Insurance for ketamine-assisted psychotherapy clinicians — Part 2
Part 2: Review the cyber risks and pertinent coverages for facilities that administer ketamine therapies.
Editor’s note: Part one of this series covered the possible liabilities faced by practitioners of ketamine psychotherapy and reviewed some of the necessary coverages.
Ketamine-assisted psychotherapy (KAP) is a unique and relatively recent form of psychotherapy that shows promising results for individuals diagnosed with a variety of mental health disorders, including treatment-resistant depression, post-traumatic stress disorder, chronic pain and anxiety.
Although ketamine has been approved by the FDA since the 1970s, its use in the psychotherapy arena is relatively recent. It was not until the 2000s that medical professionals noticed an association between ketamine and a reduction in depression and suicidal thoughts, and it is within the past few years that KAP has become part of the conversation on a larger scale.
Practitioners in this emergent field face a number of novel questions, including certain unknowns as to the potential liabilities that could arise from their practicing KAP and the insurance that they might need to protect themselves against any such liabilities.
KAP practitioners & cyber coverage
Cyber or data breach coverage: A growing number of KAP providers keep records using an electronic health records (EHR) system. What happens if that EHR is hacked, and confidential patient records are released as a result? A KAP provider’s particular EHR provider may indemnify that provider in that circumstance. KAP providers should reach out to their EHR vendor and ask what its indemnity policies are in the event of a breach. In addition to any indemnity that a KAP provider’s EHR covers, cyber or data breach coverage may help in this scenario.
But cyber risks are not confined to EHR software. Email or documents that a KAP provider stores electronically face similar data breach risks. Consider also the potential situation where a provider’s server is down for a period of time, impacting the provider’s ability to provide services to their patients. Cyber coverage may apply here.
Most cyber policies will cover not only the costs of any lawsuit, should it arise, but also the costs of restoring services, any lost profits that occurred because of a system outage that impacted a provider’s ability to provide services and costs of repairing any harm to that provider’s reputation that occurred as a result of the breach or outage.
What types of coverage should a KAP facility carry?
Employers and/or clinic owners face additional risks and, accordingly, should consider additional coverage types. Below is a sampling of what to consider. Many insurers will offer bundle packages to small business owners that include many of these types of insurance.
Workers’ compensation insurance: In most states, employers are legally required to maintain workers’ compensation insurance for their employees. Even where not legally required, it may be good to have.
Generally, employers do not have to carry workers’ compensation for employees who qualify as 1099 independent contractors. However, even if an employer only employs 1099 employees, that employer may still be on the hook. The test for whether a given employee is properly classified as a 1099 employee is highly fact-intensive. The long story short is that an employer may have workers’ compensation responsibility even for a 1099 employee if it is determined that the employee has been misclassified and is not quite so “independent” after all. If a practitioner employs others, the practitioner should consider obtaining workers’ compensation insurance even if that practitioner only works with 1099 employees. This type of insurance is usually not that expensive, and the costs of not having it could be significant.
Employee benefits liability (EBL) insurance: If a clinic provides benefits to employees, it should consider having this type of coverage. EBL policies typically cover claims from errors in the administration of employee benefits, such as errors enrolling or terminating employees in a benefit plan or errors made in describing a company’s benefits to an employee. EBL policies may also cover any errors made in company record keeping of employee benefits. Many insurers will offer this kind of coverage as an addition to other types of coverage for business owners, potentially via an endorsement.
Employment practices liability (EPLI) insurance: Anyone who employs others should consider having this type of coverage. EPLI usually covers claims of harassment or discrimination, breach of employment contract, wrongful termination, and the myriad other claims that an employer can face.
The nature of many small businesses is that the employers and employees know each other. Accordingly, clinic owners may be reluctant to imagine that these kinds of claims or suits may be brought against them. Regardless, employment situations are good until they’re not. For a small clinic with no history of claims or suits, this type of coverage may not be expensive and may be well worth the peace of mind it brings.
Property insurance: This policy covers damage to the physical property associated with an office clinic. If there is a break-in, and clinic equipment such as a printer or computer is stolen, this type of coverage may apply. Many Property insurance policies also cover “business interruption.”
Classic examples where this coverage applies include a fire burning down the building where a clinic operates or a storm causing destruction to the building where the clinic is located, making providers there unable to provide services. Whether this coverage applies will depend on the circumstances giving rise to the loss and the specifics of the policy language.
D&O insurance: If a clinic is incorporated, the corporation will have directors and officers. If these directors and officers are alleged to have mismanaged the clinic, then D&O coverage may apply. D&O policies tend to cover actions by directors and officers that result in the clinic’s financial loss/bankruptcy and/or that are alleged to violate workplace laws. Of particular relevance to the KAP field, D&O policies may cover any allegations related to credentialing and peer review, participation of a director or officer on an outside board, the Health Insurance Portability and Accountability Act (HIPAA) violations and certain regulatory claims.
Whether a clinic would benefit from D&O coverage will depend on the nature of the clinic’s business and what roles the Directors and Officers serve both within the clinic and in other capacities. If there are questions about whether it is appropriate, clinic owners and/or other employers should consider consulting a broker and/or coverage counsel to help make the determination.
Umbrella coverage: Any of the above policy types will cap the amount of coverage they provide. A given policy should clearly state what the policy limits are. For example, a malpractice policy may cover up to $1,000,000 in payments for each claim or suit with a limit of $3,000,000 total payments the policy will ever pay (the aggregate limit).
But what if a KAP provider wants more coverage than that? The novel nature of KAP means that the extent of possible liability is unclear. If a KAP provider determines that the amount they’d like to be covered for is higher than what their standard policy provides, they should consider obtaining umbrella or excess coverage that offers a higher limit of liability should they reach the limits in the policy they already have.
Allison Zamani is an associate at Blank Rome.
Opinions expressed here are the author’s own.
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