The board of directors and the officers of healthcare organizations have a big job to do. They’re in charge of all of the major decisions that directly affect the employees and patients of these organizations. They ensure that the hospital or clinic group has enough money to make payroll and cover all other costs, as well as keep track of regulations, ensuring that the hospital as a whole adheres to them. In essence, they’re like the watchdogs of the organization. But what happens when no one is watching those watchdogs?
For the most part, there are plenty of checks and balances in place, and the majority of directors and officers tend to run their organizations in an honest manner. However, things do happen, which is why it’s a good idea to have a directors and officers insurance policy in place.
What Does a Directors and Officers Policy Cover?
A directors and officers policy, also called a D&O policy, is designed to cover a number of situations that can occur due to bad management decisions or those seen in a negative light by the other employees of the organization. Some of the many things covered by these policies include:
Regulatory Violations – Keeping the government regulators happy is one goal of the board of directors and related officers. Since the federal and state governments keep a close eye on hospitals and clinic groups, it’s easy to see how one minor misstep can end up in a lawsuit that threatens to shut the organization down. Instead of rerouting patients, the board and officers will need to use the insurance policy in order to avoid paying fines out of pocket while negotiating to keep the organization open.
Mismanagement Allegations – Mismanagement can occur in a number of different ways, from one director getting kickbacks from construction companies bidding to build new hospitals and clinics to monetary decisions that end up being very unpopular with the staff. Thankfully, a D&O insurance policy can help pay for any related fines and legal costs associated with the mismanagement.
Breaches of Fiduciary Duty – The board of directors needs to constantly remember that they’re the ones who play a huge role in a patient’s care, as they’re in charge of remodeling and updating the hospital, making large hiring and firing decisions, and more. When they begin to act in their own interests instead of those of the patients who rely on the organization, they are breaching their fiduciary duty. This usually ends in a lawsuit against the officers and the board. An insurance policy can prevent all of them from having to pay fines and settlement costs out of pocket.
Have Questions? Contact Charlotte Insurance
Obviously, there are plenty of other reasons behind needing a director and officer insurance policy as well. Want to learn more about directors and officers insurance for health care organizations? Contact Charlotte Insurance. Our agents can explore and explain all available options and put together the insurance coverage plan your business needs.