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Rise in hospital professional liability large claims concerning: Report

Rise in hospital professional liability large claims concerning: Report

Self-insured hospital professional liability claims are generally stable, but the rising frequency of large, excess claims is a concerning trend, according to a new report.

The frequency of hospital professional liability claims at the $2 million occurrence level is expected to remain flat while claims severity, including defense costs, for claims at this level is projected to continue to increase at 2% every year due to “pure inflation trend,” said Virginia Jones, actuarial and analytics health care practice leader with Aon PLC in Chicago and coauthor of a report released on Monday by Aon and the American Society for Health Care Risk Management at ASHRM’s annual conference in Nashville.

But the frequency for claims greater than $5 million is increasing at a higher rate due to a rise in the occurrence of large claims in higher-risk jurisdictions, she said.

Beazley PLC’s database of medical malpractice claims, which was utilized in the analysis to study large claims, shows that more than one out of every 200 claims in the insurer’s dataset settled in excess of $10 million in 2016 and 2017. In addition, the average cost of a settled professional liability claim closed in 2017 was $575,000, a 1.8% increase compared with 2016.

Claims that used to settle for $1 million now settle for $2 million while those that used to settle for $3 million now settle for $5 million, said Valentina Minetti, focus group leader for US hospitals within the health care team at Beazley in London.

Professional liability claims in Beazley’s dataset in 2015 to 2017 time period settled 18% higher than in the prior three-year period, “suggesting a new normal for claim severity,” according to the report.

On a jurisdictional level, Cook County, Illinois, is a jurisdiction well-known for its difficulty to defend medical malpractice claims, with a 99th percentile of $11.8 million in closing year 2017, meaning that 1% of claims are greater than the 99th percentile value, the report noted.

“There are jurisdictions that everybody knows have been difficult,” Ms. Minetti said.

By contrast, New Jersey’s 99th percentile was $3.8 million in closing year 2017, according to the report, which indicates New Jersey is an example of a “slightly stable and more benign jurisdiction,” Ms. Minetti said.

“Maryland is an interesting and concerning example of a jurisdiction which was previously thought of as a moderate jurisdiction, but claims severity has increased significantly over the period,” the report stated. “In 2017, Maryland showed claim severity more comparable to Cook County, Illinois, than New Jersey.”

Obstetric claims are seen as expensive to resolve and the data supports that, according to the report. These claims represent 14% of all settlements, but that number rises to 38% of claims that closed in excess of $1 million and 46% of claims closing in excess of $10 million, according to the report.

In addition, 30% of claims closing for more than $10 million emanate from procedures occurring in the operating room while 11% emanate from emergency department issues such as sepsis, which is driving “some really catastrophic damages,” Ms. Minetti said. “Definitely, these types of claims are surging.”

The database used in the analysis includes 118 health care systems in the United States, representing about 33.6% of the hospital industry, with most of the data pertaining to self-insured claims activity, Ms. Jones said.

“At the end of the day, what we’re saying is that self-insured claims are stable, but those very large catastrophic claims … there are more of them and they also are growing in size,” she said.





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