 30 year history has ever done so. Such a large number of claims, worsened by the high severity of the losses, would be worrisome to the company as well as the insured. 

The damages covered within the policy limit include money paid as compensation to others as a result of a claim alleging injury from an error or omission in your provision of professional services. The damages – money to be paid to the claimant – could result from a demand letter sent to you by an injured patient asking for compensation because of alleged substandard care. Or, if a plaintiff sues you, damages might be paid if a settlement is reached or the plaintiff wins at trial. 

Damages include prejudgment interest. A jury might determine that the plaintiff should be awarded $100,000 for their injury. However, three years may have passed between when the injury occurred and when the jury verdict was entered. The court could award interest accruing on the $100,000 over that time. This interest is covered within the policy limit.

Damages also include any legally-required payment of the claimant’s legal expenses. For instance, if the state’s laws say that when a plaintiff wins at court the defendant has to pay for the plaintiff’s attorney fees, the policy would cover these fees within the limit of liability.

Your policy also provides supplementary payments. These are monies paid in addition to, not out of, your limits of liability for a covered claim. The most significant of these supplementary payments is claim expenses, i.e., your legal fees to defend to the claim, and related costs such as expert witness fees. Keep in mind that claim expenses must be incurred or approved by OMIC to be covered. Some insurance policies include claim expenses within the limits of liability. These are often called “wasting policies.” They substantially decrease the amount of money the insured has to pay an award of damages. It can cost well over $100,000 in attorney fees to take a claim through trial. In such a case, under a wasting policy, the insured would have only $900,000 left to pay any damages awarded. 

Another supplementary payment is post-judgment interest. This means all interest on the amount of any judgment within the policy limit that accrues after entry of the judgment and before OMIC has paid the judgment. Premiums on appeals bonds authorized by OMIC are also paid in addition to the limits of liability. 

OMIC also pays reasonable expenses, other than loss of earnings, incurred by the Insured at OMIC's request in the investigation or defense of the claim. For example, OMIC may ask the insured to provide not only the claimant’s medical records, but copies of the practice’s policies and procedures manuals. OMIC would reimburse the insured for the cost of this reproduction and delivery. 

At the Insured’s request, OMIC will also pay an insured’s loss of earnings, up to $500 per day and $250 per half day, when OMIC asks the insured to attend any court proceeding, trial, mediation, or arbitration involving the claim. However, attendance at the Insured's own deposition or the deposition of others is not a “court proceeding” and does not qualify for these supplementary payments. 

Neither the policy limits nor supplementary payments cover punitive damages, exemplary damages, treble damages, or any other increase in damages resulting from multiplication of compensatory damages. These damages are often awarded when intentional acts are alleged or for extremely egregious behavior. Many states do not allow insurance companies to pay punitive damages since the point is to punish the wrongdoer, i.e., the insured. Fines, penalties, and the return, reimbursement, or restitution of governmental payments are not covered for claims of injury to a patient due to your treatment. (These should not be confused with fine and penalty payments for billing errors and other regulatory matters, which are covered under the Additional Benefits section of the policy). Finally, expenses for services rendered by the Insured to the claimant (e.g., the cost of follow up treatments by the insured to remedy the injury) are not covered. These should be covered by the insured. Please see your policy for all terms, conditions, and exclusions.