Do You Need a Consent-To-Settle Clause in Your Policy?

Under your employer’s group malpractice policy, you may not have a consent-to-settle clause. The employer owns the policy, which means there’s a strong chance it owns the consent-to-settle.

Navigating malpractice insurance can be tough. Understanding settlement clauses makes it even harder. Malpractice insurance aims to protect medical workers in case of a lawsuit. However, these policies often include terms that restrict what the insured can do during the settlement. This blog post looks at the consent-to-settle clause. It explains how this clause affects medical malpractice insurance. It also offers tips to help insured doctors get better terms.

What is a Consent-to-Settle Clause?

In medical malpractice insurance, a consent-to-settle clause is very important. This gives the insured physician the power to agree or disagree to settlement offers. It requires the insurance company to get the insured’s consent before they can settle a claim. So, the insurer cannot go ahead with a settlement without the insured’s clear approval.

Consent-to-settle is essential because it protects the insured physician’s reputation and future job opportunities. Settling a malpractice claim can have serious effects. It can harm one’s reputation, lead to licensing problems, and restrict chances for career growth.

Understanding Its Role in Medical Malpractice Insurance

Medical malpractice insurance, also called professional liability insurance, gives important protection to healthcare workers facing claims of mistakes or negligence in their work. A key part of these policies is the consent-to-settle clause. This is important because it gives the doctor the right to approve or deny any settlement that the insurance company suggests.

Think about this: if there is no consent-to-settle clause, the insurance company can choose to settle a claim even if the doctor feels they did nothing wrong. This can significantly affect a doctor’s career and reputation.

Comparing Consent-to-Settle vs. No Consent Clauses

The distinction between having a consent-to-settle clause and not having one can be significant for medical professionals. Here’s a closer look:

Policies lacking consent-to-settle grant the insurer sole discretion in determining whether to settle. This can be problematic, as the insurer’s primary interest often lies in minimizing its own financial liability. Consequently, a settlement might be reached even if it harms the insured physician’s reputation or career.

How Insurers Limit Consent-to-Settle Clauses

A consent-to-settle clause usually helps the insured. However, insurance companies often add rules to limit what they have to pay if there are issues about settling. One way they do this is by using a “hammer clause.” This can lower their payment if the insured does not accept a settlement suggestion. This puts more financial pressure on the insured. Because of these tactics, it is very important to review and discuss the terms carefully with legal help.

Common Restrictions and Their Implications

Insurance companies use different methods to limit consent-to-settle clauses. Some of these are:

• Hammer Clause: This is sometimes called a “blackmail settlement clause.” It lets the insurer reduce their payment if the insured says no to a settlement offer and then loses in court with a higher judgment. If this happens, the insured may have to pay the difference between the settlement offer and the final court decision.
• Arbitration Clause: This rule allows the insurance company to start arbitration if they think the physician is unfairly rejecting a settlement. An independent arbitrator will look at the case to see if the insured is right to refuse the settlement offer.

Strategies to Negotiate Better Terms

When you negotiate a consent-to-settle clause, keep these strategies in mind to get better terms:

• Get Legal Help: It’s important to have a skilled attorney look over the policy language. They can find problems and negotiate better terms for you.
• Ask for a Higher Reasonableness Standard: If your policy says that consent shouldn’t be “unreasonably withheld,” ask for a higher standard for what is considered “unreasonable.”
• Talk About the Hammer Clause: If there is a hammer, try to negotiate a higher limit on the insurer’s liability or a better percentage split for any judgment that goes over the settlement offer.

Obtain a Pure Consent Clause (If Possible)

For professional liability policies, having a pure consent clause is very important. This gives the insured physician complete control over the settlement process. With a pure consent clause, the insured’s approval is needed before any settlement offer can be accepted. This allows the insured to make informed choices about the settlement of a claim and protects their interests. Insurers often add this type of language in their policy language to improve transparency. It makes sure that the insured’s consent is a key part of the settlement recommendation process.

Benefits of a Pure Consent Clause for Professionals

Having a pure consent clause in a professional liability policy has many benefits. First, this lets the insured physician have full control over their defense and the result of a malpractice claim. This is very important when the physician thinks they did nothing wrong. In such cases, they may want to go to trial to prove their innocence.

Steps to Secure a Pure Consent Clause in Your Policy

Getting a pure consent clause may take some effort, but the peace of mind it brings is worth it. Here are some ways to help you get one:

• Work With an Independent Insurance Broker: Independent brokers can help you. They can talk to different insurance companies. This way, they can find a policy with better terms, which may include a pure consent clause.
• Emphasize Your Risk Profile: Show how you practice safety and have a low risk profile. Insurance companies are more likely to offer good terms to people who are considered less likely to have malpractice claims.
• Be Persistent and Informed: Knowing your needs and being clear when negotiating can lead you to a policy that really protects you.

The Danger of Group Malpractice Policies

Physicians who work with group malpractice plans may have less control over consent-to-settle rights. In individual liability insurance, the named insured has more freedom to decide. However, in group policies, the group policyholder, usually the employer, has the power to settle claims. This situation can create conflicts of interest. It can happen when settling a claim is good for the group but bad for the individual physician who is accused.

Potential conflicts of interest between members of a group practice

In a group practice, the goals of each doctor do not always match up with the group’s goals. This is especially true when there is a malpractice claim. For example, if the group faces a big claim, they might choose to settle quickly. They may do this to avoid financial problems for everyone in the group. However, this can make a doctor feel they have to take a settlement that they do not think is fair.

Key Takeaways

It is vital to understand the details of a consent-to-settle provision in your professional liability insurance. Knowing the consequences and limitations imposed by insurers is crucial. Striving for advantageous conditions, including a pure consent provision, can enhance your protection. Group malpractice insurance might create conflicts of interest, so it’s important to choose carefully. Aligning your policy with your requirements and protecting your interests is essential. Keep an eye on settlement terms and consult legal experts to handle any settlement-related challenges. Familiarizing yourself with the complexities involved will empower you to make sound choices about your liability coverage.