Managing Contingent Liability

Emergency Medical Services, like most providers, often ignore contingent liability until it’s too late. With the continued building of complexity into our health care system it’s not uncommon for a patient to be seen by a dozen or more provides in their chain of care. When something goes wrong all parties tend to get sued. Managing contingent liability is about limiting this exposure.

The first step to managing contingent liability is through contractual language, the second is in verifying proof of insurance coverage. When EMS services sign contracts with nursing homes, hospitals and municipalities they are often presented with wording that benefits the other party, by simply asking that they receive the same terms in return will provide most coverage needed. Ambulance services should also have lawyers review these contracts and make wording suggestions.

The two most common terms in contracts are “indemnification” and “hold harmless”. Indemnification means that the other party will reimburse you for any expenses you incur on their behalf. Hold harmless says that neither party will sue each other, often with an exception for gross negligence. Putting these two together means your patient transport organization will be reimbursed for legal expenses caused by your contract partners and that those parties will not come after you directly. This aligns both parties interests.

Requesting and monitoring proof of insurance is also a key part of this process. Many organizations, nursing homes in particular, either do not carry insurance or buy from unrated carriers. By putting in place controls (internally or using a third party service like CertTrack) will ensure that you do not become the deepest pocket. EMS services should require at least $1M in malpractice coverage from an AM Best A- or better rated carrier. Also, reminder that insurance renews once a year and many contracts run until cancelled. Proof of coverage should be requested at each yearly renewal.

Contact today to discuss ways to limit your contingent liability and lower overall costs. One claim, even if no settlement is paid, can have catastrophic consequences on your renewal premium.