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Do Nurses Need Their Own Professional Liability Insurance?


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By Debra Wood, RN, contributor

Nov. 6, 2009 - Mistakes happen, even to the best clinicians, but a large number of nurses do not carry professional liability insurance. Forgoing the relatively inexpensive coverage may not be a wise decision.

Taralynn Mackay, RN, JD
Taralynn Mackay, RN, JD, encourages all nurses to carry their own professional liability coverage.

“People will insure their cars and homes but not their careers,” said Taralynn Mackay, JD, RN, an attorney with McDonald, Mackay & Weitz in Austin, Texas. “Few of my clients have malpractice insurance.”

Professional liability insurance typically pays for a defense attorney and any settlement or judgment against the nurse, up to the policy limits. It also, depending on the policy, will often cover licensure defense, if the nurse is reported to the board of nursing.

A 2009 American Nurses Association online poll found that 53 percent of 311 responding nurses reported they did not carry professional liability insurance.

“A lot of myths keep nurses from getting malpractice insurance,” Mackay added.

One of the biggest myths is that an employer’s coverage will protect the nurse. It may be true that the employer carries sufficient insurance, but Mackay advises nurses to ask how much it will provide and for what. She also said an employer could sue the nurse to get back money paid if negligence occurred. Mackay also cautioned that if a hospital goes bankrupt, money might not be available for legal services.

Richard A. Joslin
Richard A. Joslin recommends agency nurses carry their own liability coverage but that nurses employed by a hospital, at least in Michigan, do not need it.

“The hospital attorney is loyal to what the hospital wants,” Mackay said. “You want [your own coverage] for malpractice and for an investigation before the board. You need someone on your side, watching out for your interests.”

Richard A. Joslin, an attorney with Collins, Einhorn, Farrell & Ulanoff in Southfield, Mich., disagreed, saying that hospitals are typically on the same side as the nurse, and the hospital policy is all a nurse needs ― at least in Michigan where hospitals have a legal responsibility for acts of employees. He recommended nurses ask for a written copy of what the hospital coverage will provide.

Benjamin W. Newman
Benjamin W. Newman suggests nurses carry insurance, but at a dollar amount equal to, not more than, most physicians in their state.

“Nurses should rely on whoever is employing them to provide liability insurance,” agreed health care defense attorney Benjamin W. Newman, a shareholder in the practice of Bobo, Ciotoli, Bocchino, Newman & Corsini in Orlando, Florida. However, he recommends that nurses carry personal insurance, as well, because they often move from job to job.

Joslin strongly encourages nurses working for temporary agencies to secure their own coverage. While some agencies make policies available to their staff, nurses will need to investigate the coverage and the conditions.

“The question is liability outside the hospital setting,” Joslin said. “Anyone not an employee of the hospital, I would want my own insurance policy.”

Newman added that the facility where they are temping may provide coverage, and the nurse should ask.

Nurses also need coverage outside their place of work, for instance if they volunteer. They should check to make sure their policy will cover those situations. Even though free clinics may offer sovereign immunity, Newman said, someone can sue, and the nurse will need a lawyer to help with the defense process. However, policies will not cover actions outside of the nurses’ scope of practice.

Another myth is that carrying insurance will increase the risk of a lawsuit, Mackay said. Typically, the plaintiff’s lawyer will name everyone involved in the case in the lawsuit, and he or she will not find out until later who has insurance.

“Insurance can keep you in a lawsuit where you may have been dismissed, because you didn’t make a lot of money awhile back,” Mackay said. “We’re seeing nurses are making more money now. They are not getting dropped because they do not have funds.”

Newman cautioned that nurses not carry too much coverage, because if their policy has higher limits than the physicians involved in a case, the plaintiff’s attorney may shift the focus to nursing negligence. In Florida, physicians typically carry $250,000 rather than $1 million, which was the norm before rates skyrocketed. Yet nurses’ policies often still have $1 million limits.

“You become more of a target, unnecessarily,” Newman said. “Buy no more than $250,000 in coverage.”

Nurses who think that they do not need insurance because they are good at what they do are simply fooling themselves, Mackay said.

“The majority of my clients are good nurses,” Mackay said. “Good nurses can have a bad day, make mistakes. They can be subject to false claims against them.”

When selecting a policy, experts advise inquiring about whether it is an “occurrence” policy, providing coverage for incidents that happened while the policy is in effect or a “claims-made” policy, which only covers if the claim is filed while the policy is active. Additional riders can be purchased to extend the time a claim can be reported and still covered.

“Nurses who change jobs should purchase a tail policy,” said Joslin, explaining that it will cover acts committed prior to accepting a new job.

Newman suggests checking the state’s statue of limitation and if it is two years, buy two-years’ worth of tail coverage.

Mackay also advises purchasing enough coverage, explaining that investigating a case against the board of nursing at an informal stage will cost $3,000 to $5,000 and from $8,000 to $15,000 per day at a hearing.

“It can get very expensive,” Mackay said. “You don’t want the attorney to cut corners [and say,] ‘I cannot get an expert, because you don’t have the money to pay for one. And we really need an expert.’ That’s doing yourself a disservice. You want the best coverage and defense you can.”

CNA HealthPro, a nurse professional liability carrier, reported in its claims study that the average paid indemnity for registered nurse claims from 1997 until 2007 was $149,252. The highest were for claims in an inpatient hospital setting, at $163,436, and 38.2 percent of the claims originated in a hospital inpatient setting. Death was the most frequent injury, accounting for 38.2 percent of claims. Infections, abscesses and sepsis accounted for 6.5 percent of claims, according to the report.

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