Glossary
- Binding arbitration
- Californians Allied for Patient Protection (CAPP)
- Claims Made Coverage
- Declaration Page
- Informal Negotiation
- Jury Trial
- Licensing Board Coverage
- Mediation
- Medical Injury Compensation Reform Act of 1976 (MICRA)
- Occurrence Based Coverage
- PRF Annual General Meeting
- Primary Level / Excess Level of Coverage
- Prior Acts Coverage
- Risk Retention Group (RRG)
- “Tail” Coverage
- Limits on non-economic damages ($250,000 cap)
- Evidence of collateral source payments (such as Workers' Compensation)
- Limits on attorney contingency fees
- Advance notice of intent to sue (90-day notice)
- Statute of limitations
- Periodic payments of future damages
- Binding arbitration of disputes
Binding arbitration: This is an alternative method of resolving disputes, in which the case is decided by an arbitrator (or panel of three arbitrators) selected by the litigants. The arbitration panel usually consists of a retired judge, selected by mutual agreement of the litigants, and two lawyers specializing in medical liability cases. While the discovery process in medical malpractice arbitration is similar to that used in regular litigation, the arbitration is conducted privately and is usually less time consuming. The evidence presented in arbitration is the same as would be presented to a jury. The arbitrator(s) render a formal written decision which is final, binding and cannot be appealed except on very limited grounds. PRF requires each policyholder to make a good faith effort to have each patient sign an arbitration agreement before treatment commences, except where emergency treatment is required. PRF provides arbitration agreements free of charge to all policyholders. They are available in English, Cantonese and Spanish.
Californians Allied for Patient Protection (CAPP): Californians Allied for Patient Protection (CAPP) is a broad-based coalition of health care providers, business, labor and consumer organizations, and insurers created to preserve the provisions of MICRA.
Claims Made Coverage: Liability insurance coverage only for claims that occur and are reported during the period in which the insurance policy is in force. Conversely, if a claim is filed after the policy period, it will not be covered unless the policyholder has purchased additional coverage allowing an extended reporting period. This is sometimes referred to as "tail coverage."
Declarations Page: This is the summary page of an insurance policy, which contains the key information about the policy and policyholder, including the full name of the insured, his or her practice location(s), dates the policy is in effect and the limits of coverage. PRF issues a new Declarations Page annually. Typically the Declarations Page of the policy is submitted to hospitals for credentialing purposes and as proof of insurance.
Informal Negotiation: Informal negotiations can take many forms. Even when a formal Complaint has been filed with the Court, PRF attorneys are often able to negotiate with the plaintiff's attorney to resolve the matter before it goes to arbitration or trial.
Jury Trial: If no arbitration agreement exists, and if the parties cannot resolve the dispute through negotiation or mediation, there will be a trial by jury to determine the judgment. A court trial is a formal, public process. Twelve jurors are selected, and usually the plaintiff and the defendant testify. Other interested parties may also be called to testify, such as family members, treating physicians, and expert witnesses. A trial can take one to two weeks to complete, and from the insured's perspective may be the least desirable method of resolution. Since PRF insureds use arbitration agreements and since PRF is proactive in resolving claims even before a claim is asserted by the patient, there have been very few trials in PRF's 35-year history.
Licensing Board Coverage: This coverage available from PRF pays the cost of legal defense up to the policy maximum when the policyholder requires assistance in responding a a licencing board inquiry or investigation. Such investigations are not unusual following the report of a professional liability award, settlement or even a complaint filed by an unhappy patient.
Mediation: Unlike arbitration, mediation is a voluntary process which can only produce a resolution if both parties agree. Typically the litigants choose a neutral person such as a retired judge who has experience with settling medical malpractice cases. The mediator has no power to force parties to settle, but skilled mediators can usually bring about a resolutions in the space of one day meeting with the litigants. If successful, the result includes a binding settlement agreement and dismissal of the lawsuit, without the need for a trial or arbitration.
Medical Injury Compensation Reform Act of 1976 (MICRA): MICRA is the term used for legislation arising out of the medical malpractice liability crisis of 1975 when malpractice insurers either drastically increased their rates or withdrew from the malpractice market entirely due to the skyrocketing cost of medical injury awards. MICRA has been responsible for containing the cost of medical malpractice liability insurance in California. Other states without similar legislation are currently experiencing the type of crisis that California went through in 1975. MICRA's basic provisions are:
For a more detailed explanation of MICRA visit http://www.micra.org/, the website of Californians Allied for Patient Protection (CAPP).
Occurrence Based Coverage: Liability insurance coverage for events that occur during the period in which the policy is in force regardless of when a claim is filed. Occurrence based coverage eliminates the need for the insured to purchase a "tail" if and when the policyholder elects to change malpractice insurance carriers, for whatever reason. Previously very common, yet today very few insurance providers are willing to take on potential exposure to a malpractice claim for an unlimited time. PRF has offered occurrence based coverage since its inception and is one of the few insurers that continues to provide its policyholders with this level of protection at no additional cost.
PRF Annual General Meeting: In April or May of each year, PRF has an Annual General Meeting and all Insureds are invited to attend. Proxies are sent out to all shareholders in PRF's holding company, Sphargis, Inc. (all PRF Insureds) and via the proxy vote and the vote of those members in attendance the Board of Directors is elected. Board members and other members of PRF's management team are in attendance. The Board of Directors presents a review of the events of the previous year regarding the financial and administrative state of the Company.
Primary Level / Excess Level of Coverage: Liability insurance generally has two tiers of coverage, i.e., the primary level and the excess level. The first $500,000 of loss coverage is considered the primary level of insurance. Any portion of a settlement, judgment or award exceeding $500,000 penetrates the excess level of coverage. Professional liability insurance carriers often purchase reinsurance for the excess level of coverage ($501,000 to $1, 000,000). Effective January 1, 2003, PRF has retained the potential liability for both the primary and excess levels of coverage.
Prior Acts Coverage: Liability insurance coverage for claims arising from acts that occurred before the beginning of the policy period. Policies written on a "claims made basis" cover only claims filed during the policy period, unless additional “tail coverage" or extended reporting coverage is purchased when the policy ends. Prior acts coverage is an alternative to tail coverage in which the new insurance provider provides coverage for the risk normally covered by a tail policy. Prior acts coverage is sometimes referred to as “nose” coverage.
Risk Retention Group (RRG): An RRG is an insurance company organized under the Federal Liability Risk Retention Act of 1986. By law it may only be owned and capitalized by its policyholders, and must provide liability insurance to an identifiable group facing similar liability exposures, e.g., health care providers facing the risk of malpractice liability to patients. PRF is licensed as a risk retention group by the Vermont Department of Banking, Insurance, Securities and Health Care Administration (BISHCA), and is registered with the State of California. There are hundreds of risk retention groups such as PRF offering specialized coverage to their members throughout the United States. For more information about risk retention groups in general, visit the National Risk Retention Association’s (NRRA) website at http://www.nrra-usa.org/aboutus/faqs. This page has a link to the online copy of the Federal Liability Risk Retention Act.
“Tail” Coverage: Liability insurance that extends beyond the end of the policy period of a liability insurance policy written on a claims made basis. Liability claims are often made long after the accident or event that caused the injury. Most medical professional liability policies are written on a claims made basis, which means the insurer pays only claims that are made during the policy term. Claims made policies do not cover claims arising during the policy term but which are reported later. To fill the coverage gap, the policyholder must purchase tail coverage separately from the insurer or prior acts coverage from a new insurer.