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A Malpractice Primer


 

In a 2001 Hospital Practice article Robert Wachter, MD, named malpractice as one of the top 10 issues that require consideration as it relates to the hospitalist movement.1 There are many areas to consider when looking at malpractice insurance for hospitalists as opposed to other physician specialties. Just one area being reviewed by insurance carriers: Underwriters are grouping hospitalists with internal medicine physicians because hospitalists do not yet have their own classification code.

“When physicians spend 85% to 100% of their time in the office,” wrote Dr. Wachter, “it seems prudent to base assessments of competence on the quality of the office practice rather than that of the hospital practice. As in other situations, the hospitalist movement has exposed the inadequacies of the earlier system.” This assessment seems applicable to the area of insurance as well. There may be a need to create means by which hospitalists can be better protected from malpractice risk and coverage inadequacy. This area, like all others associated with hospital medicine, is evolving.

In this article we highlight malpractice insurance for hospitalists: what you should consider now and in the future regarding policy coverage. policies Available to Hospitalists

The types of malpractice insurance available to hospitalists include:

  1. Policies provided under your employer’s policy or purchased for yourself;
  2. Policies that cover you when any event actually occurs or when the claim is filed; and
  3. Policies purchased by hospitals where the payouts for claims are made either by the insurance company (the carrier) or by the employer (the hospital).

Most hospitalists are covered by institutional or group employers. In most cases, hospitalists are hired directly by hospitals or by an agency that contracts with hospitalists and administrates this relationship with the hospital.

“We recommend that the hospitals employ the hospitalists and that they put them on their hospital malpractice policy,” says Pam Kirks, insurance broker with the Gallagher Health Insurance Company in Raleigh, N.C., “because that’s the cheapest way to go for the hospitalist. There are different types of coverage out there that they can get; they can get their own coverage certainly. But I think the majority of them are becoming hospital employees.”

The right fit: Hospitalists don't fit into just any ol' malpractice policy coverage. Know the differences between policies in order to tailor one to your individual needs. And although you may be covered under your hospital's insurance policy, everyone can benefit from understanding the nuances of malpractice coverage.

Occurrence or Claims Made

The types of medical malpractice insurance available to hospitalists are either “occurrence” or “claims-made” policies. An occurrence policy is one in which the policy that responds to a claim is the one that was in effect when the incident actually occurred. A claims-made policy that responds to a claim is the one that is in effect when the claim is made—provided that you also had continuous coverage from the time that the incident occurred.

Joe Zorola, director of underwriting at ProMutual Insurance Company in Boston, further explains the claims-made policy. “For instance, let’s say you have a policy this year and something happens tomorrow and five years down the line [the patient] file[s] a claim because of what happened tomorrow,” he explains. “You should have continued this policy through the next five years so that there’s no lapse of coverage, but the policy that will respond will be the policy five years from now.”

Of the 52 hospitals and 14,000 people that ProMutual insures, half of the policies are individual policies and half are group policies.

“The majority of [policies] are in Massachusetts and so are written under an occurrence basis,” says Zorola. “The ones outside of Massachusetts—and those are the group policies that we do have—are claims made.”

Physicians and insurance carriers each have preferences between the two types. “The occurrence policy is the policy that a lot of physicians like because they understand that if they did something today, [they can think] ‘I never have to worry about having insurance in the future for it,’” says Zorola. “The claims-made policy is the one that we as [insurance] companies like because it allows us to close our books on each policy year much sooner because we know that we aren’t going to have any more claims attached to the policy this year or in another year or two.”

Fully Insured or Self Insured?

Malpractice policies available through employers are either fully insured or self insured. The difference between the two types involves who is responsible for the claims payouts. With fully insured plans, the employer pays a premium to an insurer and the insurer pays claims out of the pool of premiums it collects from everyone it insures. Under a self-insured plan, the employer is responsible for paying all claims out of company assets. The Employee Retirement Income Security Act (ERISA) regulates self-insured plans; the plans are then under the jurisdiction of the U.S. Department of Labor.

“The hospitalists that we do [under]write [fully insured policies] for tend to be in the smaller community hospitals, which may not necessarily have the huge need for hospitalists; whereas the larger institutions may have a larger need for hospitalists [and] they usually tend to be self-insured,” says Zorola.

Controlled Risk Insurance Company of Vermont, known as CRICO and located in Cambridge, Mass, is one example of a self-insured system. “We only have one [malpractice insurance] product for a closed system where our clients are the Harvard teaching hospitals” says Karen O’Rourke, senior vice president of CRICO.

While experts report that lawsuits against hospitalists are scarce, they also reference the lack of classification code specifically created for the hospitalist and his/her duties. Without it, it’s impossible to distinguish in data when and in how many cases hospitalists were named.

Individual Policies for Certain Circumstances

Hospitalists who take out individual policies are usually practicing part-time or moonlighting and have another policy with a carrier that is covering their primary practice. “And this is true across the country,” says Zorola. “Most carriers will have some sort of part-time credit that they will provide [to] the people who come to them for policies. Now there are some carriers, and these are usually the large hospital carriers, who won’t provide individual policies to physicians. They only provide coverage for the hospital and the hospital’s employees.”

Hospitalists who take out their own individual policies usually get coverage from one of the local Physician Insurers Association of America carriers.

Why Are Hospitalists Sued?

In general, hospitalists are infrequently sued for medical malpractice. They may be named in initial claims, but many are dropped before the case is resolved. However, while experts report that lawsuits against hospitalists are scarce, they also reference the lack of classification code specifically created for the hospitalist and his/her duties. Without it, it’s impossible to distinguish in data to learn when and in how many cases hospitalists were named.

O’Rourke says that internists in ambulatory or outpatient practice settings are usually at risk for claims of failure to diagnose—mostly failure to diagnose cancer or myocardial infarctions. In contrast, “the hospitalists’ failures come in the communication area,” she says, “because that’s primarily what they’re there for is to make sure that the patient receives the medical care that they’re supposed to in a hospital setting.”

O’Rourke, who directs the management of underwriting claims as part of her work at CRICO, believes there is a vast difference between the reasons for claims for internists versus hospitalists.3

“We receive so many failure-to-diagnose cases with internal medicine physicians,” she elaborates. “There have been huge losses associated with them throughout other systems that we’ve seen—some of our own, such as increases in [the rates of] breast cancer or colorectal cancer. You’re not going to see that with a hospitalist unless there’s a post-op complication—bleeding that isn’t caught and failure to diagnose—that kind of issue—soon enough. But they’re still under a surgeon’s care normally.”

O’Rourke recognizes that the care of the hospital patient is a team effort. “So it’s going to be a question of how the hospital defines the hospitalist role for each and every condition or [for] surgical patients,” she says.

The Cost of Insurance

Hospitalists don’t appear to be experiencing the negative effects of what the insurance industry, in general, is suffering—that many insurers are pulling out of the market because of the untenable costs of remaining in business. That is because a lot of hospitalists are covered by the hospital policy and the hospital, therefore, assumes the burden of paying their premiums. However, some hospitalists may have the same affordability issues that some of the practitioners who are paying their own malpractice premiums.

“The publicity around affordability tends to be in the higher-rated classifications such as with surgeons and OB/GYNs,” says Zorola, “and since we charge hospitalists considerably lower rates, we don’t hear as much from them.”

Some states are only claims-made states, and some offer occurrence and claims-made policies. “If you … compare apples to apples, claims-made is probably the rate to use because every state will have a claims-made rate,” Zorola explains. “The hospitalist at $1 million/$3 million annual aggregate on a matured claims-made basis in Massachusetts would be paying $12,908. Sometimes the hospital pays that, sometimes the hospitalist. The part-time hospitalists … are usually paying half of that. A general surgeon, on the other hand, in comparison, pays $39,474. And this is in Massachusetts. Whereas an OB/GYN would pay $105,006.” —AS

If the Hospitalist Sees the Patient

A new claim that ProMutual recently received involves a hospitalist. The allegation is “failure to monitor a patient for suicide.” The claim states that the patient attempted suicide twice by trying to hang herself. The patient was admitted to the psychiatric unit of the hospital. Although a medical consultation must be done any time a patient is admitted, the hospitalist was not consulted to assess for suicide precautions. The hospitalist’s next involvement was after the attempted suicide when she responded to the code and admitted the patient to the ICU.

Given the lines of protocol, it is likely to be decided that the named psychiatrist was responsible for noting the risks with this patient and the hospitalist’s name will be dropped from the claim. The important thing for hospitalists to know is that because the hospitalist was listed as seeing the patient, she was named in the claim and this is customary procedure.

“A lot of times the plaintiff attorney will note every doctor who has seen the patient over the last number of years,” says Zorola, “because they probably don’t know a lot about the claim either, at that point. So until the investigation is done, and you can perform the depositions and find out exactly who was responsible for what,” the hospitalist will be a part of this process.

The Classification of Hospitalists

The growing trend is that insurance underwriters are creating a separate hospitalist classification. ProMutual underwriters established a classification for hospitalist and placed it in the same rate group as internal medicine physicians. But then the underwriters listened to what some of the hospitalists were saying: that because they are more specialized and are seeing patients who are more aware of the care that should be provided in the hospital, being grouped with physicians who spend most of the their time in office practice was not an accurate way to classify them.

Zorola and his colleagues now see that “setting up a separate classification for [hospitalists] allows us in the future to review their experience and determine whether they ought to be grouped with internal medicines or whether they belong in a lower or higher classification.” Hospitalists might belong in a higher, risk-associated classification “because they are seeing sick patients whereas internal medicine and family practice doctors have a mixture of sick and well patients,” he notes.

In fact, the common assumption is that hospitalists are doing riskier work simply because they work in places in which they have more opportunities to encounter risk. O’Rourke can’t say definitively how many hospitalists CRICO insures. But she can say that few claims involve hospitalists.

“We thought they were a riskier group for a while, but we couldn’t find any evidence of that in our data,” she explains. “We had a couple of claims involving people who were hospitalists, but nothing of concern.”

Whether hospitalists prove to be a riskier group in future research will depend on first determining more precisely what hospitalists do.

What Do Hospitalists Really Do?

“I can imagine that some of [the answer to this question] is that you go find out what works best for the systems you already have in place and develop systems that are needed to really quantify what [hospitalists] are supposed to do,” says O’Rourke. “And that will vary from institution to institution depending on whether it’s a teaching hospital or not.”

But there are other factors and issues at play, some of which are entirely out of control of the insured hospitalist. Barry Halpern, an attorney with Snell and Wilmer Law Firm, whose insured clients are spread over the western half of the United States, says “malpractice insurers, for a variety of reasons, … have many, many classifications for underwriting purposes and others [have] not very many at all. There are marketing issues associated with that and they don’t have a lot to do with the aspects of the specialty.”4

Your Policy Type May Matter

“[A]s you look at this from an insurance perspective, there are pros and cons for having separate insurance for hospitalists and the hospital,” says Halpern. “Where there is separate insurance, there is sometimes greater potential for conflict tension among the provider team than when the insurance is provided on an entity basis, particularly when entity claims against hospitals are a [somewhat] growing trend.”

Halpern notes that, in general, the courts are delivering their verdicts without considering the actual relationship between a hospital and a staff physician.3 “Of course,” he adds, “the courts are hunting for ways to make hospitals responsible on an entity basis rather than specifically for negligence in credentialing, or negligence in supervising, or negligence in providing staff and tools.”

Halpern thinks that in lawsuits where any staff physician is considered as part of the entity of the hospital institution, “it may make sense for the hospitalist to be insured under the hospital’s coverage, so that you minimize the potential for finger-pointing within the hospital-based team.” Besides creating potential tension within the group, Halpern says, “there may be indemnity agreements entered into between the hospitalists and the hospital that shift legal responsibility in a way that is sometimes not as carefully considered at the front end of an arrangement than at the back end, when a problem occurs.”

Halpern says that those kinds of situations must be looked at carefully. “[T]hose kinds of indemnity agreements can lead to a whole world of collateral claims litigation and can sometimes compromise insurance coverage,” he says. “For instance, if a hospitalist group signs an indemnity contract with the hospital without clearing it with the hospitalist’s insurer, the insurer might look at that and say, ‘We didn’t underwrite that additional obligation to defend and pay damages for the benefit of the hospital. And therefore, we deny coverage.’”

What Should Hospitalists Do?

If you are an individual hospitalist and your hospital provides your coverage, our experts have some suggestions on how to best protect yourself from surprises later about your liability insurance.

“[Y]ou certainly ought to get a copy of the policy,” says Halpern, and “focus very carefully on several things: 1) what’s covered, 2) what’s excluded, 3) what are the limits, and 4) who’s providing the coverage?”

You need to be able to feel that you can say “yes” to the question, “Is this a company that I can be confident will be there when it’s needed?”

If after a careful review of your policy, you have areas you would like to discuss with the hospital, it’s a matter of negotiation. And when you have the “negotiation muscle” to get what you need for protection, says Halpern, you’re in a better position.

“Frankly, most hospitals are interested in maintaining quality staff, quality relations with physicians—both employed and on the consulting staff,” says Halpern. “[They] are not typically in the business of muscling people and treating them badly. So if the hospitalist finds a legitimate gap in coverage or a concern, by and large hospitals look to be fair in working those things out. If they’re not, there are two basic approaches, and one is to not continue in the relationship.” (In other words, quit). “The second [approach] is to insure over the gap by going to an insurance broker and seeing if you can find coverage.”

Conclusion

Although most hospitalists are covered under their hospital policies, all hospitalists would benefit from understanding the specifics of their malpractice coverage. The dynamics of the hospitalist model will require changes in many areas including malpractice insurance. The trend of insurance carriers to establish a separate classification for hospitalists is likely to provide more precisely written coverage that accounts for the particulars of hospital medicine practice TH

Writer Andrea Sattinger will write about risk management for hospitalists in the Jan. ’06 issue.

References

  1. Wachter RM. The hospitalist movement: ten issues to consider. Hosp Pract. 1999;34(2):104-106.
  2. Entman SS, Glass CA, Hickson GB, et al. The relationship between malpractice claims history and subsequent obstetric care JAMA. 1994;272:1588-1591.
  3. Alpers A. Key legal principles for hospitalists. Am J Med. 2001;111:5-9.
  4. Pham HH, Devers KJ, Kuo S, et al. Health care market trends and the evolution of hospitalist use and roles. J Gen Intern Med. 2005;20:101-107.

How Are You Insured and What Are You Insured For?

One of the hospitalist groups covered by ProMutual is Southern New Hampshire Medical Center, Nashua, where Stewart Fulton, DO, is the head of that group. The hospitalist department is three years old. In fact, the day The Hospitalist talked to Dr. Fulton was the first day hospitalists were providing 24-hour hospital coverage, seven days a week.

Although Dr. Fulton began as the only hospitalist, there are now 10 in the department They are classified as part of a multispecialty group and did not actively participate in choosing their malpractice insurance. He says there have been few legal issues so far.

“I think what is important to us is 1) the reassurance that [the policy is] there and 2) that there is additional coverage … an umbrella policy that will protect us in addition to … our malpractice [policy].”

But does their hospital-provided malpractice insurance address the particulars of a hospitalist’s work such that the hospitalist team feels reassured with the details of their coverage?

“I don’t think I have an answer to that question,” says Dr. Fulton. “I haven’t personally looked through my policy in regard to the coverage and how it relates to my specific practice. Certainly it’s not a traditional internal medicine practice and I don’t know from that perspective what the underwriters would consider [regarding hospitalists] when they weigh their policy for the traditional practice.”

Think on This: Malpractice Recommendations

  1. Determine roles and accountabilities for yourself and the colleagues with whom you will communicate and work. Establish an institutional administrative policy for the hospitalist’s scope of practice. Supply this information to your risk manager to factor in when discussing your insurance coverage with insurance brokers or carriers.

    “I believe that whether it’s a teaching hospital or a community hospital, they have to figure out how to do it best for themselves,” says O’Rourke, referring to how hospitalists and other providers will need to share responsibilities for a patient’s care. “You have to have everyone buy in. For instance, if you have hospitalists working on a surgical floor, you better have the surgeons understand what’s going on. If you work on the medical floor, you’ve got to have your attendings and the admitting physician, … the PCPs—everyone—understand what you have there.” And she adds, “If I were running a hospital, I’d be touting [having hospitalists] as a real benefit.”

  2. Recognize that malpractice insurance, too, is an area affected by the evolving dynamics of hospital medicine. “Concern surrounds the myriad organizational and clinical issues that inevitably appear whenever there is a major change in our extraordinarily dynamic healthcare system,” wrote Dr. Wachter. “As with the initial debate about whether to embrace the hospitalist model, one hopes that many of these issues will be settled on the basis of rigorous analysis informed by relevant data.”1
  3. Read your policy. Discuss concerns with your employer’s risk manager. “This conversation is encouraging me to go investigate what our policy is and what the coverage is and what the reasoning and thoughts were that generated the policy and whether it’s sufficient,” says Dr. Fulton. “Certainly as our area of medicine grows … we need to be considering all of those issues—malpractice [and] sufficient coverage for what we do.” —AS

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