Insurance malpractice

All practitioners need liability insurance coverage specific for the specialty and role in which they are practicing. It is absolutely critical that applicants for medical liability insurance be completely honest in informing the insurer what duties and procedures they perform. Failure to do so, either from carelessness or from a foolishly misguided desire to reduce the resulting premium, may well result in retrospective denial of insurance coverage in the event of an untoward outcome from an activity the insurer did not know the insured engaged in.


Proof of adequate insurance coverage is usually required to secure or renew privileges to practice at a health care facility. The facility may specify certain minimum policy limits in an attempt to limit its own liability exposure. It is difficult to suggest specific dollar amounts for policy limits because the details of practice vary so much among situations and locations. The malpractice crisis of the 1980's eased significantly in the early 1990s for anesthesia professionals, largely because of the decrease in number and severity of malpractice claims resulting from anesthesia catastrophes as anesthesia care in the United States became safer.


The exact analysis of this phenomenon can be debated, but it is a simple fact that malpractice insurance risk ratings have been decreased and premiums for anesthesia professionals have not been increased at the same rate as for other specialties over the past 15 years and, in many cases, have actually decreased. Therefore, anesthesia professionals must be absolutely certain what they are buying when they apply for malpractice insurance. Even though anesthesiologists have not recently suffered a great number of very large malpractice payments or jury verdicts, in specific parts of the United States known for a pattern of exorbitant settlements and jury verdicts, liability coverage limits of $2 million to $5 million or even greater may be prudent. An additional feature in this regard is the potential to employ "umbrella" liability coverage above the limits of the base policy, as will be noted.


The fundamental mechanism of medical malpractice insurance changed significantly in the last 3 decades because of the need for insurance companies to have better ways to predict their losses i.e., amounts paid in settlements and judgments. Traditionally, medical liability insurance was sold on an "occurrence" basis, meaning that if the insurance policy was in force at the time of the occurrence of an incident resulting in a claim, whenever within the statute of limitations that claim might be filed, the practitioner would be covered. Occurrence insurance was somewhat more expensive than the alternative "claims made" policies, but was seen as worth it by some practitioners.


These policies created some open ended exposure for the insurer that sometimes led to unexpected large losses, even some large enough to threaten the existence of the insurance company. As a result, medical malpractice insurers have converted almost exclusively to claims made insurance, which covers claims that are filed while the insurance is in force. Premium rates for the first year a physician is in practice are relatively low because there is less likelihood of a claim coming in a majority of malpractice suits are filed 1 to 3 years after the event in question. The premiums usually increase yearly for the first 5 years and then the policy is considered "mature". The issue comes when the physician later, for whatever reason, must change insurance companies. If the physician simply discontinues the policy and a claim is filed the next year, there will be no insurance coverage.


Therefore, the physician must secure "tail coverage," sometimes for a minimum number of years, indefinitely to guarantee liability insurance protection for claims filed after the physician is no longer primarily covered by that insurance policy. It may be possible in some circumstances to purchase tail coverage from a different insurer than was involved with the primary policy, but by far the most common thing done is to simply extend the existing insurance coverage for the period of the tail. This very often yields a bill for the entire tail coverage premium, which can be quite sizable, potentially staggering a physician who simply wants to move to another state where his or her existing insurance company is not licensed to or refuses to do business.


Individual situations will vary widely but it is reasonable for anesthesiologists organized into a fiscal entity to consider this issue at the time of the inception of the group and record their policy decisions in writing, rather than facing the potentially difficult question of how to treat one individual later. Other strategies have occasionally been employed when insuring the tail period, including converting the previous policy to part time status for a period of years, and purchasing nose coverage from the new insurer. Whatever strategy is adopted, it is critical that the individual practitioner is absolutely certain though personal verification that he or she is thoroughly covered at the time of any transition. It is essential that the new arrival verify with confirmation in writing that malpractice liability insurance coverage is in force before there is any patient contact.


Medical malpractice insurers are becoming increasingly active in trying to prevent incidents that will lead to insurance claims. They often sponsor risk management seminars to teach practices and techniques to lessen the chances of liability claims and, in some cases, suggest specific practices, such as strict documented compliance with the "Standards for Basic Anesthetic Monitoring." Clearly, it is sound practice management strategy for practitioners to participate maximally in such programs. Likewise, some insurers make coverage conditional on the consistent implementation of certain strategies such as minimal monitoring, even stipulating that the practitioner will not be covered if it is found that the guidelines were being consciously ignored at the time of an untoward event. Again, it is obviously wise from the practice management standpoint to cooperate fully with such stipulation.


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