Medical Malpractice Insurance

This is liability insurance for physicians. As a matter of observation and over-simplification, doctors with the best bed-side manners generally get sued less frequently than those with holier-than-thou attitudes. While this insurance does not pay for poor manners, it does pay for acts of professional negligence which arises out of care and/or treatment of a patient.

The basic scenario is that a doctor treats a patient and the patient does not respond as expected. Keeping in mind that not all bad results are malpractice, the simple truth is that physicians do make mistakes and the patient suffers the consequences.

One of the problems which arises is that the physician does not purchase sufficient liability limits: the amount of the insurance coverage is inadequate to cover the exposure created by the malpractice. Tort reform has created artificial limits capping the physician’s exposure for non-economic claims [pain and suffering, loss of earning capacity, etc.], with no cap on economic damages [attendant care, future medical expenses, wage loss, etc.]. As of today, for example, Michigan has two damage caps, which are annually adjusted for inflation. The lower cap of $410,800 applies to all categories of injuries that do not meet the criteria of the higher cap of $733,500. The higher cap is intended to apply to, generally speaking, injuries resulting in paralysis, brain damage, or damage to the reproductive organs [the statutes should be consulted for the exact language].

Unfortunately, physicians do not have limits sufficient to meet these caps – and they should. And, the failure to have even these minimum caps results in verdicts in excess of the policy limits thereby exposing the physician’s personal assets, his “collectible estate,” to satisfy all amounts over the policy limits. Under certain circumstances, such as where the physician has advised his insurer to settle within the policy limits, the insurance company may be found to be in bad faith breach of the insurance policy with the physician.

This is an occurrence more common than one would like to believe, or at least a very unfortunate one, as some insurance companies take the position that their loss ratios are better by trying every case than by aggressively pursing settlements. And they do so in jurisdictions whose bad faith decisions lack teeth. So, the physician is well served, and well serves his patients who trust him, to be certain that his insurance limits meet, at a minimum, the higher cap stated in the statute. Instead, the physician buys limits of $200,000, or so, trying to save money on premiums, without consideration of his potential personal exposure or the additional damage he is causing his already injured patient. Many physicians confidently, even arrogantly, think their personal assets are immune from exposure to judgments in excess of his liability limits – and our advice to them is to “think again.” For every extremely competent financial planner or attorney who specializes in asset protection, there is another equally competent forensic accountant or collections attorney who has made a successful career of discovering hidden or “insulated” assets, and obtaining for the medical malpractice patient/victim his full recovery.

If you have questions concerning your malpractice policy, or concerns over how “your” insurance company is handling your claim, or whether your insurer-retained attorney is protecting your interests, please call or contact Barry M. Feldman. And, do so immediately.