What’s happening with cost and claims in the wake of COVID-19

Doctors have enjoyed more than a decade of relatively affordable medical malpractice premiums. But for many, those good times are ending.

The turnaround is documented in a white paper published earlier this year by the investment management firm Conning. The company found that after peaking in 2006, premiums dropped 20% between 2007 and 2013, then remained fairly steady before increasing by 5% in 2019.

Similarly, Medical Liability Monitor, in its 2019 annual rate survey, found that more than 25% of medical professional liability premium rates increased during the preceding year, the first time that has happened since 2006.

“2018 marked the year in which premiums were the lowest we’ve seen in this century,” says Robert E. White Jr., executive vice president for medical professional liability at The Doctors Company, a malpractice insurance provider. “But in the last year or two we’ve seen the market become firmer.”

Still unknown is how the COVID-19 pandemic will affect the medical malpractice market. The answer to that question won’t become clear for several years, White says, because most malpractice suits aren’t filed until several years after the incident on which they are based, and then take more years to move through the judicial system.

Matt Gracey, CEO of Danna-Gracey, a malpractice insurance broker headquartered in Delray Beach, Florida, says rate increases in the 5% range actually are on the lower end of the scale he has seen, and are generally limited to smaller practices. Some large multispecialty groups his company works with have seen their rates go up by as much as 100% over the last 18 months, he adds.

Gracey says premiums were held down in the years prior to 2019 because of a combination of factors, including new competitors entering the market and a decline in the number and severity of malpractice suits around the country. The latter development was due in part to a wave of tort reform legislation prior to 2006 in which states placed caps on the dollar amounts of damage awards in malpractice cases and/or made it more difficult for plaintiffs to sue physicians and hospitals.

But those drivers of lower premiums have ended or reversed over the past few years. White notes that there is less competition in the market, with about 100 companies writing policies today compared with approximately 130 four or five years ago. Meanwhile, states such as Texas, Florida and Oregon have seen their caps on damage awards either struck down by the courts or modified by their legislatures.

The result, says Gracey, is that “every A-rated carrier specializing in malpractice insurance now is running a combined loss ratio of over 100%, meaning that for every dollar of premium they bring in they’re paying out more than a dollar, which means they have to raise their rates.”

To be sure, not all doctors have seen increases in their malpractice premiums. Melissa Lucarelli, M.D., a family practitioner in Randolph, Wisconsin, and member of the Medical Economics® editorial advisory board, is paying $10,288 in 2020, a slight decrease from the $10,357 she paid in 2015. Similarly, Damon Raskin, M.D., an internist in Pacific Palisades, California, says his malpractice premiums have changed “hardly at all” over the past five years.

That there are exceptions to the overall trend doesn’t surprise White. “The fact is, there are 50 different states and 50 different markets in the MPL (medical professional liability) business, and when the market starts to change it trends slowly,” he says. And although an insurance carrier may be experiencing an overall loss in a state, “there may be specialties in that state where no increase is indicated.”

As for the legal risks to doctors posed by COVID-19, experts say these could take several forms. One stems from the prohibitions on elective surgeries most states imposed at the start of the pandemic. “If a doctor deemed something to be nonemergent during the elective surgery ban and (it) turned out they were wrong, they could be sued,” White says.

A second category of risks is from patients claiming they contracted COVID-19 at a physician’s office. Some practices are trying to protect themselves by requiring patients to sign an “exculpatory clause” agreement, limiting the patient’s ability to sue if they experience any harm while being treated. But White warns that relying on exculpatory clauses for protection is dangerous.

“We tell these physicians upfront that an exculpatory clause probably won’t provide the protection they’re looking for because they generally aren’t viewed with favor by the courts,” he says. “Probably the best they can hope for in that regard is some form of state or federal legal immunity for physicians.”

Doctors can also take heart from the difficulty inherent in proving that a person contracted COVID-19 in a particular place, says Frederick M. Cummings, J.D., a health law attorney with Dickinson Wright in Phoenix, Arizona.

“Exposure could come from a myriad of places,” Cummings notes. “If I were a plaintiff’s lawyer, I wouldn’t take that case because there’s still so much community spread.”

White urges practices to follow the CDC’s COVID-19 safety guidelines as a way of defending themselves in the event of a patient lawsuit. “‘We followed the standard of care, what else could we have done?’ That will be the best defense,” he says.

Probably the greatest potential danger, however, comes from the exponential growth in the number of remote visits caused by the pandemic. As the use of telehealth increases, so does the possibility of a doctor missing a change in a patient’s health status or not following up with the patient in person, thereby leading to a malpractice suit.

“Remote examinations have inherent limitations when it comes to diagnosing,” White notes. “That means doctors have to make sure their antennae are out for those symptoms that require a patient to be seen in person in order to ascertain a potentially life-threatening condition.”

He points to the decline in emergency department visits for strokes and heart attacks since the pandemic began (20% and 23%, respectively, from mid-March through May, according to the CDC) as cause for concern. Symptoms of both conditions often are first detected by a patient’s primary care doctor, and speedy treatment is crucial to good outcomes for both. “Failure to pick up on the need to get these patients seen right away, that’s where most of the exposure comes from in these cases,” he says.

Cummings points out that many doctors already have experience in deciding when a patient requires an in-person diagnosis. “I don’t see it as any different than when a patient called you on the phone and said, ‘I’m having these symptoms,’ and the doctor judging whether they should come in,” he says. “But it does require some previous knowledge of the patient (and) things like their history and comorbidities.”

But despite doctors’ best efforts at remote diagnosing, Cummings notes, the number of deaths from causes other than COVID-19 unexplained causes increased substantially after the pandemic started. (According to results from a July study in JAMA Internal Medicine, there were approximately 122,000 more deaths between March 1 and May 30 than would normally be expected during those months, which was 28% higher than the number of COVID-19–related deaths.) He speculates that many of those unexplained deaths were due to the disease’s exacerbating underlying conditions in patients.

“The big issue for many of my clients is not whether they recognized COVID(-19), it’s whether they paid attention to any of the other health issues that were lurking in those patients,” he says.

Cummings adds that doctors can defend themselves in a lawsuit stemming from a remote diagnosis by thoroughly documenting the encounter. This is especially the case for patients who have missed in-person visits because of concerns over COVID-19.

“It’s more important than ever to make sure that whatever information they get on calls from patients they’re no longer seeing regularly is documented and whatever their thought process was at the time is reflected in the note,” he says.

In the end, experts say, a doctor’s best defense against a malpractice suit is to prevent it from occurring. And that requires building a trusting relationship with patients, fostered by honesty and good communication.

Gracey points out that one of the most common malpractice charges primary care doctors face is failure to diagnose. “But when you drill into those claims, you find a lot of what’s really behind them are communication issues,” he says. And although occasional miscommunications in relationships are inevitable, “if we have terrible relationships with each other, those miscommunications get blown out of proportion, and in the case of doctors and patients, they end up before judges and juries.”