Don't be afraid to contact your insurer when you smell a suit at your doorstep

Key Points

Many doctors are reluctant to notify their insurance companies under such conditions because they are afraid their rates will increase. Several good reasons to notify an insurer exist, however:

• You can ensure that all relevant records will be secured. Once you suspect a lawsuit, keep your records in a locked, fireproof file to which only you have the key, so that they won't be lost, damaged, altered, or destroyed. When you report a claim, your carrier probably will request that you take such action. If you do not do so and a lawsuit commences two or three years after the incident, it might be impossible to find the all of the records.

• It also looks bad if the whole record can't be found. A fire destroyed all of one doctor's records. When a lawsuit commenced, the plaintiff's attorney filed a charge of spoliation of evidence. The charge was not upheld, but the jury could not have been favorably impressed by the argument being made.

• You can ensure that all vital testimony will be conserved. You will not remember much about a particular patient you see today when you go to trial in five to 10 years, and neither will your colleagues, the nurses, or the staff at the hospital.

Once you report a request for records to your insurer, the company will evaluate it and will send an investigator if it deems that a lawsuit is probable. The investigator will talk to you and other witnesses while your memory is fresh. The investigator will take your statement, which can be corrected, notarized, and saved. Your testimony, and that of key witnesses, can be preserved should litigation occur later.

Most policies contain a notice provision stating that the insurer may deny coverage if a physician fails to notify the carrier of a request for records in a timely manner. This clause aims to prevent the insurer from being surprised by litigation and also aims to prevent the defense from being compromised.

For example, a doctor could settle a claim with a patient, obtain a release, and never notify his insurer because he does not want his rates to increase. If the patient sues later and the court allows the lawsuit despite the release, the insurer would have the right to refuse representation and indemnification. Sometimes the insurer will include a defense and reserve the right to evaluate the judgment.

A few disadvantages are associated with notifying your insurer, however. Doing so may induce the insurer to create another file, which could factor into an adjustment of your premiums later. Also, your settlement of the matter may be slowed as you wait for the insurer to ascertain liability and authorize payment. Lastly, your settlement could end up being reported to the National Practitioner Data Bank.

If you think questions could be raised about the quality of your care, if the patient has had a bad result or is unhappy, or if you're unsure of the lawyer's intentions, however, report the request. It benefits you and your insurer to get an early jump on a potential lawsuit. The insurer is unlikely to penalize you for reporting a request for records.

The author is a healthcare attorney in Mt. Kisco, New York, and a Medical Economics Consultant. She can be reached at lj@bestweb.net
. Malpractice Consult deals with questions on common professional liability issues. Unfortunately, we cannot offer specific legal advice. If you have a general question or a topic you'd like to see covered here, please send it to memalp@advanstar.com
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