Sexual abuse & molestation: are we at a crossroads with respect to coverage?
Over the past two decades, medical professional sexual abuse and molestation (SAM) settlements have reached eight, nine and even ten figures ever more frequently. This frequency of severity has raised questions about the insurability of the exposure going forward – should abuse of a patient be an indemnifiable exposure?
How did we get here?
Twenty years ago, isolated SAM cases were presented to medical professional re/insurers. While the perpetrator faced criminal prosecution, it was generally accepted that the healthcare organisation was civilly liable for negligent supervision, credentialing or oversight of the perpetrator. Notable examples include Dr. Levy in Maryland, the Ob/Gyn who surreptitiously photographed several thousand patients over several years. The activity was discovered in 2012 and settled in 2014 for ~$190 million. Around the same time, Dr. Bradley (paediatrician) in Delaware was founded to have sexually abused young children over several years. The Bradley cases settled for $130 million.
“Reviver” legislation to open up Statutes of Limitations led to many new claims being filed, and the increased attention to this issue fuelled a number of high-profile settlements, including Dr. Tyndall in California, whose settlement exceeded $1.2 billion. In the past month, a series of SAM claims in Chicago have settled for close to $500 million. Significant SAM claim settlements well in excess of $100 million are currently being resolved across the country.
Until recently, few of the largest medical malpractice verdicts involved SAM claims – most settled rather than face a jury.
In 2023, a New Mexico verdict of $485 million ($400 million of which was punitive) found a medical professional entity liable for a SAM assault in foster care. That claim was settled soon thereafter, as were several other related claims.
Earlier this year, an Illinois jury awarded $535 million ($475 million punitive, though the punitive element has since been reduced to $120 million) arising from alleged abuse in a behavioural health setting. In September, a Virginia jury awarded $360 million against another behavioural health physician who had inappropriate contact with former patients, with many similar claims waiting to be tried/negotiated. It should be noted neither of the behavioural health claims have finally settled yet, and both defendants are clear they don’t agree with the verdicts and intend to appeal.
What can re/insurers do?
Nine figure awards can easily exceed the largest coverage towers. Insurers have recently moved towards SAM sub limits, significant co-participations, and retentions for each claim (rather than “batching” as one common loss) as well as restricting the retroactive date of coverage for SAM losses or even excluding SAM coverage entirely.
With no sign that SAM loss severity is likely to reduce in the near future, the bigger, more basic question is being increasingly presented – is it even possible to underwrite SAM exposure? Are we approaching the point at which SAM will be completely excluded from medical professional liability programs, and what implications will that have upon captives and hospital systems?
Richard Henderson is senior vice president at TransRe. He can be contacted at: rhenderson@transre.com
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