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Crash carts in hospitals and medical offices stand ready to assist doctors who need to deliver care, often in emergency situations. Carts may carry a mobile stock of IV supplies, scalpels, suction devices, trach tubes or defibrillators. So equipped, doctors and other health care professionals are poised to address everyday risks that surface on the front lines of patient care. Sometimes, despite best-laid treatment plans, unforeseen and unforeseeable medical complications still arise. To paraphrase and sanitize a popular car bumper sticker, “Stuff happens.”
'Black Swans'
Epistemologist Nassim Nicholas Taleb caught the attention of risk professionals in 2007 with the publication of his book, The Black Swan. In it, Taleb argues that rare and unpredictable events challenge human understanding. Further, he maintains that people gravitate retrospectively toward simplistic explanations of such events, often not learning from them. Hence, the phrase “black swans” entered risk management's lexicon.
Physicians also face black swans. These, however, occur not in the form of super storms, tornadoes or nuclear reactor meltdowns. Instead, they can beset doctors cloaked in the guise of medical malpractice lawsuits, loss of professional privileges and media exposes. Today's physicians navigate a perilous tort minefield. One wrong move or decision can expose them and their medical practices to explosive liabilities. Medical malpractice claims remain a threat to the financial viability of doctors, hospitals and medical practices. Due to inflation in medical and legal bills, claim costs are rising.
Caps on Damages
While some states have damage caps on recovery for general damages, i.e., pain and suffering, others have repealed those caps. For example, caps in Ohio, Georgia and Illinois have been ruled unconstitutional. Other states face legal challenges to existing caps. Further, caps on general damages often are of little help in high-value claims involving obstetrics and pediatrics, where the economic damages can be catastrophic.
In terms of claims against hospitals, a 2011 Zurich Insurance Company claim study revealed a slight rise in medical malpractice claim frequency, with severity trending up (about 6.3% per year from 2002 to 2008). Large-claim frequency continues to rise, mostly driven by claims in the $1 million to $5 million bracket.
Further choppy waters on the medical malpractice sea may loom. Health care reform may alter the liability landscape. Reimbursement cuts may hit hospital balance sheets. This, in turn, could trim staffing, leaving fewer dollars for patient safety and risk management. Further, the influx of millions of additional patients into the healthcare system, combined with a shortage of primary care physicians may increase medical errors, claims and lawsuits.
Five Steps
One safety net cushioning the impact of those physician liabilities is insurance, which often spells the difference between survival and insolvency for doctors. It is an asset. Like any asset, medical professionals should preserve and manage it by not jeopardizing it. One way to manage insurance assets is to avoid missteps that could negate insurance coverage, cloud the prospect of financial protection, and increase the doctor's own antacid consumption. Adroitly managing insurance as an asset through policy compliance and alertness at the buying stage will maximize the asset as a safety net, cushioning the impact of professional liability costs.
Here are five steps toward building a risk management “crash cart” to smoothly navigate the medical malpractice insurance claim process:
Step 1: Embrace Prompt Loss Reporting'
Insurance policies generally require prompt notice of a claim as a condition for coverage. If a patient, another doctor, attorney, hospital or anyone reports an adverse outcome, handle it immediately. Do NOT bury it on the desk. Send written notice to the insurer within 24 hours. Send it certified, Return Receipt Requested, to document that you reported the loss and when. Assign this task to an office manager and have clear, written protocols about how the medical practice handles reporting to the insurer, with time-limits.
Many insurance policies require that you notify the company “as soon as possible” or “as soon as practicable” after a loss or claim. The consequences of not giving prompt notice differ, depending on the contract wording and jurisdiction. Since the consequences may be serious, though, time is of the essence. Communications should be a two-way street. When you give a loss report, you should also get certain things. This leads to tip number two.
Step 2: Ask the Insurer for Four Things When Reporting Any Claim, Lawsuit or Incident
Let us address each of these in turn. Acknowledgement from the insurer imparts peace of mind to the doctor or hospital risk manager that a loss notice has reached its intended destination. The adjuster's (or attorney's) name and contact information is key if the insured has questions about reserves, case status, etc. The claim number is also handy. It helps the insurer and adjuster match the policyholder's letter, e-mail or phone call with the right case. Busy claim operations may have thousands or tens of thousands of claim files, either in hard copy or electronic/scanned format. A single adjuster might be struggling to manage a caseload of 100 to 200 claims. Matching the right incoming communication with the right claim file is a mundane but essential task needed to get anything done. Asking the insurer to keep policyholders informed helps to monitor the progress and status of any claim made against them. This will facilitate tool number three.'
Step 3: Stay Engaged in the Claim Process
Identify the insurance claim representative and any legal counsel who handle the claim or lawsuit. Check in regularly. Put it on a diary or reminder system. Give them the time and information needed to mount an effective defense of the medical actions in question. This might mean educating them on the intricacies and workings of the medical procedure or specialty. It might mean connecting them with key doctors elsewhere who can clarify a point of interest. It might mean digging out some hard-to-locate records or documents that are key, or required by the litigation process. It may be suggesting a medical school faculty member who could be an expert or consulting resource for the defense team. Maybe the doctor or hospital representative knows of published, peer-reviewed studies that bolster the actions taken (or not taken) in treating a patient. Successful claim defense is a team effort that merits ongoing engagement by the physician/policyholder in the claim process.'
Another dimension of engagement relates to communication from the medical professional to all key constituencies, hence the next tool.
Step 4: Adopt Thorough Loss Reporting
Confusion often arises about adverse medical event loss reporting under insurance policies, especially reporting incidents. Typically, this confusion surrounds adverse events and occurrences that fall short of a formal claim or lawsuit. Some troublesome matters may simmer but have not (yet) triggered a claim, lawsuit or monetary demand. Should you report these? Here, there is no substitute for a close reading of the insurance policy language. Focus in on the Conditions section of the policy, which governs the policyholder's loss reporting obligations.
Closely read the policy wording (because that will govern). Have a clear grasp of loss-reporting requirements before deciding to buy a policy. Lawsuits are clear-cut, as are letters of representation from attorneys. Other scenarios can be fuzzier. This could include a letter from a law firm requesting medical records or “rumor mill” feedback that a patient's family is upset and may hire a lawyer. Must all of these be reported to the medical malpractice insurer?
Err on the side of over-notifying any and all companies that issued policies that might conceivably respond to a claim. Do not jeopardize insurance coverage because someone in your practice or office did not notify the insurer of a matter when it was an incident. Avoid this scenario through thorough and prompt loss reporting.
Step 5: Make Claim Issues Explicit in the Insurance Placement and Renewal Process
Price, premium and getting the lowest quote often are the cornerstones of the medical malpractice insurance placement process. That is understandable. The coverage is expensive and a huge chunk of a doctor's or medical practice's annual operating budget. It is easy, however, to overlook claim aspects of the insurance relationship. That is a prescription for headaches. Physicians and medical practices may buy or renew coverage with little discussion of claims. That is a mistake, the full contours of which may only be apparent years later when a claim arises.'
Some doctors may have strong feelings about using a particular attorney or law firm to defend them. Others may want a specific adjuster to handle any claims. These are aspects of claims management which can be and should be discussed at the insurance placement phase. Tip: Include claim issues as part of an insurance renewal checklist. Enlist the help of your insurance agent or broker here. Caveat: This does not mean the insured will always get what it wants. However, there is no harm is asking, and there is a better chance of getting it at the shopping phase than at the “lawsuit-was-just-filed” stage.
Conclusion
Unfortunately, bad things happen to good doctors and hospitals. Effective claim defense is a team effort, with vital roles played by the insurer, the medical professional and staff and ' in the case of litigation ' the defense attorney. While physicians can expect difficulties from torts and courts, by using sound management strategies, they can adroitly equip their own risk “crash cart” to use in navigating the legal landscape.'
Kevin M. Quinley, CPCU, ARM, is Principal of Quinley Risk Associates LLC, a risk management consulting firm. He is a member of this newsletter's Board of Editors. He can be reached at [email protected].
'
Crash carts in hospitals and medical offices stand ready to assist doctors who need to deliver care, often in emergency situations. Carts may carry a mobile stock of IV supplies, scalpels, suction devices, trach tubes or defibrillators. So equipped, doctors and other health care professionals are poised to address everyday risks that surface on the front lines of patient care. Sometimes, despite best-laid treatment plans, unforeseen and unforeseeable medical complications still arise. To paraphrase and sanitize a popular car bumper sticker, “Stuff happens.”
'Black Swans'
Epistemologist Nassim Nicholas Taleb caught the attention of risk professionals in 2007 with the publication of his book, The Black Swan. In it, Taleb argues that rare and unpredictable events challenge human understanding. Further, he maintains that people gravitate retrospectively toward simplistic explanations of such events, often not learning from them. Hence, the phrase “black swans” entered risk management's lexicon.
Physicians also face black swans. These, however, occur not in the form of super storms, tornadoes or nuclear reactor meltdowns. Instead, they can beset doctors cloaked in the guise of medical malpractice lawsuits, loss of professional privileges and media exposes. Today's physicians navigate a perilous tort minefield. One wrong move or decision can expose them and their medical practices to explosive liabilities. Medical malpractice claims remain a threat to the financial viability of doctors, hospitals and medical practices. Due to inflation in medical and legal bills, claim costs are rising.
Caps on Damages
While some states have damage caps on recovery for general damages, i.e., pain and suffering, others have repealed those caps. For example, caps in Ohio, Georgia and Illinois have been ruled unconstitutional. Other states face legal challenges to existing caps. Further, caps on general damages often are of little help in high-value claims involving obstetrics and pediatrics, where the economic damages can be catastrophic.
In terms of claims against hospitals, a 2011 Zurich Insurance Company claim study revealed a slight rise in medical malpractice claim frequency, with severity trending up (about 6.3% per year from 2002 to 2008). Large-claim frequency continues to rise, mostly driven by claims in the $1 million to $5 million bracket.
Further choppy waters on the medical malpractice sea may loom. Health care reform may alter the liability landscape. Reimbursement cuts may hit hospital balance sheets. This, in turn, could trim staffing, leaving fewer dollars for patient safety and risk management. Further, the influx of millions of additional patients into the healthcare system, combined with a shortage of primary care physicians may increase medical errors, claims and lawsuits.
Five Steps
One safety net cushioning the impact of those physician liabilities is insurance, which often spells the difference between survival and insolvency for doctors. It is an asset. Like any asset, medical professionals should preserve and manage it by not jeopardizing it. One way to manage insurance assets is to avoid missteps that could negate insurance coverage, cloud the prospect of financial protection, and increase the doctor's own antacid consumption. Adroitly managing insurance as an asset through policy compliance and alertness at the buying stage will maximize the asset as a safety net, cushioning the impact of professional liability costs.
Here are five steps toward building a risk management “crash cart” to smoothly navigate the medical malpractice insurance claim process:
Step 1: Embrace Prompt Loss Reporting'
Insurance policies generally require prompt notice of a claim as a condition for coverage. If a patient, another doctor, attorney, hospital or anyone reports an adverse outcome, handle it immediately. Do NOT bury it on the desk. Send written notice to the insurer within 24 hours. Send it certified, Return Receipt Requested, to document that you reported the loss and when. Assign this task to an office manager and have clear, written protocols about how the medical practice handles reporting to the insurer, with time-limits.
Many insurance policies require that you notify the company “as soon as possible” or “as soon as practicable” after a loss or claim. The consequences of not giving prompt notice differ, depending on the contract wording and jurisdiction. Since the consequences may be serious, though, time is of the essence. Communications should be a two-way street. When you give a loss report, you should also get certain things. This leads to tip number two.
Step 2: Ask the Insurer for Four Things When Reporting Any Claim, Lawsuit or Incident
Let us address each of these in turn. Acknowledgement from the insurer imparts peace of mind to the doctor or hospital risk manager that a loss notice has reached its intended destination. The adjuster's (or attorney's) name and contact information is key if the insured has questions about reserves, case status, etc. The claim number is also handy. It helps the insurer and adjuster match the policyholder's letter, e-mail or phone call with the right case. Busy claim operations may have thousands or tens of thousands of claim files, either in hard copy or electronic/scanned format. A single adjuster might be struggling to manage a caseload of 100 to 200 claims. Matching the right incoming communication with the right claim file is a mundane but essential task needed to get anything done. Asking the insurer to keep policyholders informed helps to monitor the progress and status of any claim made against them. This will facilitate tool number three.'
Step 3: Stay Engaged in the Claim Process
Identify the insurance claim representative and any legal counsel who handle the claim or lawsuit. Check in regularly. Put it on a diary or reminder system. Give them the time and information needed to mount an effective defense of the medical actions in question. This might mean educating them on the intricacies and workings of the medical procedure or specialty. It might mean connecting them with key doctors elsewhere who can clarify a point of interest. It might mean digging out some hard-to-locate records or documents that are key, or required by the litigation process. It may be suggesting a medical school faculty member who could be an expert or consulting resource for the defense team. Maybe the doctor or hospital representative knows of published, peer-reviewed studies that bolster the actions taken (or not taken) in treating a patient. Successful claim defense is a team effort that merits ongoing engagement by the physician/policyholder in the claim process.'
Another dimension of engagement relates to communication from the medical professional to all key constituencies, hence the next tool.
Step 4: Adopt Thorough Loss Reporting
Confusion often arises about adverse medical event loss reporting under insurance policies, especially reporting incidents. Typically, this confusion surrounds adverse events and occurrences that fall short of a formal claim or lawsuit. Some troublesome matters may simmer but have not (yet) triggered a claim, lawsuit or monetary demand. Should you report these? Here, there is no substitute for a close reading of the insurance policy language. Focus in on the Conditions section of the policy, which governs the policyholder's loss reporting obligations.
Closely read the policy wording (because that will govern). Have a clear grasp of loss-reporting requirements before deciding to buy a policy. Lawsuits are clear-cut, as are letters of representation from attorneys. Other scenarios can be fuzzier. This could include a letter from a law firm requesting medical records or “rumor mill” feedback that a patient's family is upset and may hire a lawyer. Must all of these be reported to the medical malpractice insurer?
Err on the side of over-notifying any and all companies that issued policies that might conceivably respond to a claim. Do not jeopardize insurance coverage because someone in your practice or office did not notify the insurer of a matter when it was an incident. Avoid this scenario through thorough and prompt loss reporting.
Step 5: Make Claim Issues Explicit in the Insurance Placement and Renewal Process
Price, premium and getting the lowest quote often are the cornerstones of the medical malpractice insurance placement process. That is understandable. The coverage is expensive and a huge chunk of a doctor's or medical practice's annual operating budget. It is easy, however, to overlook claim aspects of the insurance relationship. That is a prescription for headaches. Physicians and medical practices may buy or renew coverage with little discussion of claims. That is a mistake, the full contours of which may only be apparent years later when a claim arises.'
Some doctors may have strong feelings about using a particular attorney or law firm to defend them. Others may want a specific adjuster to handle any claims. These are aspects of claims management which can be and should be discussed at the insurance placement phase. Tip: Include claim issues as part of an insurance renewal checklist. Enlist the help of your insurance agent or broker here. Caveat: This does not mean the insured will always get what it wants. However, there is no harm is asking, and there is a better chance of getting it at the shopping phase than at the “lawsuit-was-just-filed” stage.
Conclusion
Unfortunately, bad things happen to good doctors and hospitals. Effective claim defense is a team effort, with vital roles played by the insurer, the medical professional and staff and ' in the case of litigation ' the defense attorney. While physicians can expect difficulties from torts and courts, by using sound management strategies, they can adroitly equip their own risk “crash cart” to use in navigating the legal landscape.'
Kevin M. Quinley, CPCU, ARM, is Principal of Quinley Risk Associates LLC, a risk management consulting firm. He is a member of this newsletter's Board of Editors. He can be reached at [email protected].
'
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