Insurance Coverage for Practitioners of Ketamine-Assisted Psychotherapy
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.
This article provides a broad overview of potential liabilities for practitioners of KAP and coverage options that they should consider. Whether a particular claim or suit is covered will depend on a close analysis of the nature of the allegations as well as the specific policy provisions.
What Types of Liability Might Arise?
Most KAP practitioners have on their radar the potential that a malpractice suit could be brought against them. The concept of malpractice in the context of healthcare generally means an alleged act or omission by a healthcare professional during the treatment of a patient that deviates from accepted norms of practice, i.e., the standard of care. The challenge, of course, with respect to KAP is with respect to the latter component – arriving at an “accepted norm of practice.” The field is fairly undeveloped in that regard.
This uncertainty may make many KAP practitioners uneasy. As KAP continues to become more widely practiced, ascertaining a standard of care will become more possible. In the meantime, KAP providers would do well to have adequate malpractice insurance, which should help them defend themselves in the unfortunate event that a claim or suit is brought against them. Short of a formal lawsuit, a former patient could file a complaint with the relevant state licensing board, and a KAP practitioner will want to have coverage for any sums spent responding to the complaint.
In addition to possible malpractice claims, KAP practitioners should consider other types of risk. What if a patient is at a KAP clinic for a KAP session and slips and falls, suffering injury as a result? What if a former patient claims that a KAP practitioner misled them about the efficacy of KAP and makes a claim against that practitioner based on false advertising? Say a KAP practitioner’s Electronic Health Records (EHR) software suffers a data breach and client files leak. What are the practitioner’s options in that situation?
KAP clinic owners face an additional set of risks. Clinic owners, or other employers, face the risks associated with ownership of any business as well as the risks they already assume as individual practitioners. What if an employee claims discrimination? What if a malpractice suit is brought against an employee, and the KAP clinic is sued as well? Or what if one of an employee is injured on the job and seeks compensation?
The above scenarios represent only some of the many potential liabilities that a KAP practitioner could face. Risk management is key, as is a robust insurance portfolio and an understanding of what that insurance covers. Below are some of the coverage types that KAP practitioners should consider.
I Practice KAP. What Types of Coverage Should I Have?
Malpractice Insurance: Most KAP practitioners already have this type of coverage, sometimes called Errors and Omissions (E&O) coverage. Their question is likely not whether to have this coverage but more what their malpractice insurance actually covers, particularly whether it covers the novel field of KAP.
Generally speaking, malpractice insurance for KAP practitioners covers a claim or suit brought against that practitioner because of a “professional incident” resulting from the “practice of the profession” for which the practitioner is covered. This insurance covers not only any money that the practitioner ultimately has to pay to a claimant or plaintiff but also the costs of defending against the claim or lawsuit, which can be substantial even for a lawsuit lacking merit. The amount of coverage will be stated in the insurance policy. Various exclusions exist and are relevant. Some exclusions, such as the exclusion for coverage for workers’ compensation claims, exist because another type of coverage applies to this type of liability. Some other exclusions, like the exclusion for “intentional wrongful acts,” apply more generally across most types of insurance.
Reviewing the actual allegations of any claim or suit will be key to determining whether there is coverage, as will reviewing the specific terms of the insurance policy. Other questions may arise as well, such as whether the state in which the practitioner practices considers the practice of KAP to be part of the “practice of the profession” in that state. And, again, the question of whether the alleged incident deviated from an accepted norm of practice could be challenging to determine, given that KAP is still an emerging field. Those questions are beyond the scope of this post but are an important part of the equation. Consultation with an insurance broker and, potentially, with coverage counsel will help make this determination.
General Liability (GL) or Commercial General Liability (CGL) Insurance: Practitioners should consider incorporating this type of coverage into their portfolios in addition to malpractice insurance. Some malpractice insurers will offer GL coverage as a bundle with their malpractice coverage. Consider, however, whether it is worthwhile to have a separate policy. In particular, malpractice insurers that offer a GL add-on will likely limit their general liability coverage to claims or suits resulting “from a professional incident that arises out of the profession” for which the KAP practitioner is insured. This language again gives rise to thorny issues around whether KAP is considered part of the profession in the state where the practitioner is licensed and practicing. A stand-alone GL/CGL policy may not have this limitation.
As relevant to practitioners of KAP, GL/CGL policies tend to cover claims based on “bodily injury” or “personal and advertising injury” brought against the practitioner. Say that a former patient sues a practitioner for emotional distress that they claim occurred because of KAP and that this emotional distress has resulted in migraine headaches, impacting that patient’s ability to work. Although this type of claim likely would be noticed by a malpractice insurer, GL/CGL coverage might also be relevant.
Alternatively, if a former patient claims that a practitioner told them that KAP would relieve them of their depression and that, following KAP, they are still depressed, they could file a lawsuit alleging that the practitioner falsely advertised or otherwise misled them about the efficacy of KAP. Most GL/CGL policies cover “personal and advertising injury,” which is designed to address these types of claims.
GL/CGL policies will also contain exclusions that may apply. GL/CGL policies typically exclude injuries that the insured “expected or intended.” Accordingly, while a negligence claim might be covered, a claim for battery (such as a patient stating that a KAP practitioner touched them while under the influence of ketamine and without their consent) might not be. Even in this scenario, however, depending on the allegations in the lawsuit, an insurer might be obligated to pay for attorneys that the practitioner hires to defend them against the lawsuit. An analysis will be necessary based on the nature of the allegations brought against the practitioner in their entirety and the terms of the specific policy.
Another consideration regarding “bodily injury” is whether purely emotional distress qualifies. For example, say a former patient claims that a KAP practitioner’s work in KAP caused them to suffer PTSD from the experience but does not allege that any physical symptoms resulted from their PTSD. Whether this qualifies as “bodily injury” will depend on the laws of the practitioner’s state. In California, at least one court has determined that claims of pure emotional distress constitute “bodily injury” because “the nerve centers of the body are a part of the physical system” and when effected there is “a physical injury thereby produced.” Abellon v. Hartford Ins. Co., 167 Cal. App. 3d 21, 212 Cal. Rptr. 852, 855-57 (1985) (citations omitted). Many states, however, will only find “bodily injury” where some physical symptom is said to result from the emotional distress.
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 providers and ask what the EHR provider’s 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.
I Own a KAP Clinic Or Employ Others Providing KAP. What Types of Coverage Should I Have?
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. Employers should contact the insurer or work with a broker to find out what is included in any given package and whether it is adequate for what the employer needs.
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 1099independent 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 – that is, as an add-on to another policy rather than as its own separate policy.
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,” meaning that if a clinic or practice is unable to operate for a period of time due to a covered cause, this insurance will pay that clinic or practice the amount of money that it would have made had it been able to operate. 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.
Directors and Officers (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 of Officer on an outside board, the Health Insurance Portability and Accountability Act (HIPAA) violations, and certain regulatory claims.
D&O policies may cover individual Directors and Officers as well as the clinic itself when it either has to reimburse Directors and Officers or is itself named in a given lawsuit along with Directors and Officers. Consult the clinic’s policy as appropriate. 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.
Procuring the proper insurance.
Now that a KAP practitioner understands more of the potential liabilities they face both as a KAP practitioner and/or employer, the next step is to review their insurance policies. Assess for any gaps in coverage and consider whether to add any of the above coverage types.
A broker or coverage counsel can be important in helping a KAP provider or employer put together an insurance portfolio that is optimal for their practice or business. The cost of having someone review a KAP provider or clinic’s coverage can be minimal in comparison to any coverage that provider or clinic is able to obtain should the unthinkable happen and the provider and/or employer face liability. Any cost may also be well worth the peace of mind of knowing that a provider is practicing KAP as legally responsibly as possible.
“Insurance Coverage for Practitioners of Ketamine-Assisted Psychotherapy,” by Allison Zamani was published in Insurance Coverage Law Center on January 6, 2022.
Reprinted with permission in Insurance Coverage Law Center © 2022 ALM Properties, Inc. All rights reserved. Further duplication without permission is prohibited.