Almost all doctors practicing in the United States have malpractice insurance. The few that do not will usually not be allowed to practice at hospitals. The most common reason a doctor does not have malpractice insurance is that no insurance company will have him or her. You do not want to be treated by a doctor who cannot get malpractice insurance.
Malpractice insurance policies differ from the insurance policies you or I may have for our homes and cars. There are three main differences.
Our personal policies are what are called “occurrence policies.” The insurance company’s responsibility is triggered by an occurrence, usually an accident. The company that insures you at the time of the occurrence is the one which will be responsible for defending you in the event of a lawsuit and paying any judgment or settlement arising out of the claim. This is true even if the claim is presented ten or fifteen years after the accident or occurrence.
Our personal policies have a policy limit which applies to each accident or occurrence. If you are particularly unlucky and have five or six accidents in a policy year, your personal policy will be obligated to pay up to the policy limits for each of those accidents.
Our personal policies also vest a great deal of authority in the insurance company. In return for its promise to defend us and to pay covered claims up to the policy limits, the insurance company receives the right to control the defense of the claim. Whether we like it or not, whether we agree with it or not, it can settle any claim it wishes. On the other hand, no matter how much we may want it to settle, it has the right to insist that the case go to trial. It gets to decide what lawyers to hire to defend suits against us. So long as it makes its decisions in good faith, it has complete control over the defense of claims.
Malpractice insurance policies, on the other hand, are “claims made” policies. Whatever malpractice insurance a doctor has at the time the claim is made is the insurance that will be responsible for defending and paying the claim. Malpractice insurers need to know their risks and using claims made policies means they will rarely, if ever, be faced with a claim more than a few years old.
Although individual malpractice policies also have policy limits, most often $1M per occurrence, they also usually have an aggregate amount, most often $3M per claims period. That means, regardless of the number of claims made against a doctor, the most the insurance company will pay will be the aggregate amount.
Finally, individual malpractice claims usually have a “consent” clause. This clause prohibits the insurance company from settling the case without the written consent of the doctor. Once the doctor gives that consent, however, the insurance company takes control and can decide to settle or to go to trial, even if the doctor wants the case to settle.
The requirement for consent by the doctor can cause significant problems for a patient bringing a suit against the doctor. Some doctors are greatly offended that their patient might sue them and refuse to give consent as a means of making things hard on the patient. Most doctors know that doctors and hospitals win 85-90% of the malpractice cases that go to trial and do not want to settle, if there is no risk or only a small risk of a jury verdict exceeding their policy limits. They prefer to take their chances with the jury. The fact that a settlement results in the doctor being reported to the National Practitioners’ Data Bank and to the applicable medical board, is another reason many are reluctant to settle.
Being able to read and interpret a malpractice insurance policy is another skill any experienced malpractice attorney will usually possess. If an attorney cannot figure out how much insurance the doctor has or what to do if the insurance company disputes coverage, she or he won’t be able to do a good job for their client.
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