Vital Sounds 2023, Quarter 2

Vital Sounds 2023, Quarter 2

In-House Counsel: The Value of License Defense Coverage

May 23, 2023


In-House Counsel: The Value of License Defense Coverage

May 23, 2023

By Tucker Poling, JD
Vice President of Claims and General Counsel

kammco May 2023 newsletter. license defense coverage.

When discussing strategies and tactics to minimize professional liability risks, I’ve often reminded clients that, although you can reduce risk, you can’t eliminate it. In those conversations, I’ve sometimes quipped, “The only thing that stands between anyone and a lawsuit is 150 bucks and a Big Chief tablet,” referring to the filing fee and something on which to write down allegations.

When it comes to a licensing board investigation, not even the filing fee stands between you and serious allegations that involve the highest professional stakes. You could also face thousands in legal fees to defend yourself if you haven’t chosen to add higher-limit license defense coverage to your professional liability insurance coverage.

Anyone can file a complaint with the state licensing board anonymously and for free. An investigation is sometimes triggered without anyone filing a complaint with the licensing board. For example, even though healthcare providers sometimes believe that paying a settlement to resolve a lawsuit will put the entire affair behind them, all settlements paid to resolve medical malpractice lawsuits are automatically reported to the state licensing board under both state and federal law – and a letter from the licensing board requesting a response to the allegations made in the lawsuit often follows.

A healthcare provider who finds themselves the subject of a licensing board investigation may be tempted to respond and defend themselves without involving an attorney. In my experience, that isn’t usually a wise choice. Abraham Lincoln once said, adopting an old English proverb, “The man who represents himself has a fool for a client.” 

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Unfortunately, I’ve experienced the wisdom of this proverb firsthand. On more than one occasion, I’ve seen healthcare providers attempt to represent themselves in responding to a licensing board investigation. On more than one occasion, I’ve seen this choice end in professionally and financially disastrous results in cases that likely could have been reasonably defended and efficiently resolved if the provider had the assistance of competent legal counsel.

But lawyers don’t work for free. Understandably, healthcare providers often balk at the thought of racking up the legal fees required to retain an attorney to competently respond on their behalf.

The concern about the cost is justified. According to Forbes magazine, the average hourly rate for an attorney was $313 in 2022. When you consider even the minimum cost incurred to hire competent legal counsel to respond to a licensing board investigation on your behalf, the dollars add up quickly. Licensing board investigations often involve at least a request for records and a written response to the allegations. Such investigations may also lead to administrative litigation involving deposition testimony, expert witnesses, and formal administrative hearings. It’s difficult to conceive of effective legal representation in a licensing board matter that would not involve thousands of dollars in legal fees.

Fortunately, if you include a License Defense Costs Higher Limit Coverage endorsement to your KAMMCO professional liability coverage, you’re covered for up to $25,000 in legal fees to respond to licensing board matters. This endorsement costs less than you would likely pay for a single hour of an attorney’s time.

I’m no Lincoln, but it doesn’t take the wisdom of the savior of the Union to see the value of this coverage. Some simple math scratched out on a Big Chief tablet will do.

For more information on this endorsement, contact the KAMMCO underwriting team at