Understanding Malpractice Liability and Insurance Coverage Options

by:
on December 21, 2018

Medical malpractice is a scary thing for a lot of physicians, and rightfully so—victims of medical malpractice were paid roughly $2.9 billion in 2017, meaning even one lawsuit has the potential to destroy a small practice.

Additionally, liability can vary depending on circumstances and location, so understanding exactly what you should do in every situation can be difficult.

Physicians who don’t fully understand their malpractice liability and fail to invest in the right level of medical professional liability insurance risk not only their practices, careers and reputations, but also those of their coworkers.

All hope is not lost, though.

Physicians can protect themselves from malpractice lawsuits by recognizing the most common errors that lead to claims and instituting policies and procedures to minimize the chance of making those errors, as well as understanding their malpractice insurance policies and investing in the appropriate level of coverage.

What Constitutes Medical Malpractice?

Before we can talk about the causes of these claims, we need to get a clear understanding of what constitutes medical malpractice, and the best way to do that is to go to the lawyers. According to the American Board of Professional Liability Attorneys:

“Medical malpractice occurs when a hospital, doctor or other health care professional, through a negligent act or omission, causes an injury to a patient. The negligence might be the result of errors in diagnosis, treatment, aftercare or health management.”

To be considered medical malpractice, three criteria must be met:

  1. A medical provider violated the “standard of care.” Basically, the standard of care refers to the acceptable medical treatment any reasonable medical professional would provide under similar circumstances. If a physician does not offer at least that level of care, they have likely violated the “standard of care” and acted negligently.
  2. A patient suffered an injury due to a medical provider’s negligence. Patients cannot bring malpractice claims just because a physician violates the “standard of care”—the patient also has to suffer some form of injury or illness as a direct result of that physician’s negligence.
  3. The patient’s injuries resulted in significant damages. Because medical malpractice lawsuits are so expensive, the expectation for malpractice claims is that damages must be substantial in order to make the case worth pursuing.

Keeping all that in mind, let’s move on to discuss the three most common causes of medical malpractice claims for general practitioners and how you can limit your risk for each.

Cause #1: Misdiagnosis

According to a large scale study of malpractice payouts in 2017 from Diederich Healthcare, allegations related to misdiagnosis and failure to diagnose accounted for the largest amount of payouts that year.

lawsuit payments fact

This isn’t all that surprising because diagnosis is something all medical providers do, regardless of factors such as specialty, location or practice model.


How to Reduce Your Risk

The big rule to go by when working to avoid misdiagnosis is over-communicate. You want to make sure you have standard procedures in place to ensure you’re doing things like:

  • Communicating with patients in a way that allows you to understand and record all of their symptoms and ensure your patient is fully informed throughout the process of diagnosis. Consider adopting shared decision-making as a way to make stronger diagnoses and better treatment plans.
  • Working closely with other teams—such as lab technicians and radiologists—to discuss test results and soundboard difficult diagnoses.
  • Identifying who’s responsible for communicating what. For example, knowing whose job it is to follow up with patients when abnormal test results are returned.

The goal here is to remove as many communication obstacles as possible so that you’re working with others to make the most accurate diagnoses possible every time.

Cause #2: Substandard Treatment

The next malpractice error for general physicians in Diederich’s survey was inadequate or substandard treatment.

lawsuit payment fact

Remember our first criterion for identifying medical malpractice in a legal sense? Where misdiagnosis is a specific way to violate the “standard of care,” substandard treatment refers to any action a physician takes that does not meet this standard.

It’s essentially a broader catch-all term for any and all treatment plans that fall short of what any reasonable medical professional would come up with in a similar situation.


How to Reduce Your Risk

Avoid patient dissatisfaction by clearly communicating treatment plans. Communication is almost as important here as it is with misdiagnosis prevention. If you’re talking your patients through the treatments you prescribe so that they understand your reasons and goals for treatment paths, patients are less likely to be dissatisfied with their treatments.

Stay current on training to provide the most up-to-date care. Another big way to protect yourself is to make sure you (and every health care provider in your practice, for that matter) stays current on certification requirements and participates in continuing medical education programs that teach the most up-to-date treatments for a range of diagnoses.


Cause #3: Prescription Errors

The third most paid malpractice error in the survey were those related to prescriptions and medications.

lawsuit payment fact

Determining liability for this error can be a bit tricky because medication is often handled by at least two different parties: the prescribing physician and the dispensing pharmacist. Still, the potential for providers to make mistakes with medication that lead to significant injuries, such as allergic reactions, dangerous drug interactions or even death, is nothing to ignore.


How to Reduce Your Risk

Double check everything for accuracy to reduce mistakes. For the most part, prescription errors are caused by simple, easily avoidable mistakes like miscalculations, typos or messy handwriting. To counter that, the biggest preventative you can employ are protocols that make double- and triple-checking your work requirements for every prescription.

You also want to make sure you’re never the only one to put eyes on your prescriptions; have your nurses go behind and verify your work to take full advantage of your team. Even something as simple as asking nurses to read orders back to you can catch potentially dangerous mistakes before they become a problem.


Understanding Your Malpractice Insurance Coverage

Generally speaking, there are two common types of medical malpractice insurance policies:

Claims-made policies
Occurrence-based policies
These policies cover physicians if the policy is in effect:
1. When the alleged malpractice occurred, and
2. When the claim was reported
These policies provide coverage for any incident that occurs while the policy is in place, regardless of when a claim is made.

To illustrate, let’s say a physician is insured with a claims-made policy from January 1, 2018 until December 31, 2018. If they commit an act of malpractice on March 1, 2018, and a claim is made about that act on September 1, 2018, the physician is covered because both dates fell within the year of coverage. However, if the act of malpractice occurred on September 1, 2018, but was not reported until February 1, 2019, the physician is not covered.

If that same physician held an occurrence-based policy covering January 1, 2018 through December 31, 2018, and the act of malpractice occurred on March 1, 2018 but wasn’t reported until February 1, 2019, the physician would still be covered.

Physicians can add nose policies and/or tail policies to claims-made policies that will extend the time frame for coverage; with tail policies extending the coverage into the future past the point when a policy expires, and nose policies extending coverage into the past before the start of the policy.

In addition to the type of policy, physicians must also be aware of the two options for coverage limits:

  1. Per-occurrence: The total amount your insurance provider will pay for any single claim.
  2. Aggregate: The total amount your insurance provider will pay over a period of time.

For example, if your policy has a $5,000,000 per-occurrence limit with a $8,000,000 aggregate annual coverage limit, that means the most your policy will pay for a single claim is $5,000,000, and it will not pay more than $8,000,000 in a year regardless of how many claims you have.

What does this mean for you? It means that you have options when it comes to selecting your medical professional liability insurance, but you need to understand the specifics of your specialty in order to make the most informed decision.

If you’re in a field with an above-average rate of malpractice claims (such as obstetrics), shell out for the policy that will provide more protection.

If malpractice is less of a concern for you, you may be fine to go with a less expensive policy. Either way, though, make sure you select an insurance provider you trust.

One More Thing: Work on Your Bedside Manner

One final thought to consider that can help prevent all malpractice claims is improving your bedside manner.

Many physicians tend to practice what has come to be known as defensive medicine—ordering every test, prescribing stronger medication, scheduling extra appointments—in an effort to avoid malpractice claims by covering every base, but studies have found that kind of care actually backfires by leading to more malpractice claims.

Instead, experts suggest working on improving your bedside manner. Doing everything you can to be approachable and make patients feel comfortable talking to you can make it easier for them to tell you about significant symptoms that will help you provide better treatment.

I know that sounds too simple to be true, but trust me: The biggest thing you can do to protect yourself from malpractice lawsuits is to focus on patient satisfaction.

NOTE: This article is intended to inform our readers about business-related concerns in the United States. It is in no way intended to provide legal advice or to endorse a specific course of action. For advice on your specific situation, consult your legal counsel.

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