Medical Professional Liability
(Last Updated 11/13/2002)
Due to the large increase in medical professional liability expense, the accounting for this expense will change in FY 2003.
Prior to FY 2003 all medical professional liability expense assessed to departments was transferred from departments’ cash reserves to the professional liability program reserves. Effective FY 2003, booked expenses will no longer be 100% funded.
Charges for professional liability on a claims-made basis will impact departments’ cash reserves via expense entries to budget/object 48-02 using the same LC 12 accounts as in past years.
Beginning in FY 2003, additional expense will be accrued to bring the total up to an occurrences basis as required by GAAP at the University level. For FY 2003, this additional expense will be 68.38% of the claims-made expense.
These additional accrued expenses will be charged to new accounts 12-dddd-4802-91489M titled “Professional Liability Accrued Expense.” A new account has been created for each department code “dddd” being charged for claims-made basis expense.
These accrued expenses will close to a new “Professional Liability Accrued Expense” LC 15 reserve. One such reserve has been created for each department.
For example, if three LC 12 clinical practice accounts are charged for claims-made expense (perhaps related to three locations), then an additional 68.38% of the total of the three charges will be expensed to the new 91489M account on that department number. All the LC 12 new 91489M accounts in a department will close to one reserve in the same way that all accrued patient fee 91489 accounts close to a single reserve.
The additional accrued amounts for July, August and September were posted in September. The transactions recording the additional accrued amounts can be identified by the description of “PR LIAB ACR MMMYY” where MMMYY is the month of the expense. The accruals will be posted monthly along with the “cash” (claims-made) entries beginning in October.
Please contact your assigned Budget Office analyst if you have any questions.