Professional liability insurance (often called “medical malpractice” in healthcare) is more than just a “cover your backside” policy. It’s a life preserver, a safety net, and – in the best cases – it’s a team of supporters who you, as a healthcare professional, can lean on if there’s a board action or claim filed against you. But, being insurance, it can often seem overly complicated at times. There may be fine print, lots of paperwork, and plenty of legal-insurance jargon. It can turn all smart medical professionals into one of those head-exploding emojis.
So let this guide do its job and guide you through all the nuts and bolts of professional liability coverage. Here, you’ll learn how medical malpractice insurance works, what it aims to help protect against, who needs it, what to look for in an insurer – and in your own employer’s policy (if it covers you) – and what you’ll need to know if a malpractice claim or board action is ever brought against you. In an attempt to simplify insurance – and break down any walls between insurance-company-speak and real professionals – we also dive into some commonly used insurance terms.
Keep in mind that every insurance policy is different, and this guide is meant to provide a general description of what you can expect based on what is usually offered – and often, in our opinion, what should be offered. If you have your own policy, it will be important to read and understand your specific policy thoroughly because that’s what protects your work and career.
What Is Medical Malpractice Insurance?
Medical malpractice insurance is liability insurance that's specifically designed for professionals who work in the medical field. This coverage protects healthcare providers if they are sued or are part of a team that gets sued. It also provides some direct benefits to you as a policyholder.
Malpractice insurance covers the legal fees used to defend you, whether the claim has merit – or not – and whether it goes to court or goes away quickly. Your insurance policy can also cover lost wages or travel expenses if you, the professional – and in this case, the defendant – have to miss work or travel to a trial to defend yourself.
In many cases, malpractice insurance also assists you if a board action is filed against you. You would likely want legal representation if you have to defend your actions to the board, and your policy should be able to provide guidance and counsel.
What Is a Medical Malpractice Lawsuit?
A medical malpractice lawsuit is when a patient alleges that a healthcare professional –or team of professionals – made a medical error. Before we go into more about a lawsuit, here are some common definitions of legal terms:
- Plaintiff: The person making the accusation. In a medical malpractice case, this would typically be the patient or their family.
- Defendant: The person the plaintiff is accusing of making a medical error; the person who needs to explain his or her actions. If you are a healthcare professional reading this, the defendant in this case would be you. (Sorry!)
- Damages: When asked “What are the damages,” this answer has two parts: The injury the plaintiff experienced, and the financial compensation the plaintiff’s team is requesting. However, the patient must be able to prove that the injury resulted in any of the following: Disability; loss of income; unusual pain, suffering, and hardship; or significant past and future medical bills. They also have to prove that the damage was caused by negligence or malpractice from the defendant.
Remember: A bad outcome (i.e., unsuccessful surgery) by itself is not malpractice - the provider had to have made a mistake. According to the American Board of Professional Liability Attorneys (ABPLA), there needs to be a “negligent act or omission” from the healthcare professional(s), which caused injury to a patient. This negligence might be the result of errors in diagnosis, treatment, aftercare, or health management. The ABPLA goes on to explain that in order for something to be considered medical malpractice under the law, the allegation must have the following elements. (Note: This gets a little lawyer-y, but we don’t want to change wording from the ABPLA.)
- A violation of the standard of care: The law acknowledges that there are certain medical standards that are recognized by the profession as acceptable medical treatments by reasonably prudent healthcare professionals under like or similar circumstances. This is known as the “standard of care.” It means that a patient has the right to expect that healthcare professionals will deliver care consistent with these standards. If it’s determined that the standard of care has not been met, then negligence may be established.
- The negligence caused harm: For a medical malpractice claim to be valid, it is not sufficient that a healthcare professional simply violated the standard of care. The plaintiff must also prove that the negligence caused an injury. If there is an injury without negligence (e.g., a patient’s condition worsens but there was no allegation that the treatment was substandard), it’s not malpractice. Likewise, if there is negligence without an injury (e.g., a nurse fails to document a patient’s medications according to hospital procedure, but the patient suffered no injury), there is no malpractice.
- The injury resulted in damages: Medical malpractice lawsuits are extremely expensive to litigate (meaning, to argue in front of a judge or jury), and frequently require testimony of numerous medical experts as well as countless hours of legal research and interviews. For a case to be viable, the patient must show that significant damages resulted from an injury received due to the medical negligence. If the damages are small, the cost of pursuing the case might be greater than the eventual recovery.
Who Should Get Medical Malpractice Insurance?
Many states require certain healthcare providers to carry professional liability insurance. But even if it’s not required, many professionals choose to protect themselves with a malpractice policy anyway. Doctors aren’t the only medical providers who are named in malpractice suits; any individual or organization involved with medical treatment can be held liable for costs or claims of medical negligence or error. This includes providers who work in the following fields:
- Nurses & Nursing Students
- Nurse Practitioners
- Physical Therapists
- Physician Assistants
- Occupational Therapists
In terms of having malpractice insurance, there are a number of reasons why you might want to consider buying malpractice insurance, even if it’s not legally required:
- You run your own clinic or private practice
- You want a supplemental policy in case your employer’s policy doesn’t cover you completely
- You want your own policy so you can have more control over the legal team and decisions made on your behalf
- You moonlight or do medical work outside of your typical job description
- You’re an independent contractor
- You want coverage for things that are not included under your employer’s policy (e.g., HIPAA or board actions)
- You are a student doing clinicals
- You want an additional financial cushion to fight claims
In the next chapter of this guide, we'll discuss what's typically covered under medical malpractice insurance – and what's not.