Batch claims “devastating” to MPL profitability, says Trans Re
The increasing frequency of “mega” batch claims is contributing to increasing verdict severity and represents a potentially even greater threat to medical professional liability business profitability, according to Richard Henderson, senior vice president of Trans Re.
A batch claim involves multiple claimants regarding a single act or a group of related acts, and usually relate to complaints around unnecessary procedures, infections, medical products or equipment, or patient abuse, Henderson said.
Writing in Captive International, Henderson described the potential impact of batch claims as “devastating” for MPL profitability on a per-claim basis. Such claims tend to trigger as many coverage parts as possible, including general liability, professional liability, directors and officers and other lines, and as many coverage years as possible. Consequently, “resolutions may exceed $100 million, and may impact many insurers and reinsurers in a coverage tower,” he said.
Patient abuse is “the most prevalent and emotive cause of batch claims that impact MPL,” said Henderson. He recommended hospitals impose “tighter scrutiny of staff, more open channels to enable victims to step forward, and immediate and proactive claims investigation processes,” to tackle the problem.
Medical professionals that perform significantly more procedures than their peers may be open to accusations that they are performing unnecessary procedures, noted Henderson. “It may be difficult for captives or insurers to identify such outliers before a formal investigation is launched, but a careful review of responses to submission/renewal questions could provide an early warning signal and trigger further, more probing questions,” he said.
Henderson warned that many MPL insurers that believe they do not cover issues relating to medical products and equipment may be mistaken. Exposure to claims around faulty equipment “are not always fully appreciated by the medical professional community, because they are not a common source of MPL losses,” he explained.
Henderson advised insureds to always assume a batch claim will arise at some point, and to designate a dedicated internal team to respond to them when they do arise. They should source third party advice in tackling the problem and have legal and public relations teams pre-identified, enabling a swift response when a batch claim arises.
Henderson said: “The best defence is a good offense. You must deploy your plan of attack immediately a batch claim arises. Time is of the essence. Early missteps will have significant ramifications down the road.”