NEITHER A PHYSICIAN NOR ANY PROFESSIONAL likes to be accused of wrongdoing or sued for negligence. Litigation is time consuming and can be filled with anxiety regardless of whether the dispute ends in a verdict or settles during the litigation process.
According to Americans for Insurance Reform, a national coalition of public interest organizations that supports insurance industry reforms, approximately 85,000 medical malpractice lawsuits are
filed annually. A physician who is sued and has professional liability insurance — most states require a physician to have this coverage—will generally have counsel appointed by his insurance carrier. A 2007 report published by the U.S. Department of Justice’s Bureau of Justice Statistics says that between the years of 2000 and 2004—the most recent period for which information is publicly available—approximately 95 percent of all medical malpractice claims settled prior to trial.
Insurers are most likely motivated to settle claims to avoid the costs and risks associated with seeing a case through to verdict. The 2007 Bureau of Justice Statistics report suggests that insurance payouts for medical malpractice claims from 2000 to 2004 were at least two and one-half times greater for claims that went to verdict than those that settled before trial. Given these economic incentives, insurers
may be motivated to settle claims where there is little or no evidence of negligence by the physician-defendant.
The impact of a settlement is more than a financial burden for the physician-defendant. A settlement can affect a physician’s reputation, state licensure status, and the ability to obtain affordable professional liability insurance in the future. Settlements are reported to the National Practitioner Data Bank (NPDB). This submission could affect the physician’s status with hospitals and third-party payers that have access to NPDB data.
In any situation in which a physician is named as a defendant in a professional liability action, the physician should review her professional liability coverage before the policy is in place— during the policy period prior to a termination or cancellation. A physician should also have the policy readily available for review if she becomes a defendant in a professional liability action. Because of the implications,
it is vital for the physicians to review and understand their policies and whether it affords them the right to control if and when a claim will be settled.