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State issues new medical malpractice insurance requirements
Beginning March 1, the Indiana Patient’s Compensation Fund (PCF) will require all licensed nurse practitioners, nurse midwives, certified registered nurse anesthetists, psychologists, podiatrists, dentists and optometrists (“independent ancillary providers”) to file individually with the PCF to be considered a qualified provider under Indiana’s Medical Malpractice Act.
Although Indiana law does not require any health care provider to purchase liability insurance, the Malpractice Act’s protections, including capped liability, apply only to providers who purchase sufficient underlying liability insurance ($250,000 per occurrence; $750,000 or greater annual aggregate) and who pay a surcharge into the PCF.
Historically, independent ancillary providers could “share” underlying insurance limits with their corporate employers and essentially be covered under the same policy. Under the new rule, they can no longer share limits with corporations, but they can continue to share limits with hospitals and nursing homes.
Physician assistants are not currently listed as independent ancillary providers.
The fund’s surcharge for these independent ancillary providers is 110 percent of the underlying policy premium. In contrast, physicians pay an actuarially fixed surcharge amount based on their specialty risk class.
The rule was promulgated by the Indiana Department of Insurance to help the financial viability of the PCF. It does not in any way affect or increase the ability of patients and attorneys to bring additional lawsuits or sue for additional damages.
Patients are still limited to a maximum statutory recovery of $1.25 million for an act of malpractice. The rule only shifts part of the indemnification obligation from the PCF to the underlying insurance company.
Here’s an example:
A patient sues a physician and his nurse practitioner (NP) for malpractice. The jury finds them both negligent and awards $1 million in total damages.
- Under the old rule, the NP would share limits under the physician’s policy and the insurance company would pay the $250,000 policy limits; the PCF would pay the remaining $750,000.
- Under the new rule, the insurance company would pay $500,000 ($250,000 for the physician and $250,000 for the NP). The PCF would pay $500,000.
The March 1 deadline refers to the policy effective date, so if an independent ancillary provider’s policy renews before March 1, he or she can still share limits with an employer. For policies that renew on or after March 1, the independent ancillary provider must purchase separate coverage.
Malpractice insurance carriers should have already provided information about this new rule. Contact your insurance carrier if you have any questions.
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