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Claims severity increases: Study

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While the frequency of hospital medical malpractice liability claims has stabilized, the severity of claims continues to grow, though at a slower rate, according to a study by Aon Risk Consultants, a unit of Chicago-based Aon Corp.

Claim frequency in 2005 remained at 2.6% of acute care bed equivalents, the same as in 2004 and down slightly from 2.7% in 2003, according to the "2006 Hospital Professional Liability and Physician Liability Benchmark Analysis," which was co-sponsored by the American Society for Healthcare Risk Management.

In 2000 and 2001, the claim frequency rate was 3.0%.

The drop in frequency is greatest in California, Florida, Pennsylvania and Texas--all of which have enacted some tort reform designed to limit plaintiffs' damages, the study noted.

The severity of claims, however, increased by 6% on average last year, according to the study. Much of that cost is attributable to defense costs, which increased by 17% on average last year. Indemnity payments to claimants increased 3% on average last year.

From 2003 to 2005, severity grew between 6.5% and 7.5% annually, according to the study.

The study for the first time also established a link between mortality rates and professional liability claims. The study found that hospitals with lower-than-average mortality rates in 2004 experienced lower-than-average professional liability claims. It also found that hospitals with higher-than-average mortality rates also had abnormally high professional liability claims.

A copy of the study may be purchased by ASHRM members for $250 and by nonmembers for $350 by calling ASHRM at 800-242-2626 and requesting item No. 178701.