Do the LEGS need to have insurance coverage?
Insurance falls within the LEGS “decision making” process and it is up to the individual LEG to determine what their insurance needs are.
Insurance is an added expense for LEGS where individual physicians receive relatively modest payments under the AFP. LEGS who are incorporated normally would have insurance. However, for an unincorporated LEG, it is less clear that any sort of insurance is required since the group essentially operates as a flow through mechanism. While there may be one or two members of the group who act as managers or directors, those positions would not necessarily justify the expense of insurance, other than for fraud or theft. Often, unincorporated groups that are formed for AFPs, APPs, FHOs, FHNs, etc. really operate out of one physician’s office where his or her employees assist with group functions in addition to the administrative duties of a regular practice. In this scenario, it would be expected that the physician would have standard insurance protection for the office that dealt with fire, water damage, theft, fraud, occupier’s liability, etc.
Will NOAMA arrange insurance for our LEG?
The LEGS, like practice plans in the academic centres, are semi-autonomous with obligations owed to governance and to the members. However, the errors and omissions of a physician group are the group’s responsibility. If a LEG wants to purchase separate insurance, it can do so.
The NOAMA Board and the PCTA Board each have their own insurance policies which cover Directors and Officers liability, and any other issues specific to their organizations. NOAMA does not have a policy that covers all of the LEGS. NOAMA’s insurance agent has recommended that there not be one policy covering all of the LEGS, plus NOAMA‘s policy, given the actions of the Directors, will be directly related to the scope of activities for their organization. Also, the LEGS may be very different in their structures. Some may have employees or choose to rent space, etc., and have different needs which could impact on their insurance requirements.
Would NOAMA be able to give us an idea of what it would cost to purchase appropriate insurance for a LEG?
The cost for insurance should be relatively inexpensive. The cost is not determined by the number of members within each group, but is based upon the type and amount of coverage required. LEGS do not require the same protection as a larger organization such as NOAMA which handles millions of dollars, or an incorporated entity that comprises physicians as shareholders. The risks of having a physician embezzle money from a group are extremely low. An unincorporated association has no legal status in any event.
We recommend that you discuss insurance costs with an insurance agent who can provide you with a quote based on the type of coverage that you require for your group.
Is there a common insurance carrier that we can speak to about insurance coverage?
NOAMA has had discussions with our insurance agent in respect to insurance options for the LEGS, and he has agreed to assist interested LEG groups through analysis of their specific insurance needs. The objective is to implement a cost effective insurance policy.
If you are interested in discussing insurance options with our insurance agent, please contact him directly at:
Brenda Nahkala, Account Executive – Commercial Lines
Aon Reed Stenhouse Inc.
Phone: (807) 346-7473 (Thunder Bay)