Protect & Defend columnist Ed Branam, DVM, is the veterinary and animal services program manager at Safehold Special Risk Inc. A 1977 graduate of the Michigan State University College of Veterinary Medicine, Dr. Branam has worked in the insurance industry for the past 20 years. He is a former Sacramento, California, veterinarian and a former veterinary affairs manager with Hill’s Pet Nutrition.Read Articles Written by Ed Branam
The delivery of veterinary services has changed significantly in recent years — from an explosion in telehealth and wellness clinics to growing numbers of clinicians working as relief veterinarians under independent contractor status. Often called 1099 contractors, independent contractors are not considered hospital employees. Instead, they function as business entities, which often provides greater professional and legal autonomy.
For those reasons, self-employed veterinarians must consider several important insurance and risk-management matters. Their exposure is heavily influenced by the type and scope of medical services they perform on behalf of a contracting clinic or veterinary organization.
All independent contractor veterinarians should inquire about any insurance coverages — property and liability — before the initial shift at the contracting clinic. Here’s what to consider.
The most obvious exposure for independent contractors is professional liability. All independent contractors without written confirmation that a clinic’s insurance policy covers them need one of their own.
Key desired features in a policy include:
- No deductible.
- Adequate per-occurrence and annual aggregate limits. Small animal veterinarians should consider at least $1 million per occurrence. Higher limits are appropriate for doctors working in herd management and with costly animals. Consult an attorney for specific advice.
- Telehealth services.
- No hammer clause.
- Your written permission is required to settle a claim.
- Access to experienced legal counsel.
Your reputation is at stake. What’s in the best interest of the clinic’s insurance company might not be what’s best for you.
Pet owners might turn to state licensing boards for emotional restitution in addition to the financial relief afforded through civil litigation. Unfortunately, such action can harm a veterinarian’s reputation and ability to practice.
License defense insurance pays for the legal expenses incurred to defend against complaints brought by a state licensing board. The coverage is typically a separate endorsement to an individual professional liability policy.
Key desired features include:
- No deductible.
- Adequate coverage limits. Several insurance companies offer up to $100,000 a year. Consult an attorney if you are not sure what’s best for you.
- Telehealth services.
- Hiring expert consultants and attorneys familiar with your state’s veterinary licensing board.
Professional liability and license defense are liability coverages. On the other hand, animal bailee is a property coverage designed to protect independent contractors if an animal is injured or dies while in their care, custody or control. Unfortunate examples include animals that escape and those injured or killed during transport.
The workers’ comp system can confuse 1099 contractors. Conceptually, it is designed as a remedy for employees injured when performing work-related duties. But if independent contractors are not employees, nor do they have employees, why would they concern themselves with workers’ compensation insurance? The reasons are simple. In many states, companies must pay workers’ compensation claims on behalf of any uninsured independent contractor hired to perform work. Despite different interpretations in individual states, virtually all businesses are at risk of having to cover an injured independent contractor. In states where benefits are not mandated, an administrative law judge could rule against a veterinary practice depending on the circumstances.
Painfully aware of the potential, many insurance companies charge an additional premium based on how much a business pays for independent contractor services.
Many veterinary businesses and organizations require their 1099 contractors to carry workers’ compensation insurance. I’ve found that especially true among nonprofit groups and local and state municipalities.
The good news is that workers’ compensation policies are relatively inexpensive for independent contractors, typically costing less than $1,000 a year. Furthermore, covered 1099 contractors appeal to veterinary facilities that need relief help.
Some businesses require independent contractors to have general liability insurance. It’s a third-party coverage designed to protect the policyholder — the independent contractor in this case — from claims of bodily injury and property damage connected to their products and services.
General liability claims against an independent contractor typically are filed by a contracted practice and its employees or clients. Scenarios include a 1099 contractor damaging an expensive piece of equipment and when a client allowed to participate in the examination or treatment of a pet is injured.
Regardless of what you drive and whether the vehicle is insured through a personal or business policy, an independent contractor must have appropriate liability limits. I recommend excess liability, or umbrella, coverage, too. This is especially important if you use your vehicle while conducting mobile or animal transport activities.
Employment Practices Liability
Independent contractors should ask whether the clinic they’re considering has an employment practices liability policy that includes third-party coverage. The potential always exists for a 1099 contractor to be named in a lawsuit brought against a contracted organization by an employee or someone else.
My advice underscores the importance of an independent contractor being familiar with each organization’s human resources guidelines. Modeling appropriate professional behavior to mitigate the risk of a harassment or hostile work environment complaint can’t be overstated.
Independent contractors control their schedules and can practice with a variety of pet health care providers and teams. The downside is the lack of many of the standard protections provided by an employer. If you’re a 1099 contractor, do your homework to ensure you’re adequately protected personally and financially against potentially disastrous incidents.
According to the IRS, “The earnings of a person who is working as an independent contractor are subject to self-employment tax.” Learn more at bit.ly/39oE2EE.