Suspect lawsuit is coming? Know how to report it
Too-late notice to your insurer might negate coverage
Most medical malpractice policies have a clause that requires physicians to notify the company of all claims in a timely fashion, advises Karen Kelly, vice president of claims operations for The Doctors Co., a Napa, CA-based medical malpractice insurer.
While the defensibility of a claim is primarily driven by the facts of a case, late notice might preclude the carrier from providing physicians with direction and advice that will ensure their interests are protected, she adds.
"Late notification may limit the carrier's ability to retain the best defense attorney and experts for a particular case, as they may already be retained by another involved party to the claim," warns Kelly. "A delayed response may also result in a default judgment being rendered against the physician."
If an insured has provided written notice of a potential covered claim during the active policy period, The Doctors Co. will accept that as notice under the policy, says Kelly.
"Even if the insured is no longer with the company when the claim is formally made, coverage may still be available," she adds.
When reporting a claim, physicians need to know whether they have a claims-made or an occurrence-based policy, says Kelly. A claims-made policy covers claims made during the time the policy is in force, and a claim that is made after the expiration of the policy period might prevent the claim from being covered, she explains. "Therefore, physicians must timely report the claim and follow all policy conditions in order for the coverage to apply," she says.
An occurrence policy provides coverage for a claim when it occurs, no matter when it was reported. "As long as there was coverage under an occurrence policy at the time of the claim, the claim can be reported years later, and coverage for the claim will be provided," says Kelly.
How and when reporting is required varies by carrier, emphasizes Roberta Carroll, RN, MBA, CPCU, senior vice president at Aon Risk Solutions — National Health Care Practice in Odessa, FL.
Carriers might require physicians to report claims by telephone instead of email or fax, or only through a specified form on the insurer's encrypted website. "I've seen some carriers that consider a claim for payment purposes as a demand for compensation or lawsuit," adds Carroll. "On the other hand, the provider has an obligation to report potential compensatory events that could give rise to a claim."
In this case, there could be a gap in coverage if the provider changes carriers and the reported claim hasn't become a lawsuit yet, but does become a lawsuit after the new coverage takes effect, she explains.
In this scenario, the first carrier wouldn't cover the reported claim because no one was asking for payment until after the coverage lapsed, and the second carrier wouldn't cover it because the provider was aware of a possible claim, she explains.
If this is the case, the provider might wish to negotiate a coverage change or find a different insurer who will cover a previously reported potential claim, she says. "Most carriers say, 'Once you've reported it as adverse event, I will cover it regardless of when it comes in,'" says Carroll. (See related story, below, on how early investigations can prevent suits.)
For more information on notifying carriers about possible claims, contact:
- Roberta Carroll, RN, MBA, CPCU, Senior Vice President, Aon Risk Solutions – National Health Care Practice, Odessa, FL. Phone: (813) 926-8069. Email: firstname.lastname@example.org.
- Karen Kelly, Vice President, Claims Operations, The Doctors Co., Napa, CA. Phone: (707) 226-0346. Email: email@example.com.
Early investigation might prevent suit
Was there an unexpected result that resulted in an angry, upset patient? If so, you should notify your carrier without hesitation, advises Karen Kelly, vice president of claims operations for The Doctors Co., a Napa, CA-based medical malpractice insurer.
"It is always advisable to report incidents in a timely manner," she emphasizes. Physicians should do this step as soon as they receive any indication that they might be sued, such as receiving a subpoena, a request for medical records, requests for money from a patient, or being contacted by phone or letter to discuss a patient's care, says Kelly.
"After a physician contacts the carrier, patient safety and/or claims experts may then be able to provide further assistance or guidance. This may reduce the severity of a loss, and possibly prevent a lawsuit," says Kelly.
Reluctant to report
There are several ways carriers might weigh reported claims as part of their internal review process, according to Kelly. The Doctors Co. encourages early reporting of potential claims, but only considers actual claims with a written demand for compensation when evaluating an insured's claims history, she says.
Too often, physicians fail to report potential claims because they don't want it to affect their experience rating, says Roberta Carroll, RN, MBA, CPCU, senior vice president at Aon Risk Solutions — National Health Care Practice in Odessa, FL. "They don't want to be known as a physician with a lot of claims, but I'm hoping that misconception is getting dispelled," she says. "There are benefits to reporting early."
This reporting allows the insurer to conduct an investigation and have a file prepared, in the event a lawsuit is later filed months or years later, says Carroll. "By that time, it's hard to get a report of what occurred. Often, witnesses you really want to talk to are no longer there," she explains. "All you really have is the medical record to go on."
An early investigation might uncover misleading or incomplete documentation that can be amended appropriately, for example. "Insurance companies aren't just looking at the claims piece anymore," says Carroll. "Many have robust risk management services."