Medical professionals have the duty to provide treatment to their patients aligned to the medical standards of care. The staff you employ at your home health care business understands that any deviation from the accepted standards of care will be considered medical negligence. They may go to great lengths to deliver the best possible care in their role. Yet, there is a possibility of clients filing a liability or malpractice suit against your business.
A report entitled Tort Liability Costs for Small Businesses finds that two out of five medical malpractice claims are baseless. [[1]] Still, plaintiffs who lack the evidence to prove medical malpractice are paid approximately one-fourth of the claims!
The financial risk is real and any home health provider that prides itself on quality care would fight tooth and nail to defend its reputation. But this too will come at a cost – the cost of defense. And regardless of who is at fault, it takes an average of five year to get a settlement. If you mentally add up the lawyer and administrative costs of fighting a lawsuit, you will no doubt see a big number.
Should you already have malpractice insurance, your policy will cover the costs arising from medical incidents, including attorney fees and the costs and expenses related to a judgement or settlement. In the absence of liability insurance, you will have no option but to pay for all such costs on your own.
Given the unpredictability of medical malpractice judgements, you need to consider the benefits of having an insurance carrier cover administrative, legal, settlement costs or damages even if it means having to pay a monthly or recurring premium.
Common claims received by home health care insurance providers
Home health care providers need to exercise appropriate care to prevent on-the-job injuries and illness. Further, special care may be necessary when attending to patients with existing health conditions or a weakened immune system.
Home health liability insurance protects you against allegations of sub-optimal care and mistakes committed when performing care duties at the client’s home. Here are some common reasons why clients file professional negligence claims:
You did not meet the reasonable standards of care: If you failed to demonstrate proper care protocols, which harmed the patient in some way, then a claim may be brought against you. The patient’s family may allege that you – as a professional caregiver – did not handle the situation in a manner expected of you.
You failed to use equipment in a responsible manner: Claims can arise from improper handling of assistive equipment, first-aid kits or other patient aid technologies, which caused the patient physical or medical harm.
You did not document actions as required in your role: Home health aides who fail to meet patient documentation requirements may be faulted for omissions or errors. Any action pertaining to patient care, progress or assessment that isn’t documented may be viewed as an action not performed.
You failed to advocate for optimal patient care: Patients or their families may bring a claim if they feel that you did not act in patients’ best interest or did not make a reasonable effort to deliver optimal care.
You did not communicate effectively: Professional liability claims can stem from a lack of communication or miscommunication that causes errors when caring for patients and addressing their individual needs.
Examples:
A number of medication risks can occur in a home healthcare setting. Miscommunication or mistakes in transcription can cause medication errors [[2]], making it imperative to double-check the prescription before administering medication to the patient in your care.
There is also a risk of the patient overdosing on a prescription medication, and fatalities can occur in some cases. If the patient is on a blood thinner, then a third type of medication error is created. The patient may be getting lab results on a frequent basis and any change in results needs to be reported to the doctor so that the blood thinner can be administered in the right doses. If the home health aide’s responsibility extends to informing the patient’s doctor about their lab results and he/she fails to notify on time, then the resulting medication error and adverse health effect can create grounds for a claim.
Also within the ambit of a home health aide’s professional responsibilities is observing changes in the patient’s condition or general health. Any critical change that is left unobserved or unreported could potentially lead to an adverse health outcome.
Trained and licensed home health aides understand fully well that they must report changes in the patient’s health or demeanour immediately to the concerned individuals. If, for some reason, they forget to or are unable to register a critical change that may have serious medical implications, then a lawsuit may be brought against the aide and agency.
Your options after a claim has been filed
In the event that one of your clients files a claim against your agency or the home health aide you employ, then your lawyer will advise you on the next steps. Your insurance provider will also research to find out if the client has a history of filing fraudulent claims. Based on this information, your lawyer will determine the best way to proceed.
One is to respond to the claim, admitting to or denying the allegations of the claim accompanied by a suitable explanation.
Another option is to file a countersuit [[3]] against the plaintiff. If you don’t take a legal recourse, then the judge may declare a default judgement and rule in favor of the plaintiff. That means, you will need to pay the financial damages being sought in the claim.
If the case cannot be dismissed on legal grounds, it can proceed directly to judgment. Here, the jury will decide the dollar amount of damages to pay to the plaintiff without the involvement of a jury. You can always settle the case out of court; although you will still need to pay, it could end up being the least expensive of all other options.
What does home health liability insurance cover?
Medical malpractice insurance covers a number of expenses related to defending and settling lawsuits, including attorney fees, court costs, settlement costs, arbitration costs, medical damages, and compensatory and punitive damages. It does not cover medical suits arising from criminal acts, sexual misconduct and inappropriate alteration/amendment of medical records.
On an average, indemnity payments of medical malpractice suits are six-figure sums whether settled in or out of court. This is excluding lawyer costs, which can be less than $30,000 for dismissed or dropped cases and over $100,000 for claims that go to trial. These significant numbers can be a strain on your business operations, particularly if you’re a small business with limited capital and resources. By absorbing a large chunk of the costs, a medical practice insurance will keep operations sustainable.
Also factor in the costs associated with a loss of productivity until such time that the claim gets settled. Although your insurance provider can’t assist in this regard, they can minimize the stress of having to pay exorbitant out-of-pocket costs and help you focus on business rather than continually remaining anxious about the lawsuit.
Claims-made versus occurrence coverage
Claims-made professional liability insurance provides coverage for claims only when the incident and the claim occurred when the policy was in force. The coverage period keeps extending so long as you keep renewing your policy and continue paying premiums. The coverage stops once you stop paying the premium.
This type of malpractice insurance is offered by virtually all providers. If you wish to switch to a different provider, you need to purchase limited coverage aligned to the transition period as coverage will cease to exist once the policy is terminated.
Occurrence coverage is not as commonly offered as its claims-made counterpart. Occurrence coverage safeguards you against any incident occurring during the period irrespective of when the claim is filed. So, if a suit is filed after the policy has been terminated, the policy will still offer protection as long as the covered incident took place during the time period where the coverage was in force.
Related: Occurrence vs Claims Made Insurance Insurance Explained
Who all can purchase medical malpractice insurance?
Medical malpractice insurance can take the form of an individual or group policy from a private insurance carrier. Home health aides can be covered by the liability insurance taken out by their employer (you). Across various health care settings, it is quite common for medical professionals to purchase insurance coverage for themselves, their employees and their business entity.
Why malpractice insurance is an essential component of risk management plans
- The Government Accountability Office (GAO) in 2003 deemed the results of the litigation system to be ‘largely random and unpredictable’. [[4]] Liability insurance serves as a safety net for unexpected judgements.
- The legal fees can add up quickly in a malpractice lawsuit. Home health care liability insurance protects your balance sheet against any financial shock that can exceed hundreds of thousands of dollars.
- Baseless claims will still need to be investigated and defended. Insurers covering the healthcare industry set aside separate funds for the allocated loss adjustment expenses (ALAE) of processing every claim. This is a huge but unavoidable expense for insurers but benefits you in your fight against frivolous claims even if you don’t end up making an indemnity payment.
- Instead of focusing on arranging the costs of legal counsel and any additional costs of investigating the matter, you can continue running your business and count on your insurer to bear the costs of the medical suit.
How much will home health care liability insurance cost you?
Depending on the amount of coverage you want to purchase and the types of incidents you seek to cover, your premium can start at less than $50 per month at BizInsure. Factors such as your geographic location, claims history and number of years in business will determine the final cost.
You should be able to afford your premium payments and also make the deductible amount available before your policy starts covering you. If you cannot arrange for this amount, you can choose a policy with a smaller deductible. A BizInsure agent can help you work out the specifics to suit your individual requirements.
[1] https://www.instituteforlegalreform.com/uploads/sites/1/ilr_small_business_2010_0.pdf
[2] https://www.ems1.com/ems-products/Ambulance-Disposable-Supplies/articles/392153048-5-ways-to-eliminate-dosing-errors/
[3] https://en.wikipedia.org/wiki/Counterclaim
[4] https://www.irmi.com/articles/expert-commentary/medical-malpractice-the-high-cost-of-meritless-claims
