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Understanding Medical Malpractice Insurance – and How It Affects a Claim

Written by Berkowitz

medical malpractice

Injury Attorneys Helping File Medical Malpractice Claims in Connecticut

After an injury from a medical professional, you may consider filing a malpractice lawsuit.

One myth out there is that physicians pay for the costs of these lawsuits out of pocket, and thus a physician would be in financial ruin if one succeeded with a suit.

In reality, malpractice claims are sent through insurance companies – just like other types of injury cases. These insurance companies have liability coverage for the doctor, and the larger the settlement, the more insurance pays out – not the physician.

While a physician might not pay for your lawsuit directly, they do pay each year. In fact, some doctors will pay thousands per year in premiums for malpractice coverage – especially if they have a high-risk or specialty field that encounters multiple lawsuits.

What is Medical Malpractice Insurance?

Medical professional liability insurance, referred to as medical malpractice insurance, is a form of professional liability insurance. It protects physicians and licensed healthcare workers from any liability or lawsuits associated with their practice.

This insurance coverage is what compensates victims of medical malpractice, but it is much more complicated than your average homeowner’s insurance policy or even health insurance.

Physicians must choose between various policies, and some hospitals have similar coverage they extend to their physicians, while some physicians carry personal protection too.

Regardless, the type of policy, policy limits, and the levels of coverage available all play a role when determining how much a person can receive in a malpractice case.

What Does Malpractice Insurance Cover for Negligent Doctors?

When a physician is negligent, and the patient suffers an injury or death because of that negligence, their insurance will ultimately pick up the costs of the lawsuit.

Some practices that may have liability insurance coverage include:

The type of negligence these policies cover typically consists of any injury caused by error or oversight. However, some policies may have clauses that allow them to not pay on an injury case where the physician was drunk or under the influence of illegal substances at the time.

Common types of claims these policies might pay out on include:

  • Failure to Diagnose – When a competent doctor would have diagnosed the patient faster or come to a different diagnosis than the at-fault doctor, the patient may suffer injuries. Therefore, the physician was negligent for failing to diagnose on time or diagnose the proper condition.
  • Improper Treatment – When a physician treats a patient using a method or medication that other competent physicians would not use, and the patient is harmed, it is malpractice.
  • Failure to Warn of Risks – Physicians are required to tell their patients of any known risks that come from treatment, medication, or proposed treatment plan. Only then can a patient indeed consent to that plan. If the patient is not fully informed and suffers an injury, the physician is negligent because they breached their duty to receive informed consent.

How Malpractice Claim Settlements Work

Most malpractice claims will never see the inside of a courtroom. This is because these claims are negotiated outside of court between the physician, attorneys, and insurance companies. The goal of negotiations is to come to an agreement and settle and avoid the unpredictability of a courtroom.

While every medical malpractice case is unique, specific steps happen during the claim and settlement process.

The Negotiation Phase

The negotiation phase is an ongoing phase.

From the moment a demand letter is sent to up until the trial begins, both sides will sit and discuss numbers.

The amount of the settlement is negotiated between the plaintiff and defendant, and the number is based on damages.

Economic damages are those that are provable expenses paid for by the plaintiff. Economic damages might include future costs too if the patient is not going to make a full recovery or will require further treatments. There is no need to negotiate economic damages because they are easily proven.

Instead, most negotiations center around the non-economic damages. Non-economic damages do not have statements, receipts, or bills attached. Instead, they focus on a patient’s pain, suffering, loss of enjoyment of life, decreased quality of life, and how their injuries affect their loved ones.

Insurance companies and attorneys must negotiate and put a dollar value on these types of damages – which is not easy. Rarely does an insurance company agree pain and suffering are valuable, and a person’s opinion on “pain” is subjective. Therefore, most of the negotiations focus on what the victim suffers, how likely it is that they suffer and if they will continue to suffer. Then, both sides try to decide how much that suffrage is worth.

Receiving Physician Approval

Unlike other injury claims, the physician being accused of malpractice must approve the settlement.

Depending on the policy for the physician, the policy language might state that the physician must approve the settlement, while other times the insurance company has the final say. Some policies do not allow the physician to deny the settlement value either.

Because of the amount physicians pay for malpractice insurance, most policies have the physician approve the settlement – even if the insurance company and plaintiff have agreed.

State Reporting Databases Might Deter Physician Approval

One reason malpractice lawsuits are harder to settle than others are the databases that track these settlements. When an agreement is made, state reporting agencies monitor them, and there is no confidentiality. Therefore, it becomes public record when a physician settles their malpractice lawsuit and the amount they paid – which can affect their reputation.

Because of these consequences, some physicians are less apt to settle; even when they should.

Some physicians prefer to try out the trial, instead of risking higher premiums or being dropped by insurance for settling. Also, doctors refuse to look at their cases as malpractice, because many feel that they have done nothing wrong.

Court Approval

Once the physician, insurance company, and plaintiff all agree on a settlement, the next stage requires court approval. The judge decides if the compensation is adequate and in the best interest of the plaintiff. Once approved, the process moves forward.

Payment Distribution Process

Payments in malpractice cases involve multiple parties. Most likely medical liens from insurance companies and hospitals will request reimbursement from the settlement funds first. Then, a Connecticut malpractice attorney takes his or her cut based on the pre-negotiated rate with the client.

Finally, the patient receives their settlement.

Are Settlements Based on Insurance Coverage?

One catch is that the amount insurance companies pay is solely based on the maximum policy amount. Therefore, if a physician has a $10 million policy, and the settlement awarded is $15 million, the insurance company only pays $10 million.

What Happens When Settlements Exceed Insurance Coverage?

Just because a settlement exceeds insurance policy caps does not mean the victim cannot collect.

In the event the settlement award is higher than the physician’s coverage, the insurance would pay their portion, and the physician would be required to pay the rest.

If your malpractice injury lawyer knows the value will exceed a policy limit, he or she may assess the physician’s assets to see what means they must pay the remaining balance. In some cases, a physician may not have enough personal assets to pay the rest of the settlement, but your personal injury attorney may have alternatives available to ensure you receive full compensation.

What about Retired Physicians?

A retired physician is not immune from malpractice lawsuits. In fact, some physicians can retire only to find years later they are named in a suit.

If the statute of limitations has not passed in the case, a victim can sue a physician even if they have retired. Most malpractice lawsuits happen quickly, rather than years later. However, there are instances where patients might not realize they were victims until it is much later.

For example, a patient was diagnosed with gastrointestinal problems and treated by her family physician for years. Her physician retires, and she starts to see another physician. This physician begins to perform tests to confirm the previous diagnosis only to find the patient has cancer and not heartburn.

While that physician has retired, they did misdiagnose the patient and delayed her much-required treatment.

Will the Physician Have Insurance?

Some physicians have carryover coverage after they retire. Some hospitals also provide their retiring physicians with professional liability insurance that covers them for several years after retirement.

While it is not required, most physicians will carry over coverage to protect themselves. After all, if they do not carry liability insurance after retirement, they would be personally liable for any damages awarded to a plaintiff in a future lawsuit.

These policies, known as occurrence policies, cover incidents that occurred when the policy was active – even if the lawsuit is filed a few years later. Most retired physicians will have occurrence policies so that they stay covered. However, physicians that opt for claims-made policies will either continue paying the premiums until the statute of limitations runs out on all potential patients or use a tail policy. Tail policies increase the coverage period of claims-made policies.

Do You Have a Malpractice Case? Contact a CT Malpractice Lawyer

Determining if you have a malpractice case let alone trying to decode the language of malpractice insurance policies is the last thing you need when you are injured. Instead, you need an injury attorney there to help you file your claim, negotiate a settlement, and worry about the process of suing retired physicians.

After your injury, speak with a personal injury lawyer from Berkowitz and Hanna, LLC.

Contact Berkowitz and Hanna, LLC to schedule a no-obligation case evaluation. Call us or request your consultation online.