SilverLink - Fall 2008 - (Page 14)

liability coverage is customized to the individual practice. Consequently, when a spa closes, it’s not simply a matter of shutting the doors and posting a “closed for business” sign. When a business is no longer viable, a well-scripted plan must be in place to ensure that after the lights go out, the owner’s liability doesn’t follow him or her out the door. When making plans to close, it’s critical for the owner to work with an attorney who is well-versed in medical malpractice and business law, to help ensure that contracts are honored, loose ends tied up and unforeseen loopholes dealt with before the closing is ﬁnal. Hard as it may be to sell or close a business, several questions must be answered, including, but not limited to, the following: • • Is the business closing completely? If so, is there a buyout clause on purchased equipment? Are there lease obligations or is it possible to opt-out early? Many leases run 3-10 years, leaving owners on the hook if the contract does not allow an opt-out or sublease. If the business is being sold, what is the best way to transfer medical records to the new owner? Has any provision been made for post-closing liability? limitations on how long a patient has to ﬁle a claim; before purchasing a tail policy, be sure to verify that it provides coverage for an adequate length of time. Purchasing a short-term tail of 1-3 years may cost anywhere from 75-300 percent of the amount an owner currently pays in annual premiums (depending on the admitted or nonadmitted malpractice carrier). Most carriers have a 30- to 60-day tail already built into the business policy, but that is usually not enough time to cover all potential exposures. Tail endorsements are only available for a set number of days after closing, so the timing of notiﬁcation is imperative when you are ready to cancel your policy. Additionally, the premium for a tail policy may be due immediately upon placement and premium ﬁnancing may not be available. Admitted carriers usually have more lenient and lengthier tails than those found in the non-admitted marketplace (although the latter venue writes most aesthetic medical malpractice policies). • • Cancel Additional Coverage—But Not Too Soon Business insurance coverage for general liability, property, workers’ compensation, etc. must also be cancelled when a business closes. It’s important to be aware of contracts that may bind an owner to property rental, equipment leases, etc., and it’s essential to carry insurance on the contracted items until all contracts have been properly canceled and the liability has ended. No matter the reason a business closes its doors, it’s important to protect the owner’s remaining assets and reputable name— and taking the steps necessary to protect vendors and clients prospectively does just that. Like a closed Broadway show, it’s gratifying when former med-spa clients and vendors can say “I wish I could have gone there one more time.” Malpractice Tail Coverage One of the most critical issues that must be addressed when a medical spa closes is that of malpractice coverage. Some owners may ask “Why do I need to have malpractice insurance if I’m no longer in business?” Many med spa owners are not aware of tail endorsements, which extend the period in which patients can ﬁle claims after treatments have ceased (or after a business closes). Without tail coverage, a med spa owner could be held personally liable for claims ﬁled months after the business has closed. Each state has its own statute of CONTACT ANDREA BELL AT 402.96 4.5429 OR ABELL@ SSGI.COM 14

Table of Contents Feed for the Digital Edition of SilverLink - Fall 2008

SilverLink - Fall 2008 Table of Contents Risk Management: Toto A Marriage Made to Last Cashier’s Check Fraud? Selection Validation Digital Tool Box When the Curtain Falls Lightning Strikes Increased Fuel Economy Employee Benefits: To Infinity & Beyond Securing Retiree Healthcare Private Client Services: Batter Up! Shaking Things Up STOLI Under Attack Client Spotlight: Bellevue University Internal Happenings: SilverStone Group Wellness Activities Group

SilverLink - Fall 2008

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