By Kathleen S. McGrath, Esq
In our dealings with defending physicians when they are involved in litigation, we are often asked what a physician should be looking for from his or her malpractice carrier. Generally, our reply is that these questions should be asked before an individual physician agrees to a certain insurance carrier to provide liability coverage.
This has been problematic over the past because of the lack of availability of insurance during the “medical malpractice crisis” of the late 1990s and early 2000s. However, we have now entered into a “softer commercial insurance market” and physicians should endeavor to be very selective about the medical malpractice carrier they choose.
In the past, most physicians looked for insurance coverage based on the bottom line – what is the cheapest coverage that I can get. The last 15 years have taught us the lesson that “You get what you pay for.” In the 1990s, companies were set up to write cut-rate insurance and physicians purchased this insurance by the droves. In the late 1990s, some of these carriers went into bankruptcy and the physicians were left with the Guaranty Fund for their defense.
Fortunately, we are now in a newer climate with more insurers writing in the state providing health care providers with more choice. Additionally, physicians have choices that go beyond the commercial insurance market. Many risk retention groups (RRGs) have been formed that can also address the physicians’ coverage needs. Unlike traditional commercial insurance, a RRG is a member-owned business association that is formed specifically for the purpose of pooling and sharing risk. All members of the RRG must be engaged in the same business and, thus, many RRGs have developed within medical specialty groups. A particular advantage to the formation of RRGs stems from the fact that each member participates in profits and, therefore, has a substantial incentive to engage in proactive risk management. With the members invested in the process, RRGs can have an edge over commercial insurance. So now is a good time to re-visit the question of what should a physician look for in placing his or her professional liability coverage. A commitment to manage risk and manage claims is a key factor in a physician’s choice for coverage. Implicit to this commitment are many initiatives including:
· Underwriting principles which require the insurers to know the individual applicant.
· A risk management program that partners with the health care provider to advance patient safety principles.
· Continuing education programs to offer assistance to health care providers.
· An aggressive claims program.
In the past, most physicians did not pay appropriate attention to the goals of risk management and the benefits of solid risk management programs. However, that climate, too, has changed. Health care providers in general are more enlightened regarding the benefits of the management of risk. To the extent that an insurance carrier assists the physician in the management of risk, the physician is receiving a value-added service from the carrier that cannot be underestimated. Therefore, it is important for a physician to inquire about the risk management program of a carrier. It is also important for the physician to have a better understanding of the patient safety programs that can substantially contribute to minimizing bad outcomes.
Continuing education programs play a very large role in raising the consciousness of the physician for better management of difficult situations. These programs afford an opportunity for exchange of ideas and a sharing of commonly occurring issues. Again, in the past, the attitude of most health care providers was simply that there wasn’t time to spend on risk management programs and patient safety initiatives. It is clear, today, that time must be made for these programs and this is time well spent. It should also be mentioned that the licensing authority for physicians requires that physicians have at least two hours of credit on risk management issues.
With respect to the claims program of the coverage provider, physicians should ask questions about the manner in which claims are handled.
· Does the carrier have a strong commitment to providing excellent attorneys for the physician?
· Does the claims provider make a commitment to providing quality expert services when needed?
· The physician should also ask the insurance provider what its attitude is toward alternate dispute resolution. The processes of mediation and arbitration have been very helpful in resolving difficult issues. For example, an arbitrator selected by both sides in a medical malpractice case can hear all of the evidence in a case and deliver a decision. The parties can agree to all of the terms of the arbitration. This process usually takes one day and is clearly much more cost effective than a jury trial which generally lasts at least one week.
In addition to the above, the following is a short list of questions that a physician should be asking his or her broker:
· What is the financial stability of the company?
· What is the AM Best rating for the company?
· What risk management opportunities are provided to the physician and his/her practice by the insurance carriers?
· What is the position of the carrier regarding the defense of claims?
· Does the carrier have a very well-trained and responsive claims staff?
· Does the carrier provide assistance and counseling to a physician through the difficulties of the lawsuit?
· Does the carrier provide coverage for a health care provider when a deposition is requested of the health care provider and the provider is not a defendant in the case?
When consulting with a broker regarding professional liability insurance, the inquiry does not begin and end with the cost of the insurance. Clearly, cost of the insurance is a very important factor, but the health care provider needs to know what the carrier’s position is with respect to the handling of claims.
Physicians need to be aware that the services of the insurance carrier are needed throughout the course of the physician’s practice. Clearly, these services are needed when a lawsuit is filed against a physician. At that time, it is imperative that the insurance carrier has an aggressive, experienced claims organization that is going to be able to use and retain the necessary resources to defend the physician through this very difficult process. However, the prevention initiatives are fundamental to the services that an insurance carrier can provide and these are of prime value to the physician.
Kathleen S. McGrath, Esq., is Chair of the Healthcare Practice Group of Marshall, Dennehey, Warner, Coleman & Goggin, in the firm’s King of Prussia office.