Does your malpractice insurance actually cover the wellness services your patients are asking for? As medical spas and wellness practices expand into medical weight loss, peptides, HRT, and other emerging longevity treatments, many assume these services are automatically included in their existing coverage. In this episode, Jason Kunz, a senior account executive at NFP and certified insurance counselor with nearly 30 years of experience, explains where gaps show up and why they are becoming more common as the industry evolves. Tune in to learn how to verify your coverage and ensure your practice stays protected as you expand services, and what the future of insurance coverage looks like as modern wellness continues to evolve.
Listen to the full episode using the player below, or by visiting one of the links below. Contact ByrdAdatto if you have any questions or would like to learn more.
Transcript
*The below transcript has been edited for readability.
Intro: [00:01] Welcome to Legal 123s with ByrdAdatto. Legal issues simplified through real client stories and real-world experiences, creating simplicity in three, two, one.
Brad: [00:13] Welcome back to Legal 123s with ByrdAdatto. I’m your host, Brad Adatto, with my co-host, Michael Byrd
Michael: [00:20] As business attorneys for health care practices, we meet a lot of interesting people and learn their amazing stories. This season’s theme is The Future of Wellness, where longevity, advanced weight loss solutions, and anti-aging innovations collide. Get ready for insights from the people driving the evolution of the medical industry.
Brad: [00:41] Well, Michael, I’m excited to bring on our guest for the show. When we talk about wellness, we get a ton of questions about malpractice coverage, and our guest today will be able to help better understand these issues.
Michael: [00:53] I’m excited too, but let’s not get ahead of ourselves, Brad. I read an article recently, ironically, around Valentine’s Day, that I think you will find interesting.
Brad: [01:03] Was this Valentine’s Day article very popular because it talked about mascots all across the country?
Michael: [01:10] I can assure you that I will not be bringing mascot talk to our opening conversation. You have way over-leveraged that conversation topic. I brace myself, in fact, every time you bring it up.
Brad: [01:22] Well, I guess I should brace myself, because if we’re getting to Valentine’s Day talk, I’m kind of nervous about that.
Michael: [01:27] Well, this article was a survey on the top breakup foods by state, and the answers were based on Google Trends search data.
Brad: [01:37] Well, that does sound like the opposite of Valentine’s Day. And breakup foods, I didn’t even know that was a thing.
Michael: [01:43] Yeah, for sure. I guess it is a thing, Brad. So I’m going to do a little test.
Brad: [01:50] Okay.
Michael: [01:51] I picked a handful of states. We’ve got our guest state in here, but I’ve got five states, and I want to see if you can guess the breakup food, the most popular breakup food for that state.
Brad: [02:01] Okay.
Michael: [02:02] Number one, Texas.
Brad: [02:04] Tacos.
Michael: [02:06] You’re actually right.
Michael: [02:09] Number two. Louisiana, where you’re from.
Brad: [02:12] Crawfish.
Michael: [02:13] You’re not right.
Brad: [02:15] Oh.
Michael: [02:16] Cake.
Brad: [02:17] Cake?
Michael: [02:17] Yes.
Brad: [02:18] Crawfish cake?
Michael: [02:19] No.
Brad: [02:19] Okay.
Michael: [02:20] No, it didn’t even say king cake.
Brad: [02:21] Okay.
Michael: [02:22] Number three, Washington.
Brad: [02:26] DC or state?
Michael: [02:27] State.
Brad: [02:28] Hummus?
Michael: [02:31] Cookies.
Brad: [02:32] okay. All right.
Michael: [02:33] All right. Number four, Illinois.
Brad: [02:37] I’m going to go home of the big giant pizza from Chicago.
Michael: [02:41] Wrong again, Brad. Popcorn.
Brad: [02:44] Popcorn?
Michael: [02:45] Yes.
Brad: [02:45] Well, it starts with a P, pizza, popcorn, same thing.
Michael: [02:47] Yeah, yeah.
Brad: [02:48] Okay.
Michael: [02:49] You started off strong and are failing.
Brad: [02:50] Failing fast.
Michael: [02:51] Number five, and our last state, North Carolina.
Brad: [02:56] Hamburgers?
Michael: [02:59] Nope.
Brad: [02:59] Okay.
Michael: [03:00] Milkshakes.
Brad: [03:01] Ah. Hamburgers and milkshakes?
Michael: [03:05] And then if you have a guess, the most popular breakup food across the country, what do you think?
Brad: [03:12] Beer?
Michael: [03:14] Wrong. Milkshakes.
Brad: [03:17] Oh. Beer’s not probably a food, well, I guess milkshake’s a food.
Michael: [03:21] Yeah.
Brad: [03:21] I don’t know.
Michael: [03:21] All right. Well, I’m going to ask you, Brad, because this is last century, so it’s been a while since you’ve had a breakup, but do you know what your breakup food was?
Brad: [03:31] Dude, I haven’t broken up with anyone in, like, over 30 years, so it had to be college. So in college, I had no money, so I’m going to either go with a burger or beer. How about you?
Michael: [03:43] Miller Lite, 100%. And it’s also been a long time.
Brad: [03:46] Yes, exactly.
Michael: [03:48] All right.
Brad: [03:48] All right, you ready to bring on today’s guest?
Michael: [03:50] Let’s bring our guest on.
Brad: [03:51] Yeah.
Michael: [03:52] Joining us today is someone we’ve referred clients to for many years, a specialist in his industry, Jason Kunz. He is a senior account executive at NFP and a certified insurance counselor. He’s been licensed in the insurance industry for more than 20 years and specializes in insurance needs for the medical spa industry. Jason, thanks for being here today.
Jason: [04:18] Well, gentlemen, thank you so much for having me. I actually wish I was there in studio with you. I’m sure down in Texas the weather is a lot warmer than it is here in the state of Washington.
Brad: [04:27] I guarantee it is right now.
Jason: [04:29] And Brad, I heard that hummus comment there, so I’m going to let that one slide.
Brad: [04:33] It’s the first thing that came to my brain. I mean, I’ve only been to Washington State for literally, 20 minutes when I was in Portland, Oregon, and drove across the state line just because I’d never been there.
Michael: [04:45] To get some hummus.
Brad: [04:46] Just to get some hummus, exactly. All right. Well, speaking of food, Jason, I’m going to hit you with a really upfront, hard question. Do you have a preferred breakup food?
Jason: [04:57] Well, I’ve been happily married, my wife tells me, for over 25 years now, so I haven’t really thought about a breakup food. But being here in the Pacific Northwest, I would probably have to drown my sorrows in some good seafood.
Brad: [05:17] There you go.
Michael: [05:17] Yeah.
Jason: [05:17] So I would probably go with some, some crabs, something of that nature.
Michael: [05:21] There we go.
Brad: [05:21] All right.
Michael: [05:22] Smart answer.
Brad: [05:22] Yeah.
Michael: [05:23] All right. Well, cool. Let’s get into it. I’d love to start just to have you introduce yourself a little more to the audience and talk a little bit about NFP.
Jason: [05:32] Well, thank you. I was kind of like collecting my thoughts before this, and I was realizing that I started in 1996, and so I’m now celebrating my 30th year in the insurance industry.
Michael: [05:44] Wow.
Jason: [05:45] Kind of sneaks up on a person, I guess. I’ve spent the vast majority of that time being a commercial insurance agent, specializing in life sciences, most specifically clinics, wellness centers, medical spas, and medical practices of that nature. For the last 10-plus years, I have been here at NFP. It’s been a wonderful organization. We specialize in property casualty, benefits, wealth management, and retirement services of that nature. I think we’re over 110 countries now, and what really attracted me to the organization is their commitment to the life science industry. As I’ve been a part of it, we’ve been able to grow as the industry has been growing, and now we’re one of the industry leaders.
Michael: [06:37] That’s very cool. So going into your kind of focused area, why don’t you tell the audience about the types of policies, you help procure for medical spas and other medical practices?
Jason: [06:50] Oh, I tell you, it sure would be nice if there was just one insurance policy that would cover all of the exposures that businesses have nowadays, but it does take a combination of a couple of different policies. First and foremost, you need to have a really good professional liability medical malpractice policy. I recommend that it be in the name of the corporation that owns the business and is set up to cover all of the services as well as all of the staff. Another major policy that would be needed is a business owner policy, also referred to as a package policy. It provides fire and theft coverage for office contents, equipment, tenant improvements, and things of that nature, plus trip-and-fall general liability and other general liability exposures. Most medical spas have a staff, so they would also need workers’ compensation coverage to protect the staff. I would say those are the major ones, and it would be wise for businesses nowadays to have some management liability coverage, such as an employment practices liability policy that helps protect the business from harassment, wrongful termination, and discrimination, and maybe even directors’ and officers’ coverage. Employee benefits are also very important nowadays.
Michael: [08:21] Wow, do y’all, does NFP help with cybersecurity risk as well?
Jason: [08:29] That is a great question. That is definitely an exposure that has been increasing, and the answer is yes. I tell you, it’s scary. As soon as you can think about a way a business can be jeopardized in a cyberattack, there are people out there thinking about ways to intrude on a business, and having good cyber protection is highly recommended.
Michael: [08:56] Another question we get a lot is on the compliance front. I don’t know if it’s a separate policy or rider, but we hear clients ask if they can have coverage if they’re investigated by a medical board or some other type of governing board. Are those types of coverages available, and what do they look like?
Jason: [09:20] Yes. Within a lot of the professional liability medical malpractice policies, they can have endorsements added, such as peer reviews and subpoena assistance. So you want to make sure you’re lined up with a good agent as well as a well-rounded insurance policy, something with the extra enhancements and endorsements that can be added.
Michael: [09:46] And final thought that just popped in my mind, because this could be different than cybersecurity, is kind of that exposure for a data breach, like a, a HIPAA-related exposure. Is that a thing?
Jason: [10:00] HIPAA is, yes, and because of all the HIPAA requirements, it can be as simple as asking for a copy of your own chart and accidentally being sent somebody else’s. Something that simple could result in a HIPAA violation, so having insurance coverage for HIPAA violations is highly recommended and available. This is something you would want to add to your professional liability medical malpractice policy.
Michael: [10:34] Cool. That’s awesome. Well, shifting gears, as you might have heard in our intro, this season we’re focusing on The Future Of Wellness. When we use the word wellness, we’re including longevity, weight loss, and anti-aging. I’d love to hear, with this wave that’s happening, about any malpractice coverage challenges and things people should know about coverage. We’ll start with a specific one: I want to hear about medical weight loss, because that’s been trending and a big service line that we’ve seen here over the last three years.
Jason: [11:15] Well, I tell you, that is definitely the buzzword nowadays, which is wonderful. People taking care of themselves is always very important. The industry always seems to have the latest and greatest, and when it comes to insurance and coverage for wellness centers, medical weight loss, and weight loss services, one very important thing is to make sure that the products themselves are FDA-approved. That is something insurance companies will ask first and foremost. Secondly, insurance companies want to make sure the businesses are in compliance with state regulations and guidelines for new medical weight loss services. They may have certain guidelines or operator requirements, and it’s up to the business owner to ensure they are in compliance with state rules for these services.
Michael: [12:24] I’m curious what you’ve experienced, because it’s still out there, and for a while it was the craze. The compounding of weight loss drugs is a little different—they’re not directly FDA-approved. We’ve done episodes on this. Have you experienced pushback on coverage when a practice wants to compound or prescribe compounded weight loss?
Jason: [13:00] It’s a great question. Generally speaking, insurance companies may specifically exclude a certain weight loss service, have a sub-limit, or place limitations on the operator. For instance, they may require a nurse or an RN to administer rather than an esthetician. I have seen situations where insurance companies will say, “We’ve had experiences with this one particular weight loss product. We’re not covering it, period.” They will specifically exclude that one service and operator, as well as related services.
Brad: [13:50] How often is it different from state to state when it comes to acquiring different types of insurance? Is that driven by the state insurance commissioner, or by the insurance companies?
Jason: [14:06] Well, state laws always supersede the insurance policy, so it’s really derived by the states. We’ve been dealing with a unique situation with medical spas. It’s a great industry, usually started by individual entrepreneurs. But in a lot of states, and that seems to be increasing, the law dictates that they have to be owned by a physician. I have the pleasure of knowing many physicians, none of whom went through medical school solely to own and run a medical spa, which creates an interesting conundrum.
Brad: [14:50] That makes sense. Going back to where Michael launched the first part of the question, it’s about understanding how much the industry is always shifting. Practices are bringing in new technology, lasers, and machines. Right now, especially in longevity and wellness services, peptides and HRT are a big push that many practices are trying to implement. I won’t have you go into the legal considerations, but I’d love to hear what you’re seeing from a coverage perspective.
Jason: [15:25] It is interesting. The insurance companies dedicated to the medical spa industry have definitely picked and chosen their policy forms when it comes to peptides and HRTs. Some are willing to cover it, and some are not. The ones that do sometimes apply a sub-limit. Most medical malpractice and professional liability policies have a $1 million limit. Sometimes the insurance companies will say, “Hey, you’re able to offer this particular HRT or peptides, however, it’s now subject to a $100,000 sub-limit.”
Brad: [16:08] Interesting.
Michael: [16:09] I’m curious, too-
Jason: [16:10] That is where it comes into a good relationship with your agent, because a lot of those things would get buried within the policy.
Michael: [16:16] Yeah.
Brad: [16:16] That’s actually what my next question was. Our audience might think they have malpractice coverage, but it’s not always intuitive whether adding new service lines is covered. How can they find that on the policy, and what steps should they take to make sure they have coverage for those new services?
Jason: [16:47] I chuckle because it would be nice if insurance policies were like books with a beginning, middle, and end. They are definitely broken into sections, and each section has coverages, definitions, and exclusions. I recommend reaching out to your agent in writing and asking if a specific service is covered. It’s 100% legitimate to ask, “Is this specific service being covered, and at full policy limits?” You can also find out if there are any guidelines. For example, some companies may say, “You’re covered as long as an RN administers it versus an esthetician.”
Brad: [17:42] Fascinating. I want to move over, and you kind of started talking about this with the doctors who are…
Michael: [17:54] Getting into the business of owning medical spas, another important role for physicians is being a medical director or supervising physician. There’s a lot of confusion, especially if a medical spa is properly owned but not physician-owned, yet needs a medical director. People often wonder if their insurance covers the medical director role or if the physician’s malpractice for their day job covers them. Can you talk about gaps people should be thinking about, especially in wellness, and share your perspective?
Jason: [18:49] That is a great question. One of the biggest gaps is really misassumptions. More and more states are requiring via guidelines and laws that medical spas be owned by a physician. If a physician has the opportunity to become a medical director or supervising physician, they can’t assume the business is within state compliance. They need to ask questions and make sure the business they’re joining is compliant. They also shouldn’t assume their individual policy will cover them in an outside medical director role. There are different ways to cover a medical director or supervising physician under an entity. One approach, similar to hospitals, is for the corporation that owns and runs the business to have the policy. This ensures all operators, including the medical director, and all services are covered. Medical directors can be covered in different capacities: strictly administrative, or including direct patient care for aesthetic services and good faith examinations. I typically recommend having medical directors covered by the corporation’s policies and getting verification. Standalone medical director coverage is also available.
Michael: [20:56] Is that where the term of art gets thrown out as an additional insured?
Jason: [21:01] It’s not so much about being an additional insured. For most insurance policies geared toward the medical spa industry, administrative medical directors are usually automatically covered as a named insured. If a medical director wants coverage for providing direct patient care, they are typically added via an endorsement for that specific coverage on behalf of the corporation, at the corporation’s location, for that corporation’s patients.
Michael: [21:41] It sounds like it’s really important, when adding a supervising physician or medical director, to have a conversation with your insurance company or agent about the doctor’s actual role, whether administrative or involving direct patient care, because that determines whether a different type of insurance or policy is needed.
Jason: [22:06] Yes. Yes, for sure.
Michael: [22:08] One thing that tends to cause confusion is that the corporate policy you described is very different from what doctors are used to with their own malpractice policies. They think of a policy that covers them for their services, and I’m curious if you’ve run into any friction on that front.
Jason: [22:33] A little bit, yes. I can tailor it however the business owners prefer. There are a couple of different ways, and I make my recommendations mostly because of life. People get busy, especially physicians, and insurance is a peace of mind factor until you need it. It’s all about doing your due diligence ahead of time, building a good relationship, feeling confident, and then doing the best job you can.
Michael: [23:07] Right.
Brad: [23:08] All good points. I guess we have time for one more question, Michael. Jason, looking into the future, what changes do you think insurance companies might make, if any, in the wellness and aesthetic industry over the next five years?
Jason: [23:26] I would definitely see continued growth, and with that, I’m optimistic that the insurance companies. I have been seeing that over the last five years, where insurance companies are a little bit quicker to react to new services, doing the due diligence so they feel comfortable about it. I mean, insurance companies love decades’ worth of research, but when you’re coming out with a new service, they don’t have that. I applaud them for doing a diligent job on a new service, trying to figure out the pros, the cons, and an adequate price point. With that said, for sure, the industry’s going to grow. I’m optimistic that more insurance carriers will enter the aesthetic and medical spa industry. I welcome that. And there’s always going to be the next latest and greatest service out there. That’s what keeps us all going.
Michael: [24:28] Yeah. A quick question that just popped in my mind. For businesses, medical spas, or wellness centers that are multi-state, are you able to find one carrier to cover them, or do you have to deal state by state on those types of coverages?
Jason: [24:49] For the most part, yes. If they have multiple state operations, insurance companies can usually tailor the coverages accordingly, even if separate corporations were formed for each state. As long as there is one common majority owner within the different state corporations, insurance companies are usually able to accommodate that.
Michael: [25:18] Interesting. Well, that’s awesome. We have run out of time. So grateful, Jason, for you joining us on Legal 123s with ByrdAdatto. We’re going to go to break, and when we come back, Brad and I will have a quick legal wrap-up. Thank you.
Jason: [25:35] Wonderful. Thank you.
Access+: [25:36] Many business owners use legal counsel as a last resort, rather than as a proactive tool that can further their success. Why? For most, it’s the fear of unknown legal costs. ByrdAdatto’s Access+ program makes it possible for you to get the ongoing legal assistance you need, for one predictable monthly fee. That gives you unlimited phone and email access to the legal team, so you can receive feedback on legal concerns as they arise. Access+, a smarter, simpler way to access legal services. Find out more. Visit byrdadatto.com today.
Brad: [26:11] Welcome back to Legal 123s with ByrdAdatto. I’m your host, Brad Adatto, with my co-host Michael Byrd. And Michael in case you forgot, this season, our theme is The Future of Wellness. We had just a really great conversation with Jason, really understanding the impact insurance can have just in general for medical practice, but obviously we’re doing a deeper dive into wellness. What are some takeaways that you had today?
Michael: [26:35] One of the things we’ve noticed, and a big reason we wanted to bring Jason on this season, is that as this wellness craze is happening, I’ll start with medical weight loss. For those who’ve been doing wellness, it’s been around for a long time, but the wave I would count is the last three years or so, where it’s really taken hold. What we’ve learned is that practices may think they have coverage because they have malpractice insurance, but medical weight loss can be excluded, particularly if they are doing compounding. The same concepts can apply to HRT, which has also been around for a long time. Then you get into conversations about peptides and other things that are not FDA-approved, and the risk of those not being covered goes up even further. The big takeaway is that if you’re adding a service line, you need to do your due diligence to make sure that risk is covered.
Brad: [27:50] Yeah, we’ve talked about this all the time, drifting out of compliance. Well, this is drifting out of insurance.
Michael: [27:56] Right.
Brad: [27:56] I mean, that’s the best way to think about it. You’re completely insured and protected because on the day you started, you were just doing some fillers and maybe firing a laser or whatever it was, but as you’ve grown, you keep adding more service lines, and you didn’t realize that your insurance needs may have changed. That goes with employees and other people that you’re adding, new locations, bringing other doctors, you name it. All those are things that as you’re doing this, not only obviously working with your attorneys, but making sure that everyone else up and down the chain, your agents, your financial planners, and of course your CPAs are aware of all these changes. But Michael, that’s all the time we have today. Audience members, we are back next Wednesday when we continue to explore the future of wellness, when we bring on to really learn about the financials with Jessica Nunn of Maven.
Brad: [28:42] Thanks again for joining us today. And remember, if you liked this episode, please subscribe. Make sure to give us a five-star rating and share with your friends.
Michael: [28:50] You can also sign up for the ByrdAdatto newsletter by going to our website at byrdadatto.com.
Outro: [28:56] ByrdAdatto is providing this podcast as a public service. This podcast is for educational purposes only. This podcast does not constitute legal advice, nor does it establish an attorney-client relationship. Reference to any specific product or entity does not constitute an endorsement or recommendation by ByrdAdatto. The views expressed by guests are their own, and their appearance on the program does not imply an endorsement of them or any entity they represent. Please consult with an attorney on your legal issues.
