If you are a doctor, chances are good that you find working with your patients to be a rewarding and fulfilling way to make a living. However, interacting with patients on a daily basis comes with the chance that you may one day find yourself at the receiving end of a medical malpractice lawsuit.
According to the law, medical malpractice occurs when two specific criteria are met: a medical provider has violated a professional standard of care, and an injury has occurred to the patient as a result of that violation.
While no practitioner intends for their medical care to cause injury to patients, most will agree that “going without” without medical malpractice insurance is risky.
Even highly skilled doctors can make a mistake or misdiagnose an illness, resulting in a lawsuit that can damage both a doctor’s finances and reputation.
What are the benefits of medical malpractice insurance?
Medical malpractice insurance provides doctors and other healthcare providers with the ability to protect themselves from the liability risks involved in patient care.
Malpractice insurance provides doctors with the legal representation they will need as well as extensive investigations to determine whether or not the malpractice claim is a fair one.
If an investigation concludes that a medical error caused personal injury to the patient, malpractice insurance also pays out the claim on behalf of the insured.
Assets, including personal property or medical practice, are protected by medical malpractice coverage.
But most importantly, holding medical malpractice insurance provides peace of mind to both practitioners and patients alike.
What does malpractice insurance cover?
Medical malpractice insurance covers a specific set of costs in the event of a claim, and can often change depending upon the location of a practice, or the type of injury at the center of the claim.
Malpractice insurance policies typically cover:
- Attorneys’ fees and court costs
- Arbitration costs
- Settlement costs
- Punitive damages and compensatory damages
- Medical damages
What liabilities are not covered under medical malpractice insurance?
Medical malpractice insurance is invaluable for covering a very specific set of circumstances that might result in a lawsuit. However, that does not mean that doctors can act with impunity.
If a claim is brought against a medical practitioner for criteria other than those mentioned above, they will not be covered by medical malpractice insurance.
Sexual misconduct, discrimination, criminal acts, and inappropriate alteration of medical records are all examples of liabilities that medical malpractice insurance does not cover.
Employers Practice Liability Insurance (EPLI) is another type of insurance available to doctors that does cover these kinds of liabilities.
Who Needs Medical Malpractice Insurance?
Medical malpractice insurance is professional liability insurance. Most healthcare professionals can benefit from having it, including physicians, nurse practitioners, PAs, nurses, physical therapists, and others. Any healthcare professional who provides medical treatment to a patient directly can become the target of a medical malpractice suit.
Are physicians, in particular, required to carry medical malpractice insurance?
There are currently no federal laws in place requiring doctors to have medical malpractice insurance coverage.
However, some states do require insurance:
- New Jersey
- Rhode Island
Some of these states also have minimum coverage requirements that must be met in order to practice medicine in the state.
For instance, the State of Connecticut requires doctors to carry no less than $500,000 for one person, per occurrence, with an aggregate of not less than $1,500,000.
These states require malpractice coverage if a facility or individual physician wants to use government programs that assist with claims:
- New Mexico
- New York
What if my state does not require insurance?
Even if the state a doctor practices in does not require them to carry malpractice insurance, certain hospitals may dictate a minimum amount of insurance required for their staff.
Health insurance companies sometimes require physicians who participate in their plans to carry insurance.
How Likely Is a Medical Malpractice Claim?
A 2016 study by the New England Journal of Medicine reported that an average of 75% of physicians will be sued for medical malpractice at some point during their careers.
However, the likelihood of a lawsuit depends heavily upon the types of medicine being practiced. This variable also greatly influences the amounts of money that are paid out in reimbursement.
For example, 85% of OB-GYN and women’s health specialists report having been the target of a medical malpractice lawsuit. This is in stark contrast to doctors of psychology, only 16% of whom report having been sued.
A survey by the American Medical Association (AMA) showed how often doctors get sued, and more than one-third of respondents had been sued at least once. Nearly 17% had been sued at least twice. Your risks increase based on your specialty.
The AMA reported the following rates of being sued by specialty:
- 63% of OBGYNs and general surgeons
- 52% of emergency medical professionals
- 47% of surgical sub-specialties
- 38% of radiologists
- 36% of anesthesiologists
- 33% of family practice physicians
- 32% of internal medicine specialists
- 25% of internal medicine sub-specialists
- 18% of pediatricians
- 16% of psychiatrists
How much can malpractice claims cost doctors?
According to the study mentioned above, roughly 20% of those doctors will lose their cases, resulting in indemnity payments that averaged roughly $275,000 across all fields of medicine.
Some payments (about 1% of those surveyed) exceeded one million dollars.
In one 2016 instance, a Florida man was awarded nearly $217 million in damages after ER doctors misdiagnosed symptoms of a stroke. However, payments in those amounts are generally considered to be outliers.
Further reading: Medical Malpractice Payouts by State
Why do patients often sue for malpractice?
The most common types of claims a doctor might face include:
- Improper treatment of a condition. This is the most common cause of medical malpractice claims.
- Failure to diagnose a condition or a misdiagnosis of the condition, which makes up roughly 26% of medical malpractice claims.
- Surgery-related claims, including preoperative and postoperative care. These can include injuries resulting from improperly sterilized surgical tools or a surgeon operating on the wrong area.
- Adverse effects from drug use. This can include drugs prescribed to a patient by their doctor or from anesthesia and other drugs used during treatment.
Disability, pain, reduced quality of life, or significant past and future medical bills are all unfortunate consequences that can happen due to medical negligence. For many patients who feel that they have suffered an injury due to their doctor’s actions, filing a medical malpractice lawsuit helps them to recoup some of their losses.
Medical debt can often lead to bankruptcy, and long-term disability makes it harder for most patients to earn a living. While filing a claim can never undo their injury, many patients feel they have no other options available to them. Families and loved ones of those who have suffered a wrongful death due to medical negligence will often sue on behalf of the deceased.
While monetary damages are often the main focus of a claim, many patients also state accountability as a primary reason for filing.
How Much Does Medical Malpractice Insurance Cost?
The cost of medical malpractice insurance varies by state as well as specialty. However, the national average comes to around $7,500 annually.
Surgeons can often expect to pay between $30,000 and $50,000 a year. This is because claims made due to surgical care tend to be much more expensive than claims related to other kinds of care. Other medical personnel can expect to pay much less, usually between $4,000 and $12,000 per year.
Specialties that carry more risk of being sued in the eyes of the insurance companies pay more for malpractice insurance.
These are a couple of examples of “risky” specialties:
- Emergency room physicians
- Cardiovascular surgeons
- General surgeons
- Orthopedic surgeons
- Plastic surgeons
Rates by Speciality and Location
This is a sample from the American Medical Association on the cost of medical malpractice insurance for various doctors from around the country:
- Los Angeles-Orange County, California: $49,804
- Connecticut: $170,389
- Miami-Dade, Florida: $190,829
- Cook-Madison-St. Clair, Illinois: $177,441
- New Jersey: $90,749
- Nassau-Suffolk, New York: $214,999
- Philadelphia, Pennsylvania: $119,466
- Los Angeles-Orange County, California: $41,775
- Connecticut: $65,803
- Miami-Dade, Florida: $190,829
- Cook-Madison-St. Clair, Illinois: $118,909
- New Jersey: $60,810
- Nassau-Suffolk, New York: $134,923
- Philadelphia, Pennsylvania: $85,930
- Los Angeles-Orange County, California: $8,274
- Connecticut: $34,700
- Miami-Dade, Florida: $47,707
- Cook-Madison-St. Clair, Illinois: $40,865
- New Jersey: $15,900
- Nassau-Suffolk, New York: $33,852
- Philadelphia, Pennsylvania: $24,433
For more information, learn How Much Medical Malpractice Costs and Why
How Does Medical Malpractice Insurance Work?
There are a few different kinds of medical malpractice insurance available for doctors. Coverage is generally divided into two types: claims-made coverage and occurrence coverage.
Occurrence coverage covers any claim for treatment that took place during the period of coverage. This includes claims that are filed months or even years after the policy is no longer in effect.
Claims-made is the more common type of medical malpractice insurance. It provides coverage as long as the policy is in effect both when the treatment took place and when the lawsuit is filed. This type of coverage is popular because it is often cheaper than occurrence-based coverage and because it tends to be more flexible.
Which type of malpractice insurance is better?
Occurence-based coverage offers doctors peace of mind that they will not be caught unprepared for a medical malpractice lawsuit. However, this type of coverage tends to be significantly more expensive.
Insurance rates can change rapidly from year to year, so many doctors prefer being able to match price to risk for the time period being covered by the policy.
Claims-based insurance allows doctors the freedom to choose as little or as much coverage as they think they need.
In certain situations, claims-made policies can sometimes leave gaps in coverage. Physicians who are taking on a new position, changing their current insurance policies, or retiring can sometimes go months without coverage if they do not carry occurrence-based insurance.
That is why many policies provide a period of tail coverage that can be purchased to extend the time of coverage after the policy ends. Doctors can also purchase nose coverage, which covers incidents that may have occurred prior to the policy’s effective date.
Who Is Responsible for Providing Medical Malpractice Insurance?
Many physicians opt to choose and pay for their own medical malpractice insurance plans. They can pick and choose plans that are specifically catered to their needs, and they have the option to change their plan as they see fit.
This also allows them the freedom to work at multiple locations.
However, this is not always the best choice for everyone. Physicians who are a part of a medical risk retention group (RRG) often obtain insurance through their group, which may have specific coverage minimums and other particulars for the medical professionals in their group.
Those who are employed by a single hospital or hospital group will often acquire malpractice insurance through their employer. Policies chosen by an employer will cease to be in effect if the doctor chooses to take on a new position elsewhere.
This is where tail coverage can often come in handy; when physicians choose to purchase alongside the plan chosen for them by their employer.
How Do I Choose a Medical Malpractice Insurance Policy?
A physician’s specialty, location, and type of employment will all have an effect on the policy that is best for them. For those who are just starting their career, employing an agent to help them choose a plan can help to avoid mistakes that might cost them in the future.
Here are some things to discuss with your agent:
What is excluded from coverage?
As mentioned earlier, medical malpractice insurance is intended to protect doctors from liability under certain conditions. However, there are many situations where a doctor may be sued for reasons that have nothing to do with medical malpractice. That is why doctors need to check for language added to the policy stating that the insurer will not cover losses resulting from certain activities.
Some common exclusions include:
- Acts committed while under the influence of drugs or alcohol
- Sexual misconduct and harassment
- Fraudulent or criminal acts
- Automobile-related injuries, including loading or unloading of patients
- Claims from any clinic or other business not named on the policy
- Claims from certain types of procedures
- Claims from HIPAA violations, such as unauthorized disclosure of patients’ medical records
Are settlement and defense costs included in the policy?
Many policies do not cover costs incurred by a lawyer, and defense costs may be included in the limit that applies to damages.
For example, let’s say a doctor’s policy limit is $500,000. A claim is brought against them, and the jury awards the plaintiff $400,000 in medical liability damages.
It costs the physician $250,000 in legal fees to defend themselves. With only $100,000 left in their policy coverage, the physician would have to pay the remaining $150,000 out of pocket.
Looking for a policy that covers defense separate from the damages limit can help to avoid paying part of the settlement out of pocket if the defense costs are too high.
Does the policy include a consent-to-settle provision?
With a consent-to-settle provision, the insurance company has to get your written permission before they can settle with a complaining patient. If you don’t consent, the insurance company cannot force a settlement.
Some policies include clauses that may allow the insurance company to settle with the patient without your consent. Checking thoroughly, either on your own or with a trusted agent, can help you to spot any clauses that may circumvent your consent-to-settle provision.
Is cyber liability included?
Healthcare data is among the most sought after by hackers and data thieves, so make sure your medical malpractice insurance policy protects you from cyber liability. Depending on the policy, cyber liability may cover data breaches, denial of service attacks, identity theft, and virus attacks.
Some policies will also cover regulatory penalties, notification and public relations expenses, credit monitoring for affected patients, and data recovery costs.
Does it have incident reporting?
The claims process can be triggered in one of two ways:
This allows a physician to report a potential incident to his or her malpractice insurer as soon as it occurs. By reporting incidents to the insurance company before a patient’s claim is made, physicians can ensure they are covered by a lawsuit filed later.
This means the malpractice carrier is not responsible for covering an incident until a patient takes action. That action can be filing a lawsuit, demanding compensation, or enlisting an attorney to investigate.
What are the liability limits?
Liability limits set a cap on the amount of liability that medical malpractice insurance will pay out in one year. A policy will include a limit per occurrence as well as an aggregate limit.
An occurrence limit is the amount your policy will cover for one claim.
The aggregate limit is the maximum amount your policy pays for all claims over the term of the policy.
Physicians often have the option of choosing higher limits, but many choose to carry limits of $250,000/$750,000. In that case, a doctor may have one lawsuit in a year and be ordered to pay $800,000 in damages. Their policy would cover $750,000, and they would be liable for the other $150,000.
However, if they had three lawsuits in a year, and each one resulted in $250,000 in damages, the insurance company would pay the full $750,000.
Being covered by medical malpractice insurance can give you peace of mind so that you can focus on giving your patients the best care possible.
Your patients will also feel reassured if they know that you have coverage in place. At the end of the day, medical malpractice insurance exists to benefit both the patient and the practitioner.