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Accurate documentation crucial to limit hospital med mal risks

Cayman starts search for insurance regulator

Subprime crisis unlikely to have major impact on insurance industry

Companies must mitigate risks of aging workforce

Cayman captive conference attracts more than 800

Accurate documentation crucial to limit hospital med mal risks


Published Dec. 10, 2007

GRAND CAYMAN, Cayman Islands—Having proper documentation of medical events is critical for health care captive owners seeking to mitigate malpractice liability risks, experts say.

The Eastern Connecticut Health Network experienced a dispute between physicians related to documentation that increased its exposure to medical malpractice lawsuits after the hospital system revamped its obstetrics unit in 2005, Dr. David Neuhaus, president of the medical staff for ECHN, told attendees of the 2007 Cayman Captive Forum held Nov. 27-29 in Grand Cayman, Cayman Islands.

Rockville, Conn.-based ECHN—established by a merger of two small community hospitals 10 years ago—created one obstetrical unit, developed a nursery for infants requiring specialized care and hired a neonatologist service with the goal of "improving care and conceptually reducing liability," Dr. Neuhaus said.

The revamp, though, resulted in questions about proper terminology in documentation, he said. In particular, obstetricians felt the neonatology service was overly aggressive in using the term hypoxic ischemic encephalopathy, a condition in which cell damage in the central nervous system is caused by inadequate oxygen. HIE allegedly causes death in newborns or results in conditions such as mental retardation or cerebral palsy and is often a leading claim in malpractice lawsuits.

"The reality is that we created extra liability," said Dr. Neuhaus, whose organization formed a Cayman Islands captive in October 2006 due to limited insurance options in Connecticut.

Connecticut has been designated by the American Medical Assn. as being in a malpractice liability crisis with only one A-rated professional liability insurer and one physician-owned mutual company providing coverage.

When the hospital's risk management staff became aware of the problems, they contacted Kenneth Felton, senior vp of the health care industry practice of Hilb Rogal & Hobbs Co. in Hamden, Conn., to help develop a program for the physicians to have an open dialogue about the issues. HRH is the hospital system's broker.

After participating in the program, the neonatologists accepted that it was not imperative for them to use the term HIE in medical records, Mr. Felton said. Rather, it was more important to document symptoms when creating a medical report, he said.

Appropriate documentation is a critical risk management initiative because inadequate, incomplete or inaccurate documentation can result in a negligence finding in malpractice cases, Mr. Felton said.

"It puts you in a very disadvantaged place in the courtroom," he said.

Documentation should be as complete and consistent as possible since gaps or inconsistencies in the medical records can create a belief that medical errors are being hidden, Mr. Felton said. "It leads a plaintiffs' attorney directly to that spot," he said.

Physicians should stick to the facts when documenting symptoms and use terminology carefully, and never should use medical records to criticize another physician, Mr. Felton said. "This is basically indefensible," he said.

Doctors also should avoid adding comments to medical records such as "incident report completed" so they don't connect medical records and an incident report, he said. They should also not prepare a confidential narrative of any incidents, except in the context of the attorney-client privilege, he said. "There's no protection for that document" if not developed in that context, Mr. Felton said.

Hospitals are often required to disclose adverse events to patients, so meeting with the patient and family soon after an incident is important, he said. Recently, Mr. Felton encountered a situation where a hospital's insurers had concerns about the hospital disclosing an adverse event to a patient, but the hospital felt the disclosure was critical.

Expressing regret about adverse incidents could mitigate the possibility of lawsuits being filed, he said. In certain states, such as Connecticut, physicians can apologize to patients without their apologies being used against them in court.

Risk managers have to determine whether a patient or family is volatile and likely to sue, an assessment that must be done on an individual basis, Mr. Felton said. Potential "danger signs" include a failure to appear for office visits, failure to show humor and a failure to pay bills, he said.

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Cayman starts search for insurance regulator


Published Dec. 10, 2007

GRAND CAYMAN, Cayman Islands—The regulatory agency overseeing captive insurance companies in the Cayman Islands is undergoing another leadership change, although regulators say that will not hamper the growth of the captive domicile.

Morag Nicol, who was appointed head of the insurance supervision division of the Cayman Islands Monetary Authority last year, is leaving her post for personal reasons. Ms. Nicol replaced Mary Lou Gallegos, who retired last year but has returned on an interim basis as the agency searches for a permanent replacement. CIMA hopes to replace Ms. Nicol quickly, Ms. Gallegos said.

The change will not affect the growth of the captive industry as the regulatory agency will conduct "business as usual," Cindy Scotland, managing director of CIMA, told attendees of the 2007 Cayman Captive Forum in Grand Cayman, Cayman Islands.

Regulators have licensed 39 new captives this year and expect to end the year with 45 to 50 new captives, making 2007 "another very positive year for growth," said Ms. Nicol, who was at the Nov. 27-29 Cayman Captive Forum but left her post Dec. 3. The domicile has a total of 760 captives with premiums of nearly $7.5 billion and $32.6 billion in assets.

The domicile licensed 51 new captives at this time in 2006, Ms. Gallegos reported at last year's conference.

Health care coverage remains the main line of business for Cayman Island captives, accounting for 36.6% of all captives, followed by workers compensation at 21.3%, Ms. Nicol said.

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Subprime crisis unlikely to have major impact on insurance industry


Published Dec. 10, 2007

GRAND CAYMAN, Cayman Islands—Although the insurance industry has yet to fully experience the impact of the U.S. subprime mortgage crisis, losses in the sector are unlikely to reverse the down cycle of the market.

In fact, insurance markets, including health care and medical malpractice, will likely continue to soften for a minimum of 18 to 24 months and possibly longer, creating concern that underwriters will be unable to maintain pricing discipline, which eventually will affect the industry’s profitability, insurers and reinsurers told attendees of the 2007 Cayman Captive Forum held Nov. 27-29 in Grand Cayman, Cayman Islands.

Swiss Reinsurance Co. and Catlin Group Ltd. both recently reported losses related to subprime-securities.

“I don’t think we’ve seen the worst yet,” said Marc Hofer, vp of Swiss Re in Zurich.

Although the insurance industry is going to experience some losses, the subprime mortgage crunch likely will not be sufficient to reverse market softening that has occurred in the past few years, said Peter Eastwood, senior executive with AIG Healthcare in Boston and senior vp of Lexington Insurance Co. “I don’t personally believe it will have the effect of taking the market in a different direction,” he said.

The markets probably will see additional rate deterioration because of the property/casualty industry’s current level of profitability. The industry has an estimated $500 billion surplus on a global basis, he said.

Clients would likely say they are paying fair premiums, while their insurers will say they are making money, said Ian Thompson, senior vp–health care at Endurance Worldwide Insurance Ltd. in Pembroke, Bermuda.

“We’re at this point where everybody seems quite happy,” he said. “It needs to be sustainable for a long time. History tells us that it won’t be.”

The insurance industry will hopefully “act in its collective best interest” by maintaining pricing discipline, Mr. Hofer said.

Underwriters are far more sophisticated than they were several years ago and will get to a point of minimum pricing, although the market likely will continue to soften for the next 18 to 24 months, said Daniel Curran, class underwriter with Catlin Underwriting Agencies Ltd. in London. “I anticipate it will continue in the foreseeable future in the absence of a market event,” such as a major natural catastrophe or a financial markets meltdown, he said.

It is even possible the markets will remain soft over the next two to three years in the absence of an event, Mr. Thompson said.

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Companies must mitigate risks of aging workforce


Published Dec. 10, 2007

GRAND CAYMAN, Cayman Islands—Companies with captives covering workers compensation face increasing injury risks associated with the aging workforce and should implement measures to mitigate potential problems, experts say.

The aging workforce creates critical challenges that human resources and risk management professionals dealing with workers comp issues are becoming concerned about, Janice Gilligan, human resources manager for Poughkeepsie, N.Y.-based H.O. Penn Machinery Co. Inc., told attendees of the 2007 Cayman Captive Forum in Grand Cayman last month.

At H.O. Penn Machinery, many of the company’s 400 employees have several decades of service time, with some working at the company for 50 years. Ms. Gilligan herself has worked at the company for 31 years.

“We have a lot of longevity,” said Ms. Gilligan, whose company participates in a Cayman Island-domiciled group captive that provides reinsurance for workers comp and other risks. “We’re very conscious of the fact that we have an aging workforce.”

Although employers implement safety precautions, accidents still happen and the consequences of those accidents are often more severe for older workers, she said. For example, one employee in his early 60s tripped on a ladder and broke some ribs and is expected to be out eight to 12 weeks. A similar injury, though, occurred previously to a 27-year old employee, who was out less than six weeks.

The median number of days away from work due to an injury increases significantly as workers age, with older workers far more likely to be away from work a month or longer, according to U.S. Bureau of Labor statistics.

In addition, workers aged 55 to 64 were nearly twice as likely to have fatal injuries than younger workers while employees over the age of 65 had nearly three times the number of fatal injuries, according to the National Safety Council, Ms. Gilligan said.

Several factors contribute to the severe injuries sustained by older workers, including hearing and vision loss, changes to their cognitive ability, slower reaction times, decreased conditioning and declining mental health, said Andy Johnson, executive vp and principal with Captive Resources L.L.C. in Schaumberg, Ill, which reviews management and oversight of loss prevention and claim management services provided to captive owners by outside vendors.

Employers need to evaluate the demographic make up of their workforces and determine whether there is a correlation between age and the severity and frequency of injuries, Mr. Johnson said. If there is a correlation, employers can implement measures such as offering workers early retirement subsidies or phased retirement programs, implementing job rotation programs or establishing onsite wellness facilities.

But losing older workers also presents challenges to employers, as they lose critical skills, knowledge and institutional memory. So employers may want to implement mentoring programs so that older workers can teach younger workers how to do their jobs, Mr. Johnson said.

For example, H.O. Penn recently hired a retired service technician to conduct a training session for younger technicians. The retiree was able to pass along his extensive knowledge, which benefited the company, and it benefited the retiree because it gave him a sense of self-worth, Ms. Gilligan said.

Conducting vision and hearing screenings for employees, observing employees while they are driving and checking motor vehicle records for citations are all “things to consider as your workforce ages,” Mr. Johnson said.

Modifying the workplace is another risk mitigation step to consider, he said. Although there are costs involved with modifications such as improved lighting and equipment, they may generate savings over the long term as they can reduce injury claims, he said.

Whatever steps employers decide to take should first be analyzed by labor lawyers to consider employment law issues, Mr. Johnson advised. “There are a lot of nuances to it,” he said.

With the aging of the workforce and the higher severity and fatality rates for older employees, employers need to be proactive in addressing the health and safety concerns, Mr. Johnson said.

“It’s not going to change,” he said. “The question is what you are going to do with it and how are you going to approach it.”

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Cayman captive conference attracts more than 800


Published Dec. 10, 2007

GRAND CAYMAN, Cayman Islands—More than 820 captive owners and service providers attended the 2007 Cayman Captive Forum in Grand Cayman, Cayman Islands, on Nov. 27-29.

The conference featured sessions on the state of the captive insurance industry in the Cayman Islands, risk management challenges for captive owners, global insurance and reinsurance market trends, and efforts to broaden the domicile's reach in the insurance industry.

Next year, the captive conference will be held Dec. 2-4, 2008, in Grand Cayman.

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