by, Lexicon Legal
For medical professionals, the coronavirus pandemic has created a huge amount of uncertainty in almost all areas of practice. Time and experience have provided much insight into the clinical aspects of treating patients. Unfortunately, one of the biggest financial threats to medical practice remains to be seen: medical malpractice claims, which do not land in court for months – often years. It then takes years after filing to know the legal outcome of such a case. Professionals in the medical, legal, and insurance industries are predicting a wave of COVID-19 litigation in the coming years. This could create an unmanageable financial burden on an industry that is still reeling from its last medical malpractice crisis. Now is the time to honestly assess the situation and apply whatever lessons can be gleaned from the last insurance crisis in the medical industry.
THE TROUBLING HISTORY OF MEDICAL MALPRACTICE INSURANCE IN RECENT DECADES
The Journal of the American Medical Association recently published an in-depth analysis of medical malpractice coverage in recent decades. Trouble in the industry began as far back as the 1990s, when managed care became widespread and began to put enormous pressure on physicians to cut costs as much as possible. Many practitioners (especially in high-risk specialties, such as obstetrics) shifted insurance frequently in search of lower premiums. This change left physicians with coverage that was neither stable nor comprehensive. At the same time, actuarial projections had not adequately accounted for regulatory changes and high claims that reduced insurers’ returns on their investments. All of these changes caused a dramatic rise in malpractice policy premiums in the early 2000s. A “hard market” for insurance coverage developed in which high premiums were accompanied by stricter underwriting requirements and carriers’ unwillingness to negotiate terms of coverage. Following 9/11, the global insurance market faced even worse economic conditions, and the hard market for medical malpractice insurance hardened even further. Premiums paid by medical malpractice policyholders increased by 74 percent between 2001 and 2006.
The market has since stabilized somewhat. 2001 to 2006’s premiums decreased 21 percent by 2017, and the market even entered a short period of growth after that. But by 2019, the medical malpractice market was already showing signs of hardening once again as a result of frequent high-dollar losses. This is a troubling trend to see before any COVID data is available. 2020 and 2021 data will be critical to understanding the effect that the coronavirus pandemic has on malpractice claims, premium costs, and the overall market for medical malpractice liability insurance.
WHAT WE LEARNED FROM THE LAST MEDICAL MALPRACTICE CRISIS
As frustrating as these prior market trends have been for providers, there is some good news. More than one hospital system has been able to effectively mitigate its losses with early interventions by its risk management personnel. The University of Michigan Health System has even been able to forego costly supplemental insurance entirely due to the effectiveness of this model. The University now has a quick response system to address any unfavorable patient outcomes, and the focus of this system is on patient safety instead of legal defensibility. The quick response has enabled the health system to reduce the lag time in resolving claims, which in turn removes the lengthy uncertainty, which causes many carriers to increase premiums. The model has also reduced the overall cost to the system by mitigating high-dollar lawsuits. These large claims are the ones that usually require hospital systems to maintain supplemental coverage, and the University’s success in mitigating high dollar claims is what allowed them to forego supplemental coverage altogether. The early intervention model has proven successful in Michigan for nearly two decades.
So what can medical professionals learn from this? There is a lot to be said about early intervention. As any clinician knows, preventing problems leads to much better outcomes than trying to fix them after they have occurred. Risk management should be carefully considered from a proactive approach. It is, however, incredibly important to do so with the advice of legal professionals. Saying or doing the wrong thing can actually leave you more vulnerable to medical malpractice claims. Prevention must be established under careful protocols that will not expose you to greater liability.
And what can legal professionals learn from this? First, be sure you know what coverage is available to satisfy a medical malpractice claim. If the malpractice insurance market hardens in the wake of a flood of coronavirus claims – as it is likely to do – many practitioners could have unreliable coverage. It might shift between carriers or drop essential coverages. It is important to know these things before you invest time and money into a case – or tell your client that there is a realistic possibility of collecting a multimillion-dollar judgment. Second, medical malpractice litigators must stay current on all developments in COVID-19 immunity statutes. Many states are contemplating such laws under pressure from the overtaxed medical community. Some of these laws could be permanent limitations on medical malpractice liability, while others are likely to apply only on an emergency basis to medical treatment rendered for COVID-19. These changes could drastically alter the future of medical malpractice litigation across the United States.
LITIGATION SUPPORT FOR ALL PHASES OF MEDICAL MALPRACTICE CLAIMS
Medical malpractice is a fast-moving area of litigation. Practitioners must be prepared for the medical and legal developments in this space – developments that sometimes occur by the hour.
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Please note: This article contains the sole views and opinions of Lexicon Legal Content and does not reflect the views or opinions of Guidepoint Global, LLC (“Guidepoint”). Guidepoint is not a registered investment adviser and cannot transact business as an investment adviser or give investment advice. The information provided in this article is not intended to constitute investment advice, nor is it intended as an offer or solicitation of an offer or a recommendation to buy, hold or sell any security. Any use of this article without the express written consent of Guidepoint and Lexicon Legal Content is prohibited.
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