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When You and Your Malpractice Insurer Disagree on Your Case
You’ve been sued for medical malpractice. If you are a physician in the United States, that is not an unlikely scenario.
An analysis by the American Medical Association shows that almost half of all physicians are sued by the time they reach 54. In some specialties, such as ob.gyn., one is almost guaranteed to be sued at some point.
But that’s what medical malpractice insurance is for, right? Your medical malpractice insurer will assign an attorney to take care of you and help you through this situation. Won’t they?
Maybe so, but the attorney and the claims representative your insurer assigns to your case may have a different idea about how to proceed than you do. Though the defense attorney assigned to you represents you, he or she gets paid by the insurance carrier.
This can create a conflict when your defense counsel and your insurance claims representative aim to take your case in a direction you don’t like.
Disagreements might include:
- Choice of expert witnesses
- Tactical decisions related to trial strategy
- Public relations considerations
- Admissions of liability
- Allocation of resources
To Settle or Not?
One of the most challenging — and common — disagreements is whether to settle the case.
Sometimes a malpractice insurer wants to settle the case against the defendant doctor’s wishes. Or the doctor wants to settle but is pushed into going to trial. In the following case, one doctor had to face the consequences of a decision he didn’t even make.
The Underlying Medical Malpractice Case
Dr. D was sued by a patient who had allegedly called Dr. D’s office six times in 2 days complaining of intermittent chest pain.
Dr. D had been swamped with patients and couldn’t squeeze this patient in for an office visit, but he did call back. The patient later claimed that during the call he told the doctor he was suffering from chest pain. The doctor recalled that the patient had complained of abdominal discomfort that began after he had exercised.
The physician wrote a prescription for an ECG at the local hospital and called to ensure that the patient could just walk in. The ECG was allegedly abnormal but was not read as representing an impending or current heart attack. Later that evening, however, the patient went to the emergency department of another hospital where it was confirmed that he had suffered a heart attack. The patient underwent cardiac catheterization and stent placement to address a blockage in his left anterior descending artery.
The patient subsequently sued Dr. D and the hospital where he had the original ECG. Dr. D contacted his medical malpractice insurance company. The insurance company assigned an attorney to represent Dr. D. Discovery in the case began.
The plaintiff’s own medical expert testified in a deposition that there was no way for the heart attack to have been prevented and that the treatment would have been the same either way. But Dr. D could not find a record of the phone calls with the patient, and he had not noted his conversation the patient in their medical records.
Dr. D held a policy for $1 million, and his state had a fund that would kick in an additional $1 million. But the plaintiffs demanded $4 million to settle.
A month before trial, the plaintiff’s attorney sent a threatening letter to Dr. D’s attorney warning him that Dr. D was underinsured and suggesting that it would be in the physician’s best interests to settle.
“I want to stress to you that it is not my desire to harm your client’s reputation or to destroy his business,” wrote the plaintiff’s attorney. “However, now is the time to avoid consequences such as these by making a good faith effort to get this case resolved.”
The letter went on to note that the defense attorney should give Dr. D a copy of the letter so that everyone would be aware of the potential consequences of an award against Dr. D in excess of his limits of insurance coverage. The plaintiff’s attorney even suggested that Dr. D should retain personal counsel.
Dr. D’s defense attorney downplayed the letter and assured him that there was no reason to worry.
Meanwhile the case inched closer to trial.
The codefendant hospital settled with the plaintiff on the night before jury selection, leaving Dr. D in the uncomfortable position of being the only defendant in the case. At this point, Dr. D decided he would like to settle, and he sent his attorney an email telling him so. But the attorney instead referred him to an insurance company claims.
Just days before the trial was to start, Dr. D repeatedly told the claims representative assigned to his claim that he did not want to go to trial but rather wanted to settle. The representative told Dr. D that he had no choice in whether the action settled.
A committee at the insurance company had decided to proceed with the trial rather than settle.
The trial proved a painful debacle for Dr. D. His attorney’s idea of showing a “gotcha” video of the allegedly permanently injured plaintiff carrying a large, heavy box backfired when the jury was shown by the plaintiff that the box actually contained ice cream cones and weighed very little.
Prior to trial, the plaintiff offered to settle for $1 million. On the first day of trial, they lowered that amount to $750,000, yet the defense attorney did not settle the case, and it proceeded to a jury verdict. The jury awarded the plaintiff over $4 million — well in excess of Dr. D’s policy limits.
The Follow-up
Dr. D was horrified, but the insurance company claims representative said the insurer would promptly offer $2 million in available insurance coverage to settle the case post verdict. This did not happen. Instead, the insurer chose to appeal the verdict against Dr. D’s wishes.
Ultimately, Dr. D was forced to hire his own lawyer. He ultimately sued the insurance company for breach of contract and bad faith.
The insurance company eventually attempted to settle with the plaintiffs’ counsel, but the plaintiff refused to accept the available insurance coverage. The insurance carrier still has not posted the entire appeal bond. The case is still pending.
Protecting Yourself
The lesson from Dr. D’s experience: Understand that the insurance company is not your friend. It’s a business looking out for its own interests.
The plaintiff’s attorney was absolutely correct in suggesting that Dr. D retain his own attorney to represent his own interests. You should hire your own lawyer when:
- You disagree with your insurer on how to proceed in a case.
- You receive a demand that exceeds your available insurance coverage or for damages that may not be covered by your policy, such as punitive damages.
- Your insurance carrier attempts to deny insurance coverage for your claim or sends you a letter stating that it is “reserving its rights” not to cover or to limit coverage for your claim.
Retaining independent counsel protects your interests, not those of your insurance company.
Independent counsel can give you a second opinion on the strengths and weaknesses of your claim, help you prepare for your deposition, and attend court dates with you to ensure that you are completely protected.
Independent counsel can challenge your insurance company’s decision to deny or limit your insurance coverage and ensure that you receive all of the benefits to which you are entitled under your insurance policy. Some policies may include an independent lawyer to be paid for by your insurance carrier in case of a conflicts.
The most important takeaway? Your medical malpractice insurance carrier is not your friend, so act accordingly in times of conflict.
A version of this article first appeared on Medscape.com.
You’ve been sued for medical malpractice. If you are a physician in the United States, that is not an unlikely scenario.
An analysis by the American Medical Association shows that almost half of all physicians are sued by the time they reach 54. In some specialties, such as ob.gyn., one is almost guaranteed to be sued at some point.
But that’s what medical malpractice insurance is for, right? Your medical malpractice insurer will assign an attorney to take care of you and help you through this situation. Won’t they?
Maybe so, but the attorney and the claims representative your insurer assigns to your case may have a different idea about how to proceed than you do. Though the defense attorney assigned to you represents you, he or she gets paid by the insurance carrier.
This can create a conflict when your defense counsel and your insurance claims representative aim to take your case in a direction you don’t like.
Disagreements might include:
- Choice of expert witnesses
- Tactical decisions related to trial strategy
- Public relations considerations
- Admissions of liability
- Allocation of resources
To Settle or Not?
One of the most challenging — and common — disagreements is whether to settle the case.
Sometimes a malpractice insurer wants to settle the case against the defendant doctor’s wishes. Or the doctor wants to settle but is pushed into going to trial. In the following case, one doctor had to face the consequences of a decision he didn’t even make.
The Underlying Medical Malpractice Case
Dr. D was sued by a patient who had allegedly called Dr. D’s office six times in 2 days complaining of intermittent chest pain.
Dr. D had been swamped with patients and couldn’t squeeze this patient in for an office visit, but he did call back. The patient later claimed that during the call he told the doctor he was suffering from chest pain. The doctor recalled that the patient had complained of abdominal discomfort that began after he had exercised.
The physician wrote a prescription for an ECG at the local hospital and called to ensure that the patient could just walk in. The ECG was allegedly abnormal but was not read as representing an impending or current heart attack. Later that evening, however, the patient went to the emergency department of another hospital where it was confirmed that he had suffered a heart attack. The patient underwent cardiac catheterization and stent placement to address a blockage in his left anterior descending artery.
The patient subsequently sued Dr. D and the hospital where he had the original ECG. Dr. D contacted his medical malpractice insurance company. The insurance company assigned an attorney to represent Dr. D. Discovery in the case began.
The plaintiff’s own medical expert testified in a deposition that there was no way for the heart attack to have been prevented and that the treatment would have been the same either way. But Dr. D could not find a record of the phone calls with the patient, and he had not noted his conversation the patient in their medical records.
Dr. D held a policy for $1 million, and his state had a fund that would kick in an additional $1 million. But the plaintiffs demanded $4 million to settle.
A month before trial, the plaintiff’s attorney sent a threatening letter to Dr. D’s attorney warning him that Dr. D was underinsured and suggesting that it would be in the physician’s best interests to settle.
“I want to stress to you that it is not my desire to harm your client’s reputation or to destroy his business,” wrote the plaintiff’s attorney. “However, now is the time to avoid consequences such as these by making a good faith effort to get this case resolved.”
The letter went on to note that the defense attorney should give Dr. D a copy of the letter so that everyone would be aware of the potential consequences of an award against Dr. D in excess of his limits of insurance coverage. The plaintiff’s attorney even suggested that Dr. D should retain personal counsel.
Dr. D’s defense attorney downplayed the letter and assured him that there was no reason to worry.
Meanwhile the case inched closer to trial.
The codefendant hospital settled with the plaintiff on the night before jury selection, leaving Dr. D in the uncomfortable position of being the only defendant in the case. At this point, Dr. D decided he would like to settle, and he sent his attorney an email telling him so. But the attorney instead referred him to an insurance company claims.
Just days before the trial was to start, Dr. D repeatedly told the claims representative assigned to his claim that he did not want to go to trial but rather wanted to settle. The representative told Dr. D that he had no choice in whether the action settled.
A committee at the insurance company had decided to proceed with the trial rather than settle.
The trial proved a painful debacle for Dr. D. His attorney’s idea of showing a “gotcha” video of the allegedly permanently injured plaintiff carrying a large, heavy box backfired when the jury was shown by the plaintiff that the box actually contained ice cream cones and weighed very little.
Prior to trial, the plaintiff offered to settle for $1 million. On the first day of trial, they lowered that amount to $750,000, yet the defense attorney did not settle the case, and it proceeded to a jury verdict. The jury awarded the plaintiff over $4 million — well in excess of Dr. D’s policy limits.
The Follow-up
Dr. D was horrified, but the insurance company claims representative said the insurer would promptly offer $2 million in available insurance coverage to settle the case post verdict. This did not happen. Instead, the insurer chose to appeal the verdict against Dr. D’s wishes.
Ultimately, Dr. D was forced to hire his own lawyer. He ultimately sued the insurance company for breach of contract and bad faith.
The insurance company eventually attempted to settle with the plaintiffs’ counsel, but the plaintiff refused to accept the available insurance coverage. The insurance carrier still has not posted the entire appeal bond. The case is still pending.
Protecting Yourself
The lesson from Dr. D’s experience: Understand that the insurance company is not your friend. It’s a business looking out for its own interests.
The plaintiff’s attorney was absolutely correct in suggesting that Dr. D retain his own attorney to represent his own interests. You should hire your own lawyer when:
- You disagree with your insurer on how to proceed in a case.
- You receive a demand that exceeds your available insurance coverage or for damages that may not be covered by your policy, such as punitive damages.
- Your insurance carrier attempts to deny insurance coverage for your claim or sends you a letter stating that it is “reserving its rights” not to cover or to limit coverage for your claim.
Retaining independent counsel protects your interests, not those of your insurance company.
Independent counsel can give you a second opinion on the strengths and weaknesses of your claim, help you prepare for your deposition, and attend court dates with you to ensure that you are completely protected.
Independent counsel can challenge your insurance company’s decision to deny or limit your insurance coverage and ensure that you receive all of the benefits to which you are entitled under your insurance policy. Some policies may include an independent lawyer to be paid for by your insurance carrier in case of a conflicts.
The most important takeaway? Your medical malpractice insurance carrier is not your friend, so act accordingly in times of conflict.
A version of this article first appeared on Medscape.com.
You’ve been sued for medical malpractice. If you are a physician in the United States, that is not an unlikely scenario.
An analysis by the American Medical Association shows that almost half of all physicians are sued by the time they reach 54. In some specialties, such as ob.gyn., one is almost guaranteed to be sued at some point.
But that’s what medical malpractice insurance is for, right? Your medical malpractice insurer will assign an attorney to take care of you and help you through this situation. Won’t they?
Maybe so, but the attorney and the claims representative your insurer assigns to your case may have a different idea about how to proceed than you do. Though the defense attorney assigned to you represents you, he or she gets paid by the insurance carrier.
This can create a conflict when your defense counsel and your insurance claims representative aim to take your case in a direction you don’t like.
Disagreements might include:
- Choice of expert witnesses
- Tactical decisions related to trial strategy
- Public relations considerations
- Admissions of liability
- Allocation of resources
To Settle or Not?
One of the most challenging — and common — disagreements is whether to settle the case.
Sometimes a malpractice insurer wants to settle the case against the defendant doctor’s wishes. Or the doctor wants to settle but is pushed into going to trial. In the following case, one doctor had to face the consequences of a decision he didn’t even make.
The Underlying Medical Malpractice Case
Dr. D was sued by a patient who had allegedly called Dr. D’s office six times in 2 days complaining of intermittent chest pain.
Dr. D had been swamped with patients and couldn’t squeeze this patient in for an office visit, but he did call back. The patient later claimed that during the call he told the doctor he was suffering from chest pain. The doctor recalled that the patient had complained of abdominal discomfort that began after he had exercised.
The physician wrote a prescription for an ECG at the local hospital and called to ensure that the patient could just walk in. The ECG was allegedly abnormal but was not read as representing an impending or current heart attack. Later that evening, however, the patient went to the emergency department of another hospital where it was confirmed that he had suffered a heart attack. The patient underwent cardiac catheterization and stent placement to address a blockage in his left anterior descending artery.
The patient subsequently sued Dr. D and the hospital where he had the original ECG. Dr. D contacted his medical malpractice insurance company. The insurance company assigned an attorney to represent Dr. D. Discovery in the case began.
The plaintiff’s own medical expert testified in a deposition that there was no way for the heart attack to have been prevented and that the treatment would have been the same either way. But Dr. D could not find a record of the phone calls with the patient, and he had not noted his conversation the patient in their medical records.
Dr. D held a policy for $1 million, and his state had a fund that would kick in an additional $1 million. But the plaintiffs demanded $4 million to settle.
A month before trial, the plaintiff’s attorney sent a threatening letter to Dr. D’s attorney warning him that Dr. D was underinsured and suggesting that it would be in the physician’s best interests to settle.
“I want to stress to you that it is not my desire to harm your client’s reputation or to destroy his business,” wrote the plaintiff’s attorney. “However, now is the time to avoid consequences such as these by making a good faith effort to get this case resolved.”
The letter went on to note that the defense attorney should give Dr. D a copy of the letter so that everyone would be aware of the potential consequences of an award against Dr. D in excess of his limits of insurance coverage. The plaintiff’s attorney even suggested that Dr. D should retain personal counsel.
Dr. D’s defense attorney downplayed the letter and assured him that there was no reason to worry.
Meanwhile the case inched closer to trial.
The codefendant hospital settled with the plaintiff on the night before jury selection, leaving Dr. D in the uncomfortable position of being the only defendant in the case. At this point, Dr. D decided he would like to settle, and he sent his attorney an email telling him so. But the attorney instead referred him to an insurance company claims.
Just days before the trial was to start, Dr. D repeatedly told the claims representative assigned to his claim that he did not want to go to trial but rather wanted to settle. The representative told Dr. D that he had no choice in whether the action settled.
A committee at the insurance company had decided to proceed with the trial rather than settle.
The trial proved a painful debacle for Dr. D. His attorney’s idea of showing a “gotcha” video of the allegedly permanently injured plaintiff carrying a large, heavy box backfired when the jury was shown by the plaintiff that the box actually contained ice cream cones and weighed very little.
Prior to trial, the plaintiff offered to settle for $1 million. On the first day of trial, they lowered that amount to $750,000, yet the defense attorney did not settle the case, and it proceeded to a jury verdict. The jury awarded the plaintiff over $4 million — well in excess of Dr. D’s policy limits.
The Follow-up
Dr. D was horrified, but the insurance company claims representative said the insurer would promptly offer $2 million in available insurance coverage to settle the case post verdict. This did not happen. Instead, the insurer chose to appeal the verdict against Dr. D’s wishes.
Ultimately, Dr. D was forced to hire his own lawyer. He ultimately sued the insurance company for breach of contract and bad faith.
The insurance company eventually attempted to settle with the plaintiffs’ counsel, but the plaintiff refused to accept the available insurance coverage. The insurance carrier still has not posted the entire appeal bond. The case is still pending.
Protecting Yourself
The lesson from Dr. D’s experience: Understand that the insurance company is not your friend. It’s a business looking out for its own interests.
The plaintiff’s attorney was absolutely correct in suggesting that Dr. D retain his own attorney to represent his own interests. You should hire your own lawyer when:
- You disagree with your insurer on how to proceed in a case.
- You receive a demand that exceeds your available insurance coverage or for damages that may not be covered by your policy, such as punitive damages.
- Your insurance carrier attempts to deny insurance coverage for your claim or sends you a letter stating that it is “reserving its rights” not to cover or to limit coverage for your claim.
Retaining independent counsel protects your interests, not those of your insurance company.
Independent counsel can give you a second opinion on the strengths and weaknesses of your claim, help you prepare for your deposition, and attend court dates with you to ensure that you are completely protected.
Independent counsel can challenge your insurance company’s decision to deny or limit your insurance coverage and ensure that you receive all of the benefits to which you are entitled under your insurance policy. Some policies may include an independent lawyer to be paid for by your insurance carrier in case of a conflicts.
The most important takeaway? Your medical malpractice insurance carrier is not your friend, so act accordingly in times of conflict.
A version of this article first appeared on Medscape.com.
Could a malpractice insurer drop you when you need it most?
You’ve practiced medicine for years without issues, but now you are facing a medical malpractice case. No worries – you’ve had professional liability insurance all this time, so surely there’s nothing to be concerned about. Undoubtedly, your medical malpractice insurer will cover the costs of defending you. Or will they? One case casts questions on just this issue.
Professional liability insurance
According to the American Medical Association, almost one in three physicians (31%) have had a medical malpractice lawsuit filed against them at some point in their careers. These numbers only increase the longer a physician practices; almost half of doctors 55 and over have been sued, compared with less than 10% of physicians under 40.
And while the majority of cases are dropped or dismissed, and the small minority of cases that do go to trial are mostly won by the defense, the cost of defending these cases can be extremely high. Physicians have medical malpractice insurance to defray these costs.
Malpractice insurance generally covers the costs of attorney fees, court costs, arbitration, compensatory damages, and settlements related to patient injury or death. Insurance sometimes, but not always, pays for the costs of malpractice lawsuits arising out of Health Insurance Portability and Accountability Act (HIPAA) violations.
But it is what the policies don’t pay for that should be of most interest to practitioners.
Exclusions to medical malpractice insurance
All professional liability insurance policies contain exclusions, and it is essential that you know what they are. While the exclusions may vary by policy, most malpractice insurance policies exclude claims stemming from:
- Reckless or intentional acts.
- Illegal/criminal activities, including theft.
- Misrepresentation, including dishonesty, fraudulent activity, falsification, and misrepresentation on forms.
- Practicing under the influence of alcohol or drugs.
- Altering patient or hospital records.
- Sexual misconduct.
- Cyber security issues, which typically require a separate cyber liability policy to protect against cyber attacks and data breaches affecting patient medical records.
It’s essential to know what your specific policy’s exclusions are, or you may be surprised to find that your malpractice liability insurance doesn’t cover you when you expected that it would. Such was the situation in a recently decided case.
Also essential is knowing what type of coverage your policy provides – claims-made or occurrence-based. Occurrence policies offer lifetime coverage for incidents that occurred during the policy period, no matter when the claim is made. Claims-made policies cover only incidents that occur and are reported within the policy’s time period (unless a “tail” policy is purchased to extend the reporting period).
The case
Dr. P was a neurologist specializing in pain management. He had a professional liability insurance policy with an insurance company. In 2012, Dr. P’s insurance agent saw a television news story about the physician being accused by the state medical board for overprescribing opioids, resulting in the deaths of 17 patients. The next day, the agent obtained copies of documents from the state medical board, including a summary suspension order and a notice of contemplated action.
The notice of contemplated action specified that Dr. P had deviated from the standard of care through injudicious prescribing, leading to approximately 17 patient deaths due to drug toxicity. Because the agent realized that lawsuits could be filed against Dr. P for the deaths, she sent the insurance company the paperwork from the medical board so the insurer would be aware of the potential claims.
However, when the insurer received the information, it did not investigate or seek more information as it was required to do. The insurer failed to get medical records, or specific patient names, and none of the 17 deaths were recorded in the insurance company’s claims system (a failure to follow company procedure). Instead, the insurance company decided to cancel Dr. P’s policy effective the following month.
The company sent Dr. P a cancellation letter advising him that his policy was being terminated due to “license suspension, nature of allegations, and practice profile,” and offered him a tail policy to purchase.
The insurance company did not advise Dr. P that he should ensure all potential claims were reported, including the 17 deaths, before his policy expired. The company also did not advise him that he had a claims-made policy and what that meant regarding future lawsuits that might be filed after his policy period expired.
A year later, Dr. P was sued in two wrongful death lawsuits by the families of two of the 17 opioid-related deaths. When he was served with the papers, he promptly notified the insurance company. The insurance company issued a denial letter, incorrectly asserting that the 17 drug-toxicity deaths that they were aware of did not qualify as claims under Dr. P’s policy.
After his insurance company failed to represent him, Dr. P divorced his wife of 35 years and filed for bankruptcy. The only creditors with claims were the two families who had sued him. The bankruptcy trustee filed a lawsuit against the insurance company on behalf of Dr. P for the insurer’s failure to defend and indemnify Dr. P against the wrongful death lawsuits. In 2017, the bankruptcy trustee settled the two wrongful death cases by paying the families a certain amount of cash and assigning the insurance bad faith lawsuit to them.
Court and jury decide
In 2020, the case against the insurance company ended up in court. By 2022, the court had decided some of the issues and left some for the jury to determine.
The court found that the insurance company had breached its obligation to defend and indemnify Dr. P, committed unfair insurance claims practices, and committed bad faith in failing to defend the physician. The court limited the compensation to the amount of cash that had been paid to settle the two cases, and any fees and costs that Dr. P had incurred defending himself.
However, this still left the jury to decide whether the insurance company had committed bad faith in failing to indemnify (secure a person against legal liability for his/her actions) Dr. P, whether it had violated the state’s Unfair Insurance Practices Act, and whether punitive damages should be levied against the insurer.
The jury trial ended in a stunning $52 million verdict against the insurance company after less than 2 hours of deliberation. The jury found that the insurance company had acted in bad faith and willfully violated the Unfair Insurances Practices Act.
While the jury ultimately decided against the insurance company and sent it a strong message with a large verdict, Dr. P’s career was still over. He had stopped practicing medicine, was bankrupt, and his personal life was in shambles. The litigation had taken about a decade. Sometimes a win isn’t a victory.
Protecting yourself
The best way to protect yourself from a situation in which your insurer will not defend you is to really know and understand your insurance policy. Is it occurrence-based or claims-made insurance? What exactly does it cover? How are claims supposed to be made? Your professional liability insurance can be extremely important if you get sued, so it is equally important to choose it carefully and to really understand what is being covered.
Other ways to protect yourself:
- Know your agent. Your agent is key to explaining your policy as well as helping in the event that you need to make a claim. Dr. P’s agent saw a news story about him on television, which is why she submitted the information to the insurance company. Dr. P would have been far better off calling the agent directly when he was being investigated by the state medical board to explain the situation and seek advice.
- Be aware of exclusions to your policy. Many – such as criminal acts, reckless or intentional acts, or practicing under the influence – were mentioned earlier in this article. Some may be unexpected, so it is extremely important that you understand the specific exclusions to your particular policy.
- Be aware of your state law, and how changes might affect you. For example, in states that have outlawed or criminalized abortion, an insurance company would probably not have to represent a policy holder who was sued for malpractice involving an abortion. On the other hand, be aware that not treating a patient who needs life-saving care because you are afraid of running afoul of the law can also get you in trouble if the patient is harmed by not being treated. (For example, the Centers for Medicare & Medicaid Services is currently investigating two hospitals that failed to provide necessary stabilizing abortion care to a patient with an emergency medication condition resulting from a miscarriage.)
- Know how your policy defines ‘intentional’ acts (which are typically excluded from coverage). This is important. In some jurisdictions, the insured clinician has to merely intend to commit the acts in order for the claim to be excluded. In other jurisdictions, the insured doctor has to intend to cause the resulting damage. This can result in a very different outcome.
- The best thing doctors can do is to really understand what the policy covers and be prepared to make some noise if the company is not covering something that it should. Don’t be afraid to ask questions if you think your insurer is doing something wrong, and if the answers don’t satisfy you, consult an attorney.
The future
In the fall of 2022, at least partially in response to the Dobbs v. Jackson Women’s Health Organization decision regarding abortion, one professional liability company (Physician’s Insurance) launched criminal defense reimbursement coverage for physicians and hospitals to pay for defense costs incurred in responding to criminal allegations arising directly from patient care.
The add-on Criminal Defense Reimbursement Endorsement was made available in Washington State in January 2023, and will be offered in other states pending regulatory approval. It reimburses defense costs up to $250,000 when criminal actions have arisen from direct patient care.
In a press release announcing the new coverage, Physician’s Insurance CEO Bill Cotter explained the company’s reasoning in providing it: “The already challenging environment for physicians and hospitals has been made even more difficult as they now navigate the legal ramifications of increased criminal medical negligence claims as seen in the case of the Nashville nurse at the Vanderbilt University Medical Center, the potential for criminal state claims arising out of the U.S. Supreme Court decision in Dobbs v. Jackson Women’s Health Organization, and the subsequent state criminalization of healthcare practices that have long been the professionally accepted standard of care.”
Expect to see more insurance companies offering new coverage options for physicians in the future as they recognize that physicians may be facing more than just medical malpractice lawsuits arising out of patient care.
A version of this article first appeared on Medscape.com.
You’ve practiced medicine for years without issues, but now you are facing a medical malpractice case. No worries – you’ve had professional liability insurance all this time, so surely there’s nothing to be concerned about. Undoubtedly, your medical malpractice insurer will cover the costs of defending you. Or will they? One case casts questions on just this issue.
Professional liability insurance
According to the American Medical Association, almost one in three physicians (31%) have had a medical malpractice lawsuit filed against them at some point in their careers. These numbers only increase the longer a physician practices; almost half of doctors 55 and over have been sued, compared with less than 10% of physicians under 40.
And while the majority of cases are dropped or dismissed, and the small minority of cases that do go to trial are mostly won by the defense, the cost of defending these cases can be extremely high. Physicians have medical malpractice insurance to defray these costs.
Malpractice insurance generally covers the costs of attorney fees, court costs, arbitration, compensatory damages, and settlements related to patient injury or death. Insurance sometimes, but not always, pays for the costs of malpractice lawsuits arising out of Health Insurance Portability and Accountability Act (HIPAA) violations.
But it is what the policies don’t pay for that should be of most interest to practitioners.
Exclusions to medical malpractice insurance
All professional liability insurance policies contain exclusions, and it is essential that you know what they are. While the exclusions may vary by policy, most malpractice insurance policies exclude claims stemming from:
- Reckless or intentional acts.
- Illegal/criminal activities, including theft.
- Misrepresentation, including dishonesty, fraudulent activity, falsification, and misrepresentation on forms.
- Practicing under the influence of alcohol or drugs.
- Altering patient or hospital records.
- Sexual misconduct.
- Cyber security issues, which typically require a separate cyber liability policy to protect against cyber attacks and data breaches affecting patient medical records.
It’s essential to know what your specific policy’s exclusions are, or you may be surprised to find that your malpractice liability insurance doesn’t cover you when you expected that it would. Such was the situation in a recently decided case.
Also essential is knowing what type of coverage your policy provides – claims-made or occurrence-based. Occurrence policies offer lifetime coverage for incidents that occurred during the policy period, no matter when the claim is made. Claims-made policies cover only incidents that occur and are reported within the policy’s time period (unless a “tail” policy is purchased to extend the reporting period).
The case
Dr. P was a neurologist specializing in pain management. He had a professional liability insurance policy with an insurance company. In 2012, Dr. P’s insurance agent saw a television news story about the physician being accused by the state medical board for overprescribing opioids, resulting in the deaths of 17 patients. The next day, the agent obtained copies of documents from the state medical board, including a summary suspension order and a notice of contemplated action.
The notice of contemplated action specified that Dr. P had deviated from the standard of care through injudicious prescribing, leading to approximately 17 patient deaths due to drug toxicity. Because the agent realized that lawsuits could be filed against Dr. P for the deaths, she sent the insurance company the paperwork from the medical board so the insurer would be aware of the potential claims.
However, when the insurer received the information, it did not investigate or seek more information as it was required to do. The insurer failed to get medical records, or specific patient names, and none of the 17 deaths were recorded in the insurance company’s claims system (a failure to follow company procedure). Instead, the insurance company decided to cancel Dr. P’s policy effective the following month.
The company sent Dr. P a cancellation letter advising him that his policy was being terminated due to “license suspension, nature of allegations, and practice profile,” and offered him a tail policy to purchase.
The insurance company did not advise Dr. P that he should ensure all potential claims were reported, including the 17 deaths, before his policy expired. The company also did not advise him that he had a claims-made policy and what that meant regarding future lawsuits that might be filed after his policy period expired.
A year later, Dr. P was sued in two wrongful death lawsuits by the families of two of the 17 opioid-related deaths. When he was served with the papers, he promptly notified the insurance company. The insurance company issued a denial letter, incorrectly asserting that the 17 drug-toxicity deaths that they were aware of did not qualify as claims under Dr. P’s policy.
After his insurance company failed to represent him, Dr. P divorced his wife of 35 years and filed for bankruptcy. The only creditors with claims were the two families who had sued him. The bankruptcy trustee filed a lawsuit against the insurance company on behalf of Dr. P for the insurer’s failure to defend and indemnify Dr. P against the wrongful death lawsuits. In 2017, the bankruptcy trustee settled the two wrongful death cases by paying the families a certain amount of cash and assigning the insurance bad faith lawsuit to them.
Court and jury decide
In 2020, the case against the insurance company ended up in court. By 2022, the court had decided some of the issues and left some for the jury to determine.
The court found that the insurance company had breached its obligation to defend and indemnify Dr. P, committed unfair insurance claims practices, and committed bad faith in failing to defend the physician. The court limited the compensation to the amount of cash that had been paid to settle the two cases, and any fees and costs that Dr. P had incurred defending himself.
However, this still left the jury to decide whether the insurance company had committed bad faith in failing to indemnify (secure a person against legal liability for his/her actions) Dr. P, whether it had violated the state’s Unfair Insurance Practices Act, and whether punitive damages should be levied against the insurer.
The jury trial ended in a stunning $52 million verdict against the insurance company after less than 2 hours of deliberation. The jury found that the insurance company had acted in bad faith and willfully violated the Unfair Insurances Practices Act.
While the jury ultimately decided against the insurance company and sent it a strong message with a large verdict, Dr. P’s career was still over. He had stopped practicing medicine, was bankrupt, and his personal life was in shambles. The litigation had taken about a decade. Sometimes a win isn’t a victory.
Protecting yourself
The best way to protect yourself from a situation in which your insurer will not defend you is to really know and understand your insurance policy. Is it occurrence-based or claims-made insurance? What exactly does it cover? How are claims supposed to be made? Your professional liability insurance can be extremely important if you get sued, so it is equally important to choose it carefully and to really understand what is being covered.
Other ways to protect yourself:
- Know your agent. Your agent is key to explaining your policy as well as helping in the event that you need to make a claim. Dr. P’s agent saw a news story about him on television, which is why she submitted the information to the insurance company. Dr. P would have been far better off calling the agent directly when he was being investigated by the state medical board to explain the situation and seek advice.
- Be aware of exclusions to your policy. Many – such as criminal acts, reckless or intentional acts, or practicing under the influence – were mentioned earlier in this article. Some may be unexpected, so it is extremely important that you understand the specific exclusions to your particular policy.
- Be aware of your state law, and how changes might affect you. For example, in states that have outlawed or criminalized abortion, an insurance company would probably not have to represent a policy holder who was sued for malpractice involving an abortion. On the other hand, be aware that not treating a patient who needs life-saving care because you are afraid of running afoul of the law can also get you in trouble if the patient is harmed by not being treated. (For example, the Centers for Medicare & Medicaid Services is currently investigating two hospitals that failed to provide necessary stabilizing abortion care to a patient with an emergency medication condition resulting from a miscarriage.)
- Know how your policy defines ‘intentional’ acts (which are typically excluded from coverage). This is important. In some jurisdictions, the insured clinician has to merely intend to commit the acts in order for the claim to be excluded. In other jurisdictions, the insured doctor has to intend to cause the resulting damage. This can result in a very different outcome.
- The best thing doctors can do is to really understand what the policy covers and be prepared to make some noise if the company is not covering something that it should. Don’t be afraid to ask questions if you think your insurer is doing something wrong, and if the answers don’t satisfy you, consult an attorney.
The future
In the fall of 2022, at least partially in response to the Dobbs v. Jackson Women’s Health Organization decision regarding abortion, one professional liability company (Physician’s Insurance) launched criminal defense reimbursement coverage for physicians and hospitals to pay for defense costs incurred in responding to criminal allegations arising directly from patient care.
The add-on Criminal Defense Reimbursement Endorsement was made available in Washington State in January 2023, and will be offered in other states pending regulatory approval. It reimburses defense costs up to $250,000 when criminal actions have arisen from direct patient care.
In a press release announcing the new coverage, Physician’s Insurance CEO Bill Cotter explained the company’s reasoning in providing it: “The already challenging environment for physicians and hospitals has been made even more difficult as they now navigate the legal ramifications of increased criminal medical negligence claims as seen in the case of the Nashville nurse at the Vanderbilt University Medical Center, the potential for criminal state claims arising out of the U.S. Supreme Court decision in Dobbs v. Jackson Women’s Health Organization, and the subsequent state criminalization of healthcare practices that have long been the professionally accepted standard of care.”
Expect to see more insurance companies offering new coverage options for physicians in the future as they recognize that physicians may be facing more than just medical malpractice lawsuits arising out of patient care.
A version of this article first appeared on Medscape.com.
You’ve practiced medicine for years without issues, but now you are facing a medical malpractice case. No worries – you’ve had professional liability insurance all this time, so surely there’s nothing to be concerned about. Undoubtedly, your medical malpractice insurer will cover the costs of defending you. Or will they? One case casts questions on just this issue.
Professional liability insurance
According to the American Medical Association, almost one in three physicians (31%) have had a medical malpractice lawsuit filed against them at some point in their careers. These numbers only increase the longer a physician practices; almost half of doctors 55 and over have been sued, compared with less than 10% of physicians under 40.
And while the majority of cases are dropped or dismissed, and the small minority of cases that do go to trial are mostly won by the defense, the cost of defending these cases can be extremely high. Physicians have medical malpractice insurance to defray these costs.
Malpractice insurance generally covers the costs of attorney fees, court costs, arbitration, compensatory damages, and settlements related to patient injury or death. Insurance sometimes, but not always, pays for the costs of malpractice lawsuits arising out of Health Insurance Portability and Accountability Act (HIPAA) violations.
But it is what the policies don’t pay for that should be of most interest to practitioners.
Exclusions to medical malpractice insurance
All professional liability insurance policies contain exclusions, and it is essential that you know what they are. While the exclusions may vary by policy, most malpractice insurance policies exclude claims stemming from:
- Reckless or intentional acts.
- Illegal/criminal activities, including theft.
- Misrepresentation, including dishonesty, fraudulent activity, falsification, and misrepresentation on forms.
- Practicing under the influence of alcohol or drugs.
- Altering patient or hospital records.
- Sexual misconduct.
- Cyber security issues, which typically require a separate cyber liability policy to protect against cyber attacks and data breaches affecting patient medical records.
It’s essential to know what your specific policy’s exclusions are, or you may be surprised to find that your malpractice liability insurance doesn’t cover you when you expected that it would. Such was the situation in a recently decided case.
Also essential is knowing what type of coverage your policy provides – claims-made or occurrence-based. Occurrence policies offer lifetime coverage for incidents that occurred during the policy period, no matter when the claim is made. Claims-made policies cover only incidents that occur and are reported within the policy’s time period (unless a “tail” policy is purchased to extend the reporting period).
The case
Dr. P was a neurologist specializing in pain management. He had a professional liability insurance policy with an insurance company. In 2012, Dr. P’s insurance agent saw a television news story about the physician being accused by the state medical board for overprescribing opioids, resulting in the deaths of 17 patients. The next day, the agent obtained copies of documents from the state medical board, including a summary suspension order and a notice of contemplated action.
The notice of contemplated action specified that Dr. P had deviated from the standard of care through injudicious prescribing, leading to approximately 17 patient deaths due to drug toxicity. Because the agent realized that lawsuits could be filed against Dr. P for the deaths, she sent the insurance company the paperwork from the medical board so the insurer would be aware of the potential claims.
However, when the insurer received the information, it did not investigate or seek more information as it was required to do. The insurer failed to get medical records, or specific patient names, and none of the 17 deaths were recorded in the insurance company’s claims system (a failure to follow company procedure). Instead, the insurance company decided to cancel Dr. P’s policy effective the following month.
The company sent Dr. P a cancellation letter advising him that his policy was being terminated due to “license suspension, nature of allegations, and practice profile,” and offered him a tail policy to purchase.
The insurance company did not advise Dr. P that he should ensure all potential claims were reported, including the 17 deaths, before his policy expired. The company also did not advise him that he had a claims-made policy and what that meant regarding future lawsuits that might be filed after his policy period expired.
A year later, Dr. P was sued in two wrongful death lawsuits by the families of two of the 17 opioid-related deaths. When he was served with the papers, he promptly notified the insurance company. The insurance company issued a denial letter, incorrectly asserting that the 17 drug-toxicity deaths that they were aware of did not qualify as claims under Dr. P’s policy.
After his insurance company failed to represent him, Dr. P divorced his wife of 35 years and filed for bankruptcy. The only creditors with claims were the two families who had sued him. The bankruptcy trustee filed a lawsuit against the insurance company on behalf of Dr. P for the insurer’s failure to defend and indemnify Dr. P against the wrongful death lawsuits. In 2017, the bankruptcy trustee settled the two wrongful death cases by paying the families a certain amount of cash and assigning the insurance bad faith lawsuit to them.
Court and jury decide
In 2020, the case against the insurance company ended up in court. By 2022, the court had decided some of the issues and left some for the jury to determine.
The court found that the insurance company had breached its obligation to defend and indemnify Dr. P, committed unfair insurance claims practices, and committed bad faith in failing to defend the physician. The court limited the compensation to the amount of cash that had been paid to settle the two cases, and any fees and costs that Dr. P had incurred defending himself.
However, this still left the jury to decide whether the insurance company had committed bad faith in failing to indemnify (secure a person against legal liability for his/her actions) Dr. P, whether it had violated the state’s Unfair Insurance Practices Act, and whether punitive damages should be levied against the insurer.
The jury trial ended in a stunning $52 million verdict against the insurance company after less than 2 hours of deliberation. The jury found that the insurance company had acted in bad faith and willfully violated the Unfair Insurances Practices Act.
While the jury ultimately decided against the insurance company and sent it a strong message with a large verdict, Dr. P’s career was still over. He had stopped practicing medicine, was bankrupt, and his personal life was in shambles. The litigation had taken about a decade. Sometimes a win isn’t a victory.
Protecting yourself
The best way to protect yourself from a situation in which your insurer will not defend you is to really know and understand your insurance policy. Is it occurrence-based or claims-made insurance? What exactly does it cover? How are claims supposed to be made? Your professional liability insurance can be extremely important if you get sued, so it is equally important to choose it carefully and to really understand what is being covered.
Other ways to protect yourself:
- Know your agent. Your agent is key to explaining your policy as well as helping in the event that you need to make a claim. Dr. P’s agent saw a news story about him on television, which is why she submitted the information to the insurance company. Dr. P would have been far better off calling the agent directly when he was being investigated by the state medical board to explain the situation and seek advice.
- Be aware of exclusions to your policy. Many – such as criminal acts, reckless or intentional acts, or practicing under the influence – were mentioned earlier in this article. Some may be unexpected, so it is extremely important that you understand the specific exclusions to your particular policy.
- Be aware of your state law, and how changes might affect you. For example, in states that have outlawed or criminalized abortion, an insurance company would probably not have to represent a policy holder who was sued for malpractice involving an abortion. On the other hand, be aware that not treating a patient who needs life-saving care because you are afraid of running afoul of the law can also get you in trouble if the patient is harmed by not being treated. (For example, the Centers for Medicare & Medicaid Services is currently investigating two hospitals that failed to provide necessary stabilizing abortion care to a patient with an emergency medication condition resulting from a miscarriage.)
- Know how your policy defines ‘intentional’ acts (which are typically excluded from coverage). This is important. In some jurisdictions, the insured clinician has to merely intend to commit the acts in order for the claim to be excluded. In other jurisdictions, the insured doctor has to intend to cause the resulting damage. This can result in a very different outcome.
- The best thing doctors can do is to really understand what the policy covers and be prepared to make some noise if the company is not covering something that it should. Don’t be afraid to ask questions if you think your insurer is doing something wrong, and if the answers don’t satisfy you, consult an attorney.
The future
In the fall of 2022, at least partially in response to the Dobbs v. Jackson Women’s Health Organization decision regarding abortion, one professional liability company (Physician’s Insurance) launched criminal defense reimbursement coverage for physicians and hospitals to pay for defense costs incurred in responding to criminal allegations arising directly from patient care.
The add-on Criminal Defense Reimbursement Endorsement was made available in Washington State in January 2023, and will be offered in other states pending regulatory approval. It reimburses defense costs up to $250,000 when criminal actions have arisen from direct patient care.
In a press release announcing the new coverage, Physician’s Insurance CEO Bill Cotter explained the company’s reasoning in providing it: “The already challenging environment for physicians and hospitals has been made even more difficult as they now navigate the legal ramifications of increased criminal medical negligence claims as seen in the case of the Nashville nurse at the Vanderbilt University Medical Center, the potential for criminal state claims arising out of the U.S. Supreme Court decision in Dobbs v. Jackson Women’s Health Organization, and the subsequent state criminalization of healthcare practices that have long been the professionally accepted standard of care.”
Expect to see more insurance companies offering new coverage options for physicians in the future as they recognize that physicians may be facing more than just medical malpractice lawsuits arising out of patient care.
A version of this article first appeared on Medscape.com.