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Are You A Corporate Risk? Vital Insurance Issues for Health Practitioners

by David Balen(more info)

listed in insurance, originally published in issue 156 - March 2009

When a Health Professional forms a Limited Company or other Corporate Entity, it is usually the Tax or Legal Implications which exercise the mind.  If your Health Practice consists of one person, or is augmented by a receptionist, other clerical person or/wife/partner, this is normally covered by your existing cover. You would need to change the name on your policy to reflect the Ltd Company or other change, and of course show your corporate new name, registered office and company registration number on all notepaper, invoices, etc. You will need Employers Liability for any Employees as this is required by Law, but our Surgery policy for contents, etc., will include this for upwards of £50 per year. 

It is apparent, however, that more and more Health Professionals are setting up multi-person, multi therapy practices, with a core person or persons organizing and running the clinic or centre. A range of Corporate activities are undertaken, such as advertising all the therapists, hiring out rooms, checking they have valid insurance, ensuring that Health Professionals are properly registered, booking appointments or giving health advice, referring possible clients to other Associates and therapists, or even taking money on behalf of other practitioners, and thus possibly unwittingly acting as their agent. We have also seen situations where our clients have been employing other practitioners, or sub-contracting work for which they retain overall responsibility as proprietor of the Clinic or Centre.  Even though your receptionist and staff are covered for their actions under your policy as an individual, they are not covered if the patient of another associate or therapist complains about their behaviour or communication style.  As a principal with a clinic complaints procedure, you may get involved in a case that, on the surface, does not seem to implicate or involve you in any way, but as the case progresses, you may be named as a third party in an action.  There are too many grey areas for a sensible Health Professional and clinic proprietor to ignore the potential losses that they could incur through no fault of their own. You could also face a regulatory/disciplinary complaint for failing to monitor or supervise your staff or even consultants or keep proper data protection, or have a complaints procedure.

It seems also that a recent trend has developed, where solicitors' letters have gone to the principal, rather than the practitioner concerned.  A legal firm will go for the organization rather than the individual, especially if the practice advertises the therapist concerned, or is otherwise possibly linked. The argument can be made that the Principal chose or allowed that practitioner to work there.  Even if the claim ultimately gets redirected to the practitioner, there could be costs before it can get to that point.  In the perceived increase in this sort of claim, a corporate practice owner is being seen as easier to go for than individuals, in a clinic set up.

We have encountered situations where a Health Professional or other practitioner who was an associate or employee has left the country or disappeared without trace, leaving the owner of the clinic, or fellow associate who hired out the room where treatment took place, to receive the blame when a solicitor's letter surfaced later on.  Insurers can't normally process or deal with a claim without adequate information or the involvement of the Practitioner concerned, and it could fall back on you! 

It can, therefore, be said that there is a 'corporate' risk requiring a separate clinic policy covering both 'front line' or 'contingent' treatment risks. A front line risk I would describe as where you or your employees could be held directly responsible as a result of giving advice, treatment, or causing upset, harm, embarrassment.  A contingent risk is one that arises from being implicated in some way with the chain of events or association with the person causing the injury or loss.  The degree of vulnerability ranges from the remote (and raises the question 'is it really worth taking out extra insurance for?') to the extreme, where there is inadequate Insurance protection in place to protect the owner of the business. Hiring locums would fall into a different category, as these are usually employed in temporary situations and their respective insurances would normally deal with that situation.  It is essential that you do check the Insurance of any Locum, even if they are registered, and be prepared to be extra vigilant if you see anything with which you are concerned.

Up to now, specially designed corporate policies for 'front line' cover have been very hard to get, and expensive, because of the restricted number of insurers offering cover for Health Professionals running clinics.
 
We are pleased to advise that in connection with various specialist insurers, we can offer a range of solutions for this that cater for the treatment and advice aspect of these risks.  Cover will be very similar to the sorts of risk you have under your individual policy – Professional
Indemnity, Medical Malpractice, Breach of Confidentiality, Libel and Slander, Loss of Documents, etc.  For Contents, Money Buildings, Employers and Public Liabilities, you should consider our Bridge Surgery Package cover, which delivers all of this and more at a competitive premium.  You may also want to consider a locum cover to pay for one if you are off work due to illness or accident.  In a larger set up, you may want to consider Commercial Legal Expenses Insurance to cover Criminal Defence, Employment Awards and disputes, contract disputes, etc.

You can ask for a form now to get the ball rolling and receive a customized quote.  Premiums start at around £290 per year, and will reflect the fee, income, types of therapies offered, and the number of qualified practitioners to be covered.  .

In the meantime here is a table to help you decide if your business is vulnerable. 

 

 

Insurance Issues Around Running A Clinic – Do I Need A Policy?

Question
Answer
Solution
Are you a Health Centre/Clinic/ Individual making appointments for other therapists?
Yes
Clinic Policy may be advisable
 
No
Individual Policy OK for most situations
Are you running a Clinic with Associates?
Yes
Clinic Policy may be Advisable /may be essential depending on how Clinic is set up
If 'yes', do you have a standard contract that is signed with them?
Yes
Legal Advice may be needed to clarify extent of possible liability – this still may not prevent someone trying to sue you
Do you take money on behalf of other therapists' work? Are cheques made out to you/your company?
Yes
Clinic Policy essential. Perception of contract is that it is with you as money has been taken.
Do you Simply rent the space to other practitioners with no other involvement?
Yes
Individual Policy OK for most situations – check you have Public Liability and may be Loss of Rent/Profits insurance in case your income is curtailed by a fire, etc.
 
No
Clinic Policy may be Advisable
Do you advertise other therapists/therapies as part of your overall operation?
Yes
Clinic Policy essential – Lawyers will argue that the Public Perception will be of a corporate entity not an individual
As proprietor, do you regularly check that their Insurance is in force, correctly describes what they do, and require sight of insurance at renewal of their policy?
Yes
Clinic Policy essential – if you fail to do this and practitioner turns out to be uninsured you may be implicated
Do you have any Therapist Employees?
Yes
Clinic Policy essential – your policy covers you and your practice not necessarily a number other qualified therapists for whom you are responsible
Does your receptionist carry out any treatment on your behalf or under supervision?
Yes
Highly likely that this is not insured anyway if this employee is not qualified, but if they are, then Clinic Policy is essential
Are you renting Rooms?
Yes
Check you have a Public Liability to cover this – your surgery standard cover will be Ok for this
Are you renting Rooms out to others?
Do you have a mortgage on the Building?
Yes
Consider some form of protection for this income, or cover to pay for additional cost of hiring somewhere else – e.g. Loss of Rent or Profits or increased cost of working cover (ICOW) if the rooms become seriously damaged by Fire, Flood, Storm and you can't use them
Do you have a mortgage on the Building?
Do you use a locum if you are ill?
Yes
Consider some form of Illness and accident Income Protection, for lump sum disablement benefits as well as weekly income replacement cover
Are you taking on work experience people?
Yes
You must have an Employers Liability cover for this. Even though they are not technically employees, allegations of negligence against you if they are injured will be covered under such a policy

 

Further Information

For in depth technical advice, please contact David or Josh Balen and their Commercial Insurance team on Tel; 01684 581875; Tel; 01684 581880;   db@balen.co.uk

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About David Balen

David Balen CERT PFS is a third generation insurance broker and has been practising for over twenty-seven years. He is a qualified NVQ assessor and is also actively involved in teaching Self-Development, Healing and Practice Management. His Insurance Practice specialises in servicing the needs of Complementary and other Health Professionals and their organisations. David is the Managing Director of Balens. David can be contacted at 01684 893006 db@balens.co.uk  www.balens.co.uk

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