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Reese interviews Dr. Richard Engar, former clinical dentist of ten years, and current CEO of Professional Insurance Exchange. Dr. Engar draws from decades of experience to explain how dentists can prevent unnecessary malpractice claims from putting their wealth and reputations at risk. He also offers advice for dealing with malpractice threats, describes the most common (and most expensive) types of claims, and highlights the one thing you should never do in the face of a malpractice settlement.
Speaker: Views on this program are opinions of dental industry experts and not necessarily those of dentist advisers. Opinion shared in the following interview do not constitute personal financial advice. This program is furnished by dentist advisors, a registered investment advisor. Your tuned into Dentist Money Industry Experts series. Now here’s your host, Reese Harper.
Reese Harper: Welcome to the Dentist Money Show. I’m your host Reese Harper here with a special guest today, Dr. Richard Engar. He’s somebody who’s got a resume that’s probably as diverse and very digital see as a dentist. Welcome to the program, Dr.
Richard Engar: Thank you.
Reese Harper: We’ve got a really good show planed today for you. We’re going to be talking about part of his background, which is the CEO of the Professional Insurance Exchange and that’s a malpractice insurer that helps protect dentists from situations that they get in with a patient claims and a variety of other issues. So I want to give you a little bit of background on Dr. Anger. Then we’re going to get into areas of concern that from an insurance company’s perspective, what they see on a daily, weekly, annual basis in terms of claims, how claims arise, the likelihood of various claims and how an insurance company is run. There’s some really interesting insights that I think will help everyone in their practices and in their finances. All of you know that one of our hot topics is helping protect your estate and protect your wealth. You worked so hard to accumulate it, you want to make sure that nothing can poke holes in your financial plan. So tell me a little bit about how PIE started and why it was organized.
Richard Engar: Well, in the late seventies there were some issues going on with the national companies in terms of premium increases. At that point, they were beginning to see more of an interest in plaintiff’s lawyers to pursue malpractice claims among dentists and the national carriers started increasing their rates dramatically. And Dennis felt that their needs weren’t met. They weren’t listened to, that the cases were being settled and adjusters were making decisions without any input from the dentists’. And so this movement started really in California to look into dentists controlling their own destiny and running their own companies. A number of visionary dentists, one of whom was a Doctor Charlie Parkin, had this notion that we should maybe think about doing this in Utah. So they sent a dentist out there to meet with some California dentists-
Reese Harper: Who had already established something similar?
Richard Engar: Were working on the same sort of thing. The California company became TDIC and PIE started out in September of 1978.
Reese Harper: Yeah. So the general big picture was premiums were increasing all over. Dentists are frustrated that the insurance companies are settling claims, sometimes based on what an adjuster’s rule book says, and maybe not applying a lot of logic or putting effort into protecting the needs of the dentist.
Richard Engar: Right on the money. I mean you’re talking companies where the dental malpractice part was just a real small division and their whole thing was, it’s a lot more expensive to fight a claim and go to trial than it is just to settle up front quickly. So, the feeling was let’s control our own destiny.
Reese Harper: What’s the average number of claims that happen in a calendar year, usually?
Richard Engar: Well, and that’s another excellent question because it’s evolved. When I first started at PIE, we’d probably open 24 to 30 claims a year. The last few years it’s been under 15.
Reese Harper: Now I don’t want to jump ahead, but you’re kind of alluding to probably how claims change over time depending on what the perceived… How consumers perceive the carriers strength. Right? If you’re going to settle every case.
Richard Engar: Word gets around, yes. With the plaintiff’s lawyer population in particular. I get more telephone calls then. I mean we have a lot more what I would call potential claims. Where for example, a dentist will call me and say I did a root canal and I broke a file or we had a short fill and the tooth never healed. I’m referring the patient to an endodontist and the patient’s mad cause they don’t want to pay for it twice. I had them sign it in informed consent and everything Dah, Dah, Dah, Dah, Dah. We can look at it and say, well technically we could defend this case, but you know, if all they want is a $900 refund, it might be in your best interest. We have them signed a release of claims, which means number one, they can’t go to any legal mechanisms after that.
The big one is we have a gag order on there, so they can’t go to social media or anything else and try to trash the dentist with a bad review or whatever. So there’s a confidentiality clause in there.
Reese Harper: So you’re saying in that case, let’s say I break a file and the patient’s upset about 900 bucks or two grand or whatever, you might say it’s not worth filing a formal claim over?
Richard Engar: Well, generally I’m not dealing directly with the patients. Occasionally that happens, but the dentists will usually-
Reese Harper: I mean to the dentist. What advice you’ve given a guy in that situation?
Richard Engar: Well, we can throw all the options out at him. Some of these patients, say I’m going to call my lawyer and the truth is very few of them really have a lawyer. I’ll get into the history and how things have evolved actually in the favor of dentists. We’ll just talk about the options. A lot of the dentists say, look, I don’t want to have this be a claim. I don’t want to have a hassle. I just as soon give them their money and have them sign the paper and be done. I’ve probably got almost 50 different variants of these release forms. Some, we have a patient termination clause, some it’s for a minor, some the money’s going to an endodontist.
Reese Harper: You’re just providing assistance to the doctor in this case so that he can settle this himself.
Richard Engar: Exactly. Then they just meet with a patient and most patients are happy to sign the form. They get their check. In a lot of cases that dentist, patient relationship can continue.
Reese Harper: Yeah. Because they feel like there’s some trust there because they didn’t get housed. Right?
Richard Engar: Exactly. Nobody wants to pay for something twice. This way, the dentist learns the lesson. Maybe the tooth had a curved canal and of course sometimes the dentist will want to refer the patient. “Oh No, I know doc, you can do it.” Come on. You know, and the dentist sort of, “Oh well I can do it,” and endodontics is one of those things where it’s pretty technique sensitive and a lot of bad things can happen.
Reese Harper: Yeah. You probably see a fair amount of…Do claims arise a lot from that area or not?
Richard Engar: Well potential claims. We’ve got a couple going on right now that have involved complications from root canal therapy and I had more in the past than we do now.
Reese Harper: But things we’re talking about right now though, these are these considered formal claims even though they’re settled outside of insurance carrier?.
Richard Engar: Oh No, no. These aren’t reportable to anybody and that’s the beauty of it.
Reese Harper: Now, would they, in some cases though, if your carrier knew about this and you had called in and discussed it with them, would they report this on your record at all?
Richard Engar: No. The only-
Reese Harper: What do you mean earlier when you said when people call in to their carrier and they say that they might report that as a claim.
Richard Engar: Okay. Well for example, let’s just say there’s a carrier out called XYZ. Okay. You call XYZ their adjuster. Here’s a classic example cause I know this happened. Sometimes a patient will swallow an instrument. You’ve got a wrench to screw an implant, abutment into place or something. You know these little small things and you don’t often use a barrier to keep people from swallowing stuff.
So you slip, it comes out of your hands. Patient swallows it. Usually what do you do in that situation, if you know they swallowed it. It’s no big deal. It usually passes through and everything’s fine. But once in awhile you’ll have to send the patient to their physician or to the ER to get an X-ray to make sure mainly is not aspirated. If it gets in the lungs, it’s a more serious situation. You got to get it out of there.
Normally when that happens, you can tell people are coughing. Lungs don’t like metal objects or whatever floating around in them. Let’s say, you call XYZ and report the situation, then the adjuster might know what to do. Some of them have some retired dentist in New York that they could maybe get ahold of, but a lot of them that’s just kind of up to the adjuster.
Reese Harper: Okay, so you’re not getting a competent a resource. That was one of the points you were making.
Richard Engar: Well and that’s one of the big advantages of a company like PIE or TDIC or any of these dentists run companies. You’ve got a resource, right there with several resources. TDICs probably 10, 15 times bigger than we are.
Reese Harper: Just because of the size of the market.
Richard Engar: 15,000 insured in California. So they’ve got probably a coder of have a dentist that you could call. In any event, the XYZ will then make a note saying, okay and you’ve got a claim on your record. Where I advise the dentist and I keep a record of what we call potential claims cause the insurance department makes me do it for whatever reason. The main thing I would like to try to do, just because I advise a dentist does not mean it’s a claim. I’ll just tell you what our parameters are. We have two.
Reese Harper: I think that’s a misunderstood value of a dentist run carrier over a national provider is you can get… It’s, it’s very difficult for your own attorney or your own peers or any other advisor you have. They’re not going to know how to give you feedback around a claims related incident. If you get an adjuster that’s getting paid a $15 an hour to process a claim, you know at some point you’re just not going to get good counselor guidance and I doubt you’re going to get to the level of direction that you guys are providing. You’ve got a whole library of forms and an inventory of advice you can provide to make sure that people know how to take care of this stuff outside of a claim situation.
Anyway, we can jump to claims too, but these are kind of the non claims issues. I think your interesting, you know cause I think this is probably more common than a claim.
Well, as I said, most dentists are really worried about having a claim on their record that they have to report from then on. So the idea of this whole thing is to make the patient happy. It’s just a piece of paper and they send me a copy, I keep a record of it, they keep a record of it and life goes on. As opposed to having a bonafide claim. No, if I open a claim, it means I have a claim file. Generally we get our lawyers involved and it can drag on for two or three years.
Speaker 2: So is it a dollar amount or is it a potential liability issue that would lead you to say this has got to be a claim we have to report. I mean, when do you have to legally, as a carrier, say this is a claim versus this is something I can advise our member on?
Reese Harper: Well that’s a good question. The answer is it’s pretty arbitrary. It’s up to the insurance carrier. My rule is if I get what’s called a notice of intent, which is a statutory requirement for malpractice claims in Utah. It’s a letter that a dentist will get from a lawyer that says, I’m representing so-and-so and they intend to sue you. So if I get that, then I open a claim.
Number two, I talked about swallowing a root canal file or swallowing any instrument. We had a situation, a couple of years ago where a patient swallowed, oh, I think it was just a little wrench thing to see an abutment to crown. Well, the dentist sent the patient wisely to the emergency room and they just completely overreacted and thought, oh, it was like a partial denture, some big huge thing. So they admitted the patient and then they, I think, went in after it and pulled it out of there with the endoscopy or something.
So it generated out of pocket several thousand dollars worth of bills. Well the patient didn’t really want to have to pay those bills. So the dentist, I mean he, if it was 500, six, seven, 800, he could have handled it. It was getting to the point where he thought, PIE, I pay my premiums, I’d like you to handle it. So the minute we made the determination that I was going to pay it for him, then it became a claim. So that’s the second criteria.
So in other words, I get the notice of intent and those are our rules. I’ve tried to make it such again that I’m not penalizing our dentists by opening a claim. I really don’t have to open. In that case, we had the patient sign a release and he got reimbursed, and that was that. And again, a lot of insurance companies, you pay an extra premium for what’s called either a hammer clause or it means they won’t settle a claim without your approval as the insured.
We don’t have that, but in our 30 some, almost 40 year history, we have never settled a claim over a dentist objection. Normally we’ll lay out the issues, what’s going on. In this day and age, we don’t have as many claims, but most of them to pun intended, to have a little teeth to them. In other words, there is a problem and the plaintiff’s lawyers know that and so they’re a little harder to defend. But at the same time, these plaintiffs lawyers will come up with these ridiculous amounts they want to settle the cases for. So we’ll fight them. There’s other situations where we think the case would be easy to fight. We’d like to go to trial, but for financial reasons, if we have trial, you’re out of your office for a week. You have other things there. These things take time and effort and they wear on you.
Sometimes the dentist will just tell me, I don’t want to put up with this. This is, I can’t sleep. Can you just wrap this thing up? Can you settle it? And so we’ll make an effort to settle it for basically, as low as we can. At the same time we have to be reasonable. There are certain formulas and things that apply in the legal world. What is a case worth? One of them is we have something called special damages. Let’s say to fix the wrong, it costs 5,000 bucks. Well there’s a rule that you treble those, so that’s 15,000 for attorney’s and quote unquote pain and suffering and whatnot. So that’s a $20,000 settlement. If they want $100,000 and it should be settled for 20 then I’m going to fight it for 20 and we can mediate cases. There’s some really excellent mediators out there who bring things down to reality. So.
Speaker 2: So just backing up a little bit, I don’t know if people realize the process really involved here on the back end. I mean, if I have a patient that goes and grabs their attorney and says, I’m going to file a suit against my doctor and they send you this letter. A claim has got to be opened. You guys have a law firm that you retain and that law firm’s job is to fight the claim and try to get it to where they feel like it’s more a reasonable or it’s defending the doctor’s best interest or PIEs best interest ultimately as well.
Richard Engar: Correct.
Reese Harper: I don’t know if people realize that that’s the process that an insurance company goes through sometimes when a claim is opened because a lot of times it’s not, right? You can have a claims adjuster that just gets a claim and they have a rule book, several guidelines that they’re following to say, this is what we do for this and we settle it this or we pay this much or, and that’s a little bit different than maybe the approach that you’ve taken.
Richard Engar: Well and we could go beyond that. I mean initially I’ll get the letter, then the dentist will notify me. Of course the policy requires immediate notification. Then I’ll review the records, I get a copy of the records, whether they’re digital, which most dentists are going to now paperless or the paper copies. I’ll review them, and then I’ll discuss any questions I have with a dentist either by phone, email, or face to face meeting. Then I have the luxury of access to faculty at the dental school, potential expert witnesses, that’ll look at things for me and give me some input there. So right off the bat I’ve got people that’ll tell me, yeah, I can testify under oath that your dentist’s met the standard of care. There’s no malpractice here. So going in early, I’ve got my ducks lined up.
Reese Harper: You got your expert witness, you’ve got a law firm on retainer that you have a good relationship with. I mean, you guys were in a strong position to defend against a frivolous claim, especially.
Richard Engar: Yes, especially with local experts because most of the plaintiffs bring in these hired guns who are just there on expert pages.com or whatever you want to call it, where they can just get a name for somebody and then they can retain them and they’ll say anything for money. I won’t say what we call them but you get the drift. So yeah, so we’ve got everything pretty much set. Then the way the law works is, I can review the situation, then I’ll send the plaintiff’s lawyer a letter denying liability saying we’re going to fight this one. In many cases that’s all it takes. The claims gone. But then if they’re going to pursue it and the dentist gets what’s called a summons and complaint, which is either served or I accept service on their behalf. Then we turn it over to our lawyers.
Knock on wood, we’ve lost one trial and that’s because the dentist altered the records.
Reese Harper: Oh really?
Richard Engar: So the jury picked up right up on that. There was no credibility. You can’t win a case if you alter records. So he asked for my… Advice number one to dentist and your clients is if you want to keep your assets solid and not put yourself at risk, do not alter your records under any circumstances. Bang, Bang, Bang.
Reese Harper: Let’s talk about some of the most common claims that have been filed over the 30 plus, 40 years that PIE has been around. Maybe not just within the state, but I’m sure you review other states claims history. If we had to just kind of list top three or something, what kind of comes to mind?
Richard Engar: Well, maybe what I can focus on, the issue at whether I look at a claim, it’s sort of like what kind generate the largest settlements or have the most potential for risk in the case of your clients, you know, where are their assets put at risk? The most expensive ones generally have to do with either sedation or some form of oral surgery. The sedation wins, if you overstate somebody and obviously have a wrongful death case, those they want policy limits. You’re talking to $1 million and beyond. The worst case scenario is you sedate somebody and they live, but they’re brain damaged for the rest of their life. Knock on wood, we haven’t had one of those. We have dealt with a number of wrongful death cases over the years, not a lot. In the olden days, most of our oral surgery claims were based on third molar extraction complications.
Most dentists know about the inferior alveolar nerve and that can be a compressed or cut or somehow damaged. It’s like now your lips permanently numb. Patients don’t like that. The worst parasthesia case we’ve ever had along that line was a bilateral tongue parasthesia. So now the patient’s whole tongue is numb the rest of their life. Now you don’t lose your sense of taste, but the patients think so. That was an expensive claim several years ago.
Reese Harper: Those are typically going to be triggered by oral surgery or extractions and that’s where you’ll typically see those claims [crosstalk 00:00:19:11]
Richard Engar: Correct, correct. One of the standard unfortunate situations is where the dentist wants to refer the patient to an oral surgeon, and again, the patient says, “Oh, come on doc, I know you can do it.” And for whatever reason. You can usually tell beforehand where you’re going to have a problem.
Another complication is a fractured jaw. In other words, the wisdom tooth takes up quite a bit of space and you have to remove bone to get to it. So by the time you’re done with that, there’s not a whole lot of bone left in that intact mandible and usually you don’t break it. Then the patient goes home and bites down on something when they’re no longer numb and crack. We were getting a parade of those for awhile.
Nowadays they’ve been replaced by implant related claims, mainly having to do again with that inferior alveolar nerve. If you hit that nerve with an implant or again compress it, the patient’s going to have a numb lip and there’s ways of dealing with that. Another problem is in the upper area, in the back, you have this maxillary sinus and you can intrude an implant into that either through perforation or putting an implant in too soon and you could get a sinus infection. That’s pretty serious.
Probably another one we get often, which is less damages in terms of potential expanse, has to do with cosmetic dentistry or extensive crown and bridge work. So a patient comes in and the dentist does several crowns or bridges or whatnot on the patient or implant retained crown and bridge work and for whatever reason it’s not done well. There’s margin issues, the fit isn’t totally adequate, the bite isn’t right. Those can be expensive cases cause to repair them can be 30, $40,000 in your just special damages I mentioned. So you tack on the pain and suffering and all that, those-
Reese Harper: Anything punitive.
Richard Engar: $100,000 claims.
Reese Harper: So let’s back up to the biggest ticket items here. In the United States every year, how many… Or maybe it’s every five years or I don’t know what the statistics are, but how many wrongful death claims do we see in dentistry nationwide?
Richard Engar: Well there’ve been several involving sedation and particularly children over the last several years. Those are blasted all over.
Reese Harper: So has that been primarily pediatrics? Have you seen?
Richard Engar: Most of the ones that are publicized are pediatric cases. And again, the question is, well how much training did the dentist have.
Reese Harper: What if it was a general dentist working in pediatrics, does the plaintiff’s attorney get a little more aggressive in that situation?
Richard Engar: Yes. Cause naturally they’ll say well why wasn’t this case done in the hospital by a specialist?
Reese Harper: Specialist. Yeah. Can those, depending on the person, could the plaintiff bring a case that exceeded a normal human life value and say look, this person was the son of this person, who was a very powerful family and he had big expectations for his life?
Richard Engar: They can certainly try. I mean, the standard there is the plaintiffs will get an economist who will come up with all these numbers and we’ve dealt with some wrongful death claims and just some issues in general where they can get these economists come up with pretty ridiculous-
Reese Harper: pretty high human life values.
Richard Engar: I mean, two, $3 million. Of course, most insurance companies, a standard policy limit forever has been 1 million per claim, 3 million aggregate limit. Now some states for whatever reason of God hire the most litigious states or east coast Florida, Washington, DC, Virginia, Appalachia. If you can imagine in California and now Nevada. You can get I think $3 million limits there.
Reese Harper: Per claim.
Richard Engar: I think I mentioned our average, standard, mature claims rate premium is 1,050 a year. Oral surgeons are paying about 10,000 a year.
If you’re a dental anesthesiologist, the same about 10,000 or so. Our insured get a deal. At the same time, and if we want to talk a little bit about this, what protections are in place in case a dentist and one of your clients or somebody where you’re trying to protect their wealth, what protections are indeed in place? Are million dollar limits adequate? Which is a good question.
Reese Harper: We’ve got a lot of information we just went over right there. For you, this is probably just easy in your head. Okay.
Richard Engar: Well let’s break it down. Let’s break it down Reese.
Reese Harper: We’re backing up to a million, 3 million. What that means. So when I have $1 million per occurrence, that means any one event, I can have insurance up to a million dollars, 3 million aggregate means-
Richard Engar: In a year.
Reese Harper: Some people, I think, confuse that when they see aggregate to per occurrence, they think, well, I might have a patient bring two different lawsuits in one situation. So, I might have this, I’m going after this problem and I’m going to sue you for this problem. Per occurrence is one
Richard Engar: Person.
Reese Harper: Person.
Richard Engar: Yeah, well, it would involve three different people having-
Reese Harper: Three independent
Richard Engar: Cases where you had to pay out $1 million a piece. That’s why I say it. What’s the reality of that? You basically have to have three deaths or really serious complications, problems which is unlikely.
Reese Harper: Since your whole pool has had three claims year to date, it’s very unlikely that one person would have three claims in a calendar year. Have you ever never seen that?
Richard Engar: Well you can get multiple claims against one insurant in a year. We had a situation many, many years ago in the 90s where a dentist did all sorts of bad dentistry and surrendered his license. Rather than having patients having to deal with 300 potential claims, I mean most of our dentists, we did a mandatory course a few years ago and a lot of the examples of this dentist’s work were shown. Bad margins, bad root canals. I mean I could show you as a non dentist, some X-rays and you could recognize something there doesn’t look right. So we came up with a system where as instead of these patients making claims, we had dentists send us basically x-ray showing the problem, what was going to need to fix it. Then the patients sign a release and we pay the fees to get it fixed.
So these were adding up. Even with that, it never exceeded the aggregate limit. In those days our limit was only a hundred thousand dollars per claim, but we still, with all this, didn’t exceed that $300,000 limit for a given year. See there were, we add all these up, it was pretty substantial. That’s what I mean by an aggregate limit. It would say you could have the same person, Dennis could have 15 claims, but it just means all total, the cap would be at $3 million. So if it got to 3 million, hundred thousand dollars then that’s it. So we’d say, well. In reality-
Reese Harper: So you could have 30 claims for a hundred grand each and there you hit your 3 million or you could have three total of a million. You can’t have one for 3 million. That’s what the million dollar limit is.
Richard Engar: The million per claim. There have been, so there was a case in Texas where I think there was a fraud and all sorts of things happening and one of our competitors got hit with, like you say, it was several claims above and beyond the aggregate limit. I’m not sure how it was handled, but that was one of these where I think there was some bad crown and bridge done and fraud and there were so many patients that they took a big hit.
Reese Harper: Interesting. So let’s talk a little bit, I don’t think people really understand the difference between insurance and reinsurance. I think that’s not enough. That’s not at all common thing to understand. So basically from a normal person’s perspective, a bank or an insurance company, they have to have a certain amount of money, liquid, there in order to justify the amount of policies they have. Let’s say I’ve got a $10 million in policies out there, I’ve got to have a certain percentage in cash sitting in my bank. Generally in my experience, that range is somewhere between, seven and 10 or 12% depending on the state they’re in and how big they are. Isn’t that kind of generally the case?
Richard Engar: Yeah. Well for example, if PIE wanted to have the million dollar limits just on our own, then I would have to-
Reese Harper: Meaning you guys would pay the whole claim on your own without the help from any, what we call reinsurer. A Reinsurer is another insurance company that backs you up.
Richard Engar: Correct.
Reese Harper: In the case that it exceeds what you guys are going to cover yourselves.
Richard Engar: Right. Basically, I’ll try to put it in terms of simple math. For the insurance department rule, let’s say if PIE wanted to have no reinsurer, for me to pay $1 million claim, I would have to have $10 million in reserve. Okay. That basically, is over and above and PIE’s to the point where we’re getting there. At the same time, there’s less risk to us and we can charge the lower premium to bring in what’s called a reinsurer, which is a large company. We use one called Gen Re or General Reinsurance, which is a Warren Buffet company. It’s probably one of the most solid, secure, highly rated reinsures there is, sell the, let’s just for simple numbers, I would be responsible for the first $200,000 out of any claim that we would have to pay.
Let’s say we had $1 million wrongful death claim that we settled and so we’re having to pay, and again, I’m doing it, let’s say the concern was they wanted, it was a lawyer with five kids and we were afraid, man, this could be $3 million. So we make a settlement to protect the dentist, but then to protect us, see I’m out $200,000. The reinsurer, it coughs up the 800,000.
Reese Harper: Yeah, and that’ll help. I mean, that’s important for people to understand too, that helps bring your premiums down at some level as well. If PIE has to expose themselves to the entire amount of risk that could be coming from one potential bad claim. If you have one bad claim in a calendar year, it just happens to be three independent, $1 million tickets for one insured. I mean that cost the insurer more than $3 million in some cases, right?
Richard Engar: Well, sure. Well it would cost us, I mean there’s legal fees above and beyond that. The case like that would, if we were looking at that kind of situation, we probably either lost at trial or have some real problems. The other thing is protecting our insured and let’s say protecting your clients. There’s a lot of factors that go in there.
Reese Harper: Almost every carrier, just so everyone knows too, every carrier at some level carries reinsurance. Most of them do. There are very few carriers that do not, even the largest carriers in the company, whether they’re… Or country, whether they’re life insurance or disability or homeowners. They’re not the only insurance company that’s backing up your claim. So part of your premium just goes to pay for that reinsurance.
Richard Engar: It makes financial sense. Like we say, why should I put 3 million of my money at risk when I can, for $218 each of our insured takes care of that. So the worst case scenario, I’m out $600,000. Sounds like a lot of money, but that wouldn’t kill us. We’d go, oh shoot. Life goes on.
I’ll tell you something else that I think helps your clients in terms of risk management is there’s been a trend lately that plaintiff’s lawyers have realized that it’s expensive to pursue malpractice claims and there’s a lot of risk involved. Most of them get paid on contingency and, well, if I were to throw out the question, most of your clients wouldn’t know what percentage of lawyers get, you have a law firm right next to you we’re dealing with right now, but if a lawyer gets a settlement or a judgment, they get a third of it.
Well loss dental claims aren’t like medical claims, loss baby or a bad, some babies born with a complication and they think it’s going to be $3 million to take care of them, blah, blah, blah. They’re putting in the same amount of work because all the rules apply, but the return is minimal. You may be lucky to get $25,000 in a settlement. Well, they’re going to get their, 75, 8,000 and they’ve spent almost that much with experts in this and that. They don’t want to mess with it. So we’re seeing fewer and fewer claims because the plaintiff’s lawyers are less likely to want to pursue.
Reese Harper: Go on contingency. Yeah.
Richard Engar: So we’re seeing that across the board and that’s been a good trend.
Reese Harper: So last question on this financial side would be what if I have a bunch of reserves and my reserves are getting to be real comfortable? How do you guys make your decisions on how to derive premiums? You know what… Cause it is a new person probably doesn’t pay the same rate as someone who’s been there for 20 years and had no claims or is everyone on a similar premium schedule?
Richard Engar: Well we actually developed a really discounted premium scheduling for these brand new a dentist because they’re so far in debt. Our competitors have been doing a similar thing. So we had to react. We have our claims reviewed by these actuaries, which are these mathematicians who determine how well we can-
Reese Harper: Do you do it by age or do you do it by?
Richard Engar: Well the tenure, the industry standard is what’s called a claims made policy where the premium starts out relatively low. Normally our premium starts out for the non new folks at 850 bucks and that it peaks every year. It goes up till year five so it’s based on tenure, not on age of the dentist. That continues on. We have the, if you have your hygienists give local anesthetics, it’s $50 more if you do IV sedation or oral sedation with a drug called Triazolam, which is called Halcyon is the trade name for it, it’s a nice sedative that just relaxes people and doesn’t knock them out, but makes the procedure easier. They pay an extra 200 bucks.
So the most any of our people pays is 1300 a year. Now we do though, as if, let’s say an insured puts an implant where they shouldn’t and doesn’t handle it properly, and that’s considered a meritorious claim. We have a rule that once it’s all said and done for four years, they pay 10% of what our settlement was. So if I have to settle a claim, say for 20,000 bucks, that ensured our board of directors makes a determination that was meritorious.
So they pay 10% of that. So they’re going to-
Reese Harper: You just tack onto their premium?
Richard Engar: Two thousand bucks extra for four years as a reminder uh, uh, uh,-
Reese Harper: Be careful.
Richard Engar: If you have a second one of those you’re out. So that’s how we protect the pool. So for example, the dentist who altered his records, he was out, we’re not going to put up with that.
Reese Harper: Well what would the advice be that you’d give to dentists? Maybe one or two things just to leave our audience with advice you’d give them about malpractice claims and how to avoid them?
Richard Engar: Well one of the big things is just to inform patients of what’s going on and make sure the risks are known. That’s through informed consent but also through dialogue with the patients. And a lot of offices will have the assistance do a lot of that.
The important thing is to treat a friend and that’s hard when it’s a brand new patient. The number one again is to just make sure patients are informed, informed patients are happy patients. We like to try to teach dentists to use the line that we’re a high tech office. So one of the things about being high tech is having happy informed patients and Dah, Dah, Dah, Dah Dah. You can use x-rays and visual aids.
Then, I think, number two is to keep the lines of communication open because what makes patients mad is that they think they’re being ignored or not taken care of, particularly in a situation where the chips are down or there’s pain involved. So I think some dentist’s are a little too dependent on staff. A lot of dentists, if they’re having a surgical procedure done, they call the patient that evening, see how they’re doing and they don’t have the staff to it, they do it.
A lot of this is just building rapport and if there’s a complication, being able to deal with it. Then, my other fatherly advice, it’s not risk management just as much as taking the long view and looking at the future. In other words, you want to have a goal of how long do you want to practice and what kind of dentist do you want to be and what procedures do you enjoy doing and what procedures are you a good at. Those are the things you should focus on and emphasize. Look for as much as you can do to reduce your loan payments by refinancing so you’re getting a lower interest rate. My son just did that with his loans as an anesthesiologist and it’s saving him a grundle and I’m sure you advise your clients. Then also, as early as you can start saving for the future.
Reese Harper: That’s great advice, Dr. Engar. We appreciate you taking the time today. It was a pretty insightful thing and I bet half of you are a little bit lost during some of that. It’s a technical subject that I really enjoy and I hope that the majority of you are able to take away what I feel like is a really, really important conversation about risk management. How an insurance company functions. I think that a PIE provides a really good model for how this can be handled in a way that’s a doctor friendly. It’s also cost competitive and it’s nimble and lean, and I think that’s an important element of any insurance company. I wish we saw that more than we do in the US right now. So thanks again, Dr. Engar.
Richard Engar: Thank you, Reese. Appreciate it.
Reese Harper: It’s an enlightening conversation. We’ll have you back again soon.Insurance