Medical Malpractice Trends. December 9, 2009 Bruce Whitmore, Healthcare Facilities Leader

Transcription

1 Medical Malpractice Trends December 9, 2009 Bruce Whitmore, Healthcare Facilities Leader

2 Storm Clouds on the Horizon Downturns in the economy tend to trigger malpractice claims. Unemployment, loss of health insurance, expiring COBRA, foreclosures and personal bankruptcies drive calls to plaintiff attorneys Additional tort reform unlikely. Existing tort reform under challenge. The Wall Street meltdown has impacted many insurer s balance sheets

3 When will claim frequency likely increase? Your patient has a period of time to realize medical incident occurred and contact a plaintiff attorney. Plaintiff attorney may take 1 2 years to research and file suit. Suit is commonly filed months after incident, depending on claim. As a result, increase in frequency may lag disruption by months. Statute of Repose, i.e. time to discover (varies by state and age of patient) Incident Occurs Time Allowed to File On average, a claim takes 2-3 years to resolve 71% of claims are closed within 2 years and 85% are closed within 3 years Years The average claim could take up to 7 years to be resolved after the initial incident. This is what is called the long tail of medical malpractice claims Source: Medical Protective internal data

4 How might insurance companies react? Re-underwrite their accounts, non-renewing or raising rates for certain types of businesses. Reduce coverage or increase deductibles at renewal. Increase pricing for certain venues. Cease writing business in certain venues. Stop writing malpractice insurance altogether. Insurer insolvencies could result.

5 You can reduce exposure to these problems Take advantage of risk management programs offered by your insurance company. Track medical incidents via a QA/QI program & take steps to avoid recurrences. Ensure your credentialing process screens out claims-prone physicians. Ensure your physicians maintain not only adequate insurance, but with high quality insurers. Audit your medical records for accurate, complete and defensible documentation. Be in a position to prove your quality.

6 Take Advantage of Your Insurer s Educational Programs Hotel based seminars Home study courses Online courses Live webinars

7 Picking the right insurer can be critical. Financial ratings (A.M. Best) are important, but not everything. Pick an insurer who demonstrates: A long-term commitment to medical malpractice insurance An understanding of malpractice case law in your venue that will affect your claims Knowledge of the ASC business model ASC & Surgery-specific risk management programs The financial strength to withstand an increase in claim frequency and/or severity

8 Key Coverages & Terms You Should Understand: Occurrence Form vs. Claims-Made Defense costs Paid in addition to limits? Deductibles inclusive of defense costs? Consent to Settle & Hammer Clause Coverage for Medical Directors Minimum premium earned at inception Claim Triggers Incident vs. Written Demand

9 Incident Coverage Trigger Coverage is triggered when you report a medical incident. Example: A complication occurs during surgery resulting in additional medical costs and lost time from work. To be safe, you report the incident. Statute of Repose, i.e. time to discover (varies by state and age of patient) Claim Actually Filed Incident Occurs 0 1 Incident reported, Carrier A pays the claim Carrier B denies claim - insured knew of incident Years Claim costs mount. Defense costs and verdict paid on your behalf.

10 Written Demand Coverage Trigger Coverage is not triggered until the insurer receives a written demand Filing an incident report makes no difference. Statute of Repose, i.e. time to discover (varies by state and age of patient) Claim Actually Filed Incident Occurs 0 1 Carrier A Denies claim due to no Written Demand Carrier B Denies Claim - insured knew of incident Years Claim costs mount. Defense costs and verdict not paid by insurance

11 Claims-Made Coverage Unlimited Tail Unlimited Tail coverage keeps the Claims-Made policy open for future reports of claims indefinitely. Example: You decide to sell your surgery center 2 years from now. Statute of Repose, i.e. time to discover (varies by state and age of patient) Claim Actually Filed Incident Occurs 0 1 Carrier issues original policies Unlimited reporting endorsement is purchased from insurer. Claim reported years later. Insurer accepts claim, defends & pays indemnity. Years Claim costs mount. Defense costs and verdict paid on your behalf.

12 Claims-Made Coverage Limited Tail Limited Tail coverage keeps the Claims-Made policy open for future reports of claims for a limited time ~ 2-3 years. Example: You decide to sell your surgery center 2 years from now. Statute of Repose, i.e. time to discover (varies by state and age of patient) Claim Actually Filed Incident Occurs 0 1 Carrier issues original policies Carrier issues limited tail It expires in 2 years. Claim denied Years Claim costs mount. Defense costs and verdict not paid by insurance This becomes critical for you in the event you decide to sell your surgery center!

13 For Further Information Your current insurance broker is usually a good source of information or; Bruce Whitmore, Facilities Leader Medical Protective (direct) Bruce.Whitmore@medpro.com.

14 Certificate of Participation Name Ambulatory Surgery Centers 2 Key Topics: 1. Medical Malpractice Industry Trends and 2. Key ASC Business and Legal Trends Webinar Date