After months of rumors that personal liability insurance costs would sky-rocket, a psychoanalyst receives word his rates have dramatically increased. Opening her mail, an analyst reads that her personal liability insurance will not be renewed in her state. An analyst picks up the phone and is greeted by a lawyer who requests the records of a patient who abruptly quit the preceding month in the midst of an intense negative transference.
It was this widespread nightmarish reality for members of the American Psychoanalytic Association which in 1986 caused Richard Simons, M.D., then President of the Association, to request Dr. Philip Mechanick to chair a new Committee on Insurance.
The charge of the committee was twofold: 1) “to remain informed about all issues that arise in regard to malpractice insurance coverage for the members of the Association”; and 2) “to remain informed about all issues that arise in regard to educational insurance coverage.” This second charge involves liability insurance coverage for societies and institutes. The committee was to have no direct authority or power; it would make recommendations to the Executive Council and to the Executive Committee.
Dr. Mechanick accepted the assignment and in October, 1986, the committee was formed. Because each of the 50 states regulates the insurance sold in that state and regulations of each state differ, the membership of the committee was drawn from various areas of the country.
Present committee members are Drs. Richard Carter from Washington State, Richard Cattell from Colorado, Barbara Deutsch from New York, Evan Katz from Florida, Arthur Malin from California, Lynn Reiser from Connecticut, Ralph Roughton from Georgia, Mary Scharold from Texas, Alan Stern from North Carolina, William Stockton from Maryland and Jerome Winer from Illinois.
When Mechanick accepted the position of chairman he entered a complex, somewhat Byzantine world of regulations and regulators. The American does not market any insurance but works with the broker Frenkel and Company. Frenkel arranges coverage with insurance companies and has used the current carrier, American Home Assurance, since the liability insurance program was founded in 1974. Prior to that time members of the American arranged their own insurance. Since then the overall climate of physician's liability insurance has steadily deteriorated, and for psychoanalysts several states could be considered storm centers. The current status in these states as of the time of the Annual Meeting in May, 1989 follows:
VIRGINIA — Insurance coverage is not offered through Frenkel. The state wants separate insurance policies for individuals and for corporations. This means that an analyst who formed a professional corporation would have to carry two different policies. Dr. Scharnold is the American's liaison in Virginia. The American Home Assurance is refiling in the state and the situation is close to a positive resolution.
PENNSYLVANIA — Members of the American are not covered through Frenkel. The state insurance commission demanded certain changes in the policy which American Home Assurance could not agree to. Members received abrupt notification of non-renewal of their policies. Dr. Mechanick is working locally and American Home Assurance is refiling. The form has been approved, but the rates are still awaiting approval.
CALIFORNIA — Members of the American are still covered through Frenkel, but because of increased insurance premiums, California members found it less expensive to go to local sources and purchase claims-made policies. (Claims-made insurance provides coverage only for a claim made during the time the policy is in effect. Therefore “tails” need to be purchased to extend the coverage past the initial length of time the original policy was in effect. Occurrence insurance provides coverage for incidents occurring during the time the policy is in effect. If a claim is filed years later, the insurance is effective.)
FLORIDA — There has been no coverage for new members through Frenkel for several years. The issues in Florida are extremely complicated. Dr. Katz is working locally and the American Home Assurance legal department is assisting members in evaluating the establishment of an insurance purchasing group. This promises to be resolved in the next several months.
NEW YORK — Analysts are unable to purchase new policies; old policies can be renewed. The problem is that the New York Insurance Commission does not want occurrence policies sold. It only approves claims-made policies, although many analysts believe that occurrence policies offer better protection. A second problem is that the State Insurance Commission wants to include psychoanalysts in the risk pool with all psychiatrists. Putting analysts into this pool would raise analysts' rates to that of general psychiatric insurance — about triple current rates. Dr. Deutsch is working with Frenkel to prevent this and Frenkel has donated $15,000 to support the American's efforts.
Because of the severe and complicated problems in several states, a decision was made at the May Meeting of the American to form state subcommittees composed of members living in the affected state. Dr. Deutsch, representing New York State, chairs the first of these new committees.
A prime goal of the Committee is to establish the best level of coverage for members. The committee has made Frenkel aware that the American represents
members from all 50 states. Although Frenkel covers about 1,000 members, this is a tiny amount of insurance business. However, a group of employees at Frenkel work in the area of insurance for psychoanalysts.
Prior to the formation of the Committee, American Home Assurance unilaterally decided to put a $25,000 cap on indemnity for claims of sexual misconduct. It was very unclear if this was the limit even if the analyst was blameless. This issue was negotiated by the Committee on Insurance with Frenkel and American Home Assurance. The result was that the policy had this restriction only if the analyst was found guilty or admitted guilt. This cap should prevent frivolous claims against members.
Members from New York felt that the $25,000 cap was not enough protection, and in a recent vote decided overwhelmingly (227 for, 37 against) to raise the cap to $100,000 in spite of a premium increase of approximately 25 percent.
Another recent change in the policy is separation of the coverage for defense from coverage for indemnity. Coverage for legal fees will now be at the same level as indemnity. This accords with the adage, “don't let the cost of defense eat up your liability.” If a single coverage is used to cover both defense and indemnity, the legal costs of a complicated case could use up the indemnity coverage. This change is considered by both Mechanick and Frenkel as a significant improvement in coverage and well worth the increase in premium.
The committee retained the services of attorney Joel Glass in the fall of 1988. Mr. Glass specializes in professional liability defense and may assist the Committee in the future.
This summary of the ongoing issues may give the impression that the Committee on Insurance is primarily involved in reacting to problems. This is not the case. Mechanick views as equally important the pro-active work of the Committee in broader areas.
Mechanick emphasizes that the Committee works with members who request the intervention of the Committee. Most complaints by members have been the lack of choice of attorney and slow response. In these cases Mechanick has served as an ombudsman. The Committee will assist all members whether or not they are covered through Frenkel.
“The arrival of a claim is a terrible trauma,” Mechanick reflected. “Most members have been happy and appreciated the committee when they had a gripe. We have been able to intercede and help. Our members do not feel alone and realize we serve as an ally.”
The Committee has served in a supportive role both during preclaims and claims periods. Mechanick believes that it is nonsense to take an attitude that an analyst can withstand all the viscissitudes of life including legal actions. He feels that a lawsuit is massively disruptive, and the Committee can give emotional help.
Mechanick cites several other areas in which the Committee can benefit members. Insurance companies do not help with legal issues if there is no claim filed. The American needs a legal hotline and this is an area being explored. A related development stems from the Philadelphia Psychoanalytic Society pilot study to determine how analysts might reduce risk and protect themselves from lawsuits. The American now has two leading Philadelphia liability insurance attorneys, Gerald Litwin and Aaron Blumberg, working pro bono to advise how members can best protect themselves.
Another aspect being explored is the development of minimal criteria for analytic practice, as is standard for other types of therapy. At present, no explicit criteria for analysis exist. The problem is that in legal cases, a non-analytic, biological psychiatrist might find fault with an analyst, for example, for not performing a physical examination, although analysts have valid reasons for not doing so.
Another example: should an analyst request a consultation on an extended analysis, after 8 years, 10 years, 15 years? Not having such criteria puts the analyst at risk in legal situations. Mechanick feels that the American needs to develop non-onerous, common-sense guidelines for analytic practice, such as suggesting a concise progress note for perhaps every three months of analysis.
At present the great risk for suits against analysts is patient suicide. Analysts have much less risk of suit for sexual misconduct than general psychiatrists; however, sexual misconduct results in the highest settlements. Suits against analysts involving adverse drug reactions are increasing, possibly a reflection of changing analytic practice patterns.
Mechanick commented that a frequent question members ask is why the American cannot self-insure. There are several reasons, the first of which is that the American is a small organization and the cost of capitalization for liability insurance is enormous. To protect against excessive risk, (i.e., several multi-million dollar “hits”), the American would have to reinsure. This would bring the American back to where it started — seeking insurance.
The committee explored the possibility of other insurers. One of the typical replies is as follows: “Our Health Risk Division has undertaken an exhaustive search of the insurance marketplace in order to determine the availability of alternative insurance programs for your association. Unfortunately, the restrictive regulations imposed by New York State upon rates and forms for medical malpractice have virtually eliminated any alternatives for such coverage in that state. Until such time as New York State relaxes their control over insurance coverage terms and pricing, it will be impossible to construct a nationwide association program for medical malpractice.”
Mechanick recognizes that some Association members are very unhappy with the current liability insurance conditions. The Committee on Insurance is aware of their problems and is working to rectify them. However, Mechanick mentions that members in several areas, such as Texas, Maryland and the District of Columbia, have been pleased and content with the coverage, especially in comparison to the problems of other specialties, and to those of psychiatry in particular.