By Dan Nissi
Consider the mind-blowing $18.4 million jury award in the malpractice case against physicians for a legal professional who had died of AIDS. They had failed to test him for HIV well before his diagnosis, though he had requested the test because of his existing risk factors.
The point? While the number of medical malpractice claims filed each year is holding steady, the severity of jury awards – or the amount of the verdicts – is on an unstoppable upward trajectory. According to one study, in 2017, 33 published healthcare liability jury verdicts were awarded for over $10 million, versus 20 the year before.
Many variables impact the risk for a lawsuit. For one, specialists are more at risk than primary care physicians, with surgeons and OB/Gyns the most likely to be named in a legal action. Geography also plays a key role. Tort reform in some states like Texas has put a cap on non-economic verdicts but that’s not the case across the board.
Something else to consider: What used to be typical coverage limits of $1 million with a $3 million aggregate limit may be out of date today in most states, given the legal environment.
Medical Malpractice claims have an inherently long delay between the treatment date and the date most claims are filed. (Medicine is considered a “long tail business,” unlike in others industries where claims are made right away). Compounding this is that many physicians have tail policies, or occurrence coverage. So it isn’t uncommon to see a policy with lower limits that was bought in the past being triggered years after the treatment date – even while the severity of settlements has continued to increase over time.
It all makes the case for taking a closer look at your practice’s risks and whether your current malpractice coverage’s terms, provisions or coverage limits measure up.
One place to start is by working with your broker to evaluate what policy form is best for your particular circumstances. There are three that all provide similar coverages but have different triggers for the policy to apply.
- “Claims-made” coverage is triggered by the date a malpractice claim is first reported. (You may experience an incident that you believe could give rise to a claim even if it is not a claim yet. It is a common requirement to report these incidents to your carrier to lock in coverage for protection should a claim arise in the future. So be mindful of your policy’s requirements.) It is typically a current policy in force but subject to treatments provided after a stated “retroactive date,” which is often the first time claims-made coverage was purchased. In order for coverage to be in place, an active policy has to be in force or an extended reported endorsement issued at policy expiration which extends the period claims can be reported. (This is often referred to as “tail” coverage.)
- A modified claims-made policy provides pre-paid extended reporting period (or “tail”) protection on a claims-made basis. It’s triggered as a claims-made policy but protects you with automatic tail coverage after the policy has expired, again subject to treatments provided after the policy-listed “retroactive date.”
- “Occurrence” coverage has a trigger that is the date of the treatment, or “occurrence.” Since the trigger is the date of treatment, the occurrence policy in force at the time of the treatment is the policy trigger, regardless of when the malpractice claims come in.
Another smart move is to undertake a risk assessment of your practice, which many malpractice insurers and consultative brokers provide at no charge. It can be invaluable in uncovering worrisome risk factors and practices and might also reduce your malpractice insurance rates. Surprisingly, one survey found that 67 percent of physicians hadn’t done a risk assessment and had no plans to do so.
Your malpractice coverage is an essential way to protect your earnings and assets against malpractice claims and legal actions. It’s not just evaluating your risks and getting the best policy for your needs that are important, though. Make sure you have the right amount of coverage for your risk position. Many doctors need to reevaluate their coverage and limits in the current claims-environment or else potentially face financially painful claims outcomes.
HUB International’s team of healthcare specialists is ready to help your practice assess its risks and ensure that your medical malpractice coverage is sufficient for today’s conditions.