Medical malpractice claims have far-reaching financial, psychological, and social effects on patients
and healthcare providers at every level. The loss of key staff members and the negative publicity associated
with medical professional liability lawsuits can do significant damage to a hospital or medical clinic.
Current trends indicate malpractice claims have been growing in severity, making effective risk management plans and adequate medical professional liability insurance coverage vital to the long-term success and sustainability of any hospital or medical practice. Monetary desensitization and a national perspective shift towards social justice reform continues to soften jury sentiments and evoke sky-high verdicts. Medical inflation and the consolidation of healthcare are also drivers of outsized verdicts. Large corporate defendants have attractive deep pockets in the eyes of sympathetic juries. Batch claims, lawsuits in which plaintiffs bring multiple claims against one defendant based on the same behavior, also contribute to claim severity.1 Social media is a key factor in the prevalence of batch claims as the platforms make it easier to gather others with a similar experience into one batch claim. While claims of this kind were somewhat unusual in the past, they’re now a more frequent occurrence, and batch claims continue to be a primary concern for underwriters as the nature of such claims means the scope of the loss can more easily shoot up through an entire insurance tower.1
MEDICAL MALPRACTICE CLAIM SEVERITY TRENDS
Nationwide, the number of verdicts in excess of $25M has increased from only 4 in 2014 to 17 in 2018. Nearly all states have seen award increases, with 41 states reporting verdicts of more than $10M during the last 6 years. Overall, there has been a 55% increase in the cost of the average claim from 2000 to 2018. Data from the MPL Association Data Sharing Project shows that the 50 largest verdicts between 2001 and 2015 ranged from $15M to $20M. However, beginning in 2016, the average verdict severity rose to $23M.2 While it may seem that large verdicts paid out by companies with deep pockets and high insurance limits balance the scales of justice, in actuality, massive settlements or judgments increase hardship for many consumers and insureds. As loss ratios climb higher, insurance premiums generally rise because carriers charge prices today that are intended to cover the claims they’ll pay tomorrow. So, as insurance companies pay for massive awards, they balance the loss by narrowing coverage terms, expanding deductibles, and raising premiums until they achieve a profit or leave the line of business, which can impact the availability of liability coverage. All of these costs are ultimately borne by consumers and insureds who must find a way to pay for rate increases, bigger deductibles or retentions, and assume uninsured liability risks.
MEDICAL MALPRACTICE CLAIM FREQUENCY TRENDS
During the COVID-19 pandemic, the courts came to a standstill, which delayed filings and initially contributed to a decrease in claim frequency, which is now rebounding. Unfortunately, liability claims filed against physicians are not a rare event, but claim frequency can vary by certain factors, including age, specialty, and gender. A 2016 study from the American Medical Association (AMA) found that older physicians had a higher incidence of claims than their younger counterparts. This is not surprising given that older physicians have had more exposure to risk because they have been practicing for longer periods of time. While 8.2% of physicians under age 40 have been sued, almost 50% of physicians over the age of 54 have been.3
In addition to age, claim frequency also varies by gender. The AMA study found that female physicians were less likely to be sued than their male peers. Almost 40% of male physicians have been sued over the course of their careers, compared to 22.8% of women.3 Research also indicates that solo practitioners have a somewhat higher claim frequency than physicians in other practice types. Approximately 30% of physicians employed in hospitals and those who are part of multispecialty groups have been sued, compared to 40.4% of solo practitioners. Employed physicians also have a lower claim frequency than owners and independent contractors. 37% of both owners and independent contractors had a claim filed against them. In contrast, the share among employees was 30.1%.3
THE MOST COMMON TYPES OF MALPRACTICE CLAIMS
Malpractice claims can be filed against any type of treatment provider, from physicians and surgeons to dentists and psychiatrists. It comes as no surprise that claim incidence also varies significantly by specialty. General surgeons and obstetricians/gynecologists (OB/GYN) are the physicians most likely to be sued. On the other hand, psychiatrists and pediatricians are typically the least likely to see liability lawsuits.3 Some of the most common types of malpractice claims include surgical, diagnostic, childbirth, or medication errors.4 Negligent care, failure to perform screenings, to treat, or to adjust medications are common claim drivers. However one of the most prevalent claim drivers in today’s healthcare settings are accusations of sexual assault and molestation (SAM). There has been a dramatic increase in complaints related to abuse involving medical professionals in the last 5 years due in part to the Me Too Movement, greater public awareness, and changes in hospital culture. Location is also a growing factor in medical malpractice claims. Outpatient surgical procedures have been common in the U.S. for decades, but it’s increasingly routine for medical practitioners to perform various surgical procedures in their offices. While outpatient surgery centers have the equipment and safeguards in place to handle unexpected complications, practitioner office facilities often lack the same level of safeguards. Consequently, doctors may not be prepared to adequately deal with emergencies and find themselves at greater risk of a professional liability claim.4
In addition, the COVID-19 pandemic dramatically expanded the use of telehealth across the U.S. Even as the pandemic fades into the background, patients and practitioners alike are expected to continue embracing the virtual space. However, remote treatment may lead to more malpractice claims. In addition, the legal ramifications of telehealth malpractice claims may be especially complex. Depending on where the practitioner and the patient were physically located at the time of the appointment, jurisdictional questions can arise.4
Another impact of COVID-19 is a decrease in the quality and safety of residential care in nursing homes. Many facilities lack adequate staffing and are increasingly turning to healthcare staffing agencies to fill employee rosters. A staff member who isn’t an actual employee of the healthcare organization may not have the same sense of ownership for their role, which can increase the likelihood of errors, and subsequently, claims. As a result, the number of nursing home abuse and neglect malpractice cases is expected to increase.4 However, it’s important to note that the filing of a claim or lawsuit is not necessarily indicative of medical error. This is highlighted by the fact that 68% of claims closed in 2015 were dropped, dismissed, or withdrawn. Of the 7% of claims decided by a trial verdict, 88% percent were won by the defendant.3
Despite the concerns of “nuclear” jury verdicts, increased batch claims, a staffing crisis, and the uncertainty around telehealth, the idea that the malpractice system is broken may be exaggerated. Many studies illustrate that frivolous claims that do not involve errors often go unpaid. However, the cost to defend meritless claims points to a greater concern. The fees charged by defense firms and the contingency fees required by plaintiffs’ attorneys are a heavy financial burden shared by the country’s healthcare providers, patients, and insurance carriers.
HOW AGENTS CAN HELP
With claims trending upward in both frequency and severity, underwriters are asking tough questions about how policyholders are working to prevent or mitigate claims. Agents can help clients prepare for renewal by ensuring they are prepared to answer questions about: - SAM Prevention Policies & Procedures - Opioid Prescribing Policies & Procedures - Cyber Measures to Protect IT Systems - Workplace Violence Prevention Policies & Procedures - Current Employee Staffing Levels & Percentage of Agency Staffing Utilized - Risk Management Committees & Patient Safety Plans - Claim Reporting & Handling Procedures - Financial Sustainability & Planned Service Expansions or Reductions
The rise in medical professional liability claim severity negatively affects us all, but unless jurors’ perspectives change, batch claims decrease, and caps on noneconomic damages are protected, massive verdicts will continue to become more commonplace.1 Understanding the risks associated with each healthcare specialty can help agents set appropriate coverage expectations with clients and support a more complete dialogue with underwriting. It’s important that brokers be prepared for changes in terms, conditions, and pricing based on claim frequency and severity. Underwriters are busier than ever before, and providing an evidence-based narrative that gives a comprehensive view of an insured’s exposure and risk management plans can ensure that your wholesale broker has the key information needed to achieve a positive outcome. Contact your local CRC Group producer today to discuss how we can help your clients obtain the right medical professional liability coverage at the best possible price.
Georgeanna Montis has more than 15 years of insurance industry experience. She is Assistant Vice President of Allied Health & Clinical Research with Pro-Praxis Insurance.
Barbara Sinclair is a Senior Vice President and Underwriter with Pro-Praxis Insurance. She has more than 30 years of experience in the healthcare space.
ABOUT PRO-PRAXIS INSURANCE
Pro-Praxis Insurance is a full-service Managing General Agency and a program within CRC Group’s Starwind Specialty division, specializing in addressing the unique risks associated with the healthcare industry.
1. Behind the Rise in Large Outlier Medical Malpractice Verdicts, Physicians Practice, February 21, 2020. https://www.physicianspractice.com/view/behind-rise-large-outliermedical-malpractice-verdicts
2. Nuclear Verdicts Escalate, Inside Medical Liability, 2021. https://www.mplassociation.org/Web/Publications/Inside_Medical_Liability/Issues/2021/Q1/Articles/Nuclear_Verdicts_ Escalate_Verdicts.aspx
3. Policy Research Perspectives: Medical Liability Claim Frequency Among U.S. Physicians, American Medical Association, 2016. https://www.ama-assn.org/sites/ama-assn.org/ files/corp/media-browser/public/government/advocacy/policy-research-perspective-medical-liability-claim-frequency.pdf
4. What are the Trends in Medical Malpractice Litigation?, Gladstein Law Firm PLLC, August 15, 2021. https://gladsteinlawfirm.com/blog/what-are-the-trends-in-medical-malpractice-litigation/
5. Patients Who Accused UCLA Doctor of Sexual Abuse to Share $243.6-Million Settlement, Los Angeles Times, February 8, 2022. https://www.latimes.com/california/ story/2022-02-08/ucla-pays-243-milion-settlement-to-203-victims-of-gynecologist-heaps
6. Fact Sheet: Telehealth, American Hospital Association, 2022. https://www.aha.org/factsheet/telehealth