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The Rapid Growth of APPs and Burgeoning Risk for MPL

Wednesday, March 6, 2024, 11:00 a.m. ET
Join the MPL Association for an in-depth discussion on the proliferation of APPs and the impact of this trend on the future of MPL claims, defense, and loss mitigation. This webinar is FREE for MPL Association members and affiliate partners.

Federal Administrative Actions Impact MPL

While medical liability-related legislative activity has shifted heavily from the federal environment to the states, the same cannot be said for all regulatory activity. Thanks to the McCarran-Ferguson Act, states remain the dominant focus of regulatory matters affecting medical liability insurance.

The State of the MPL Market: Claim Severity Rises, Policy Price Increases Moderate

Every six months, the MPL Association’s Research and Analytics Department issues a report analyzing these metrics with valuable take-aways that offer industry stakeholders insights into the industry’s financial performance.  

 

FEATURE

Are Mega-Verdicts the New Normal?


By Robert Hanscom



Trends continue to indicate that medical malpractice claims are rising in severity. Adverse events that result in indefensible claims are costing the healthcare system enormous sums of money each year. The consistent escalation of large claim payouts is particularly alarming.

In recent years, we have seen an increase in verdicts that exceed $10 million. Because of their frequency, these “mega-verdict” payouts are becoming somewhat normalized in the medical professional liability (MPL) community. From 2016 to 2019, the average MPL verdict severity increased by 50% to $23 million. In 2023, there were multiple jury awards surpassing $25 million, including a $183 million verdict in Pennsylvania, the largest award ever given to a single plaintiff.

As mega-verdicts keep breaking records, the medical malpractice defense industry is becoming increasingly intent on finding ways to stem them. It is more critical than ever to understand the root-cause factors that are driving these tragic and costly damages in medical liability—the third highest type of case for mega-verdicts nationwide. But it’s not just understanding why; it is taking action. Healthcare leaders, armed with data and insight, must implement solutions that will help patients, clinicians, and MPL insurers evade the emotional, reputational, and financial damage that results from these high-severity cases.

Causes of Rising Claims Severity

Beyond an expected and gradual increase in awards over time, economic inflation and unequal wealth distribution have had a substantial effect on claims severity. In a country where billion-dollar government bailouts and six-figure college debt are regarded as “normal,” Americans have become desensitized to large dollar amounts. One million dollars used to be a life-changing amount of money for middle-class Americans. While it’s still a healthy sum of money, cost-of-living expenses are so high in some parts of the country that $1 million is often no longer perceived by juries as a sufficient award for negligence that they have deemed preventable—and where there has been a significant negative impact on the life of a patient.

Additionally, Americans are a profoundly litigious population and file millions of civil cases each year. Societal expectations and views of litigation, rather than what is fair compensation for damages, are fueling the rising cost of insurance claims. Jurors tend to assume that a large corporation or a wealthy individual and/or their insurance company can afford to pay out a massive award. All of these factors contribute to social inflation, which is gaining traction and increasing the public’s expectation of outsized verdicts.

Role of Communication Lapses in Mega-Verdicts

Due to the devastating nature of mega-verdicts, it is vitally important to prevent them at all costs. Of course, this is much easier said than done. Doing so starts with being proactive and analyzing malpractice claims data sets to avoid future medical errors and improve patient care. A close examination of malpractice data can reveal signals that warn us about the hidden vulnerabilities routinely involved in MPL cases. Strong signal data can serve as an alert that an event could likely happen again and result in serious outcomes.




Malpractice data can also reveal the root causes of harm that often lead to malpractice claims. A Journal of Patient Safety study shows that communication-related malpractice claims are extremely expensive, as they are difficult to defend and frequently result in large settlements. This is because communication failures are often regarded as negligence per se—lapses that never should have occurred—and aberrations in the standard of care.

Clearly, it is in the best interest of providers, healthcare institutions, and malpractice insurance carriers to prevent these types of scenarios. This has given rise to nationwide efforts to introduce structured communication into the healthcare setting. The goal: to remove unnecessary variability in communication between providers, particularly during critical transitions in care.

Retroactive data indicates that patient care transitions between clinicians and care settings are highly vulnerable to communication failures. Also, recent analyses show that miscommunication and handoff communication failures are a leading driver of malpractice claims across multiple disciplines and clinical specialties. It follows that targeting handoff communication holds promise as one of the most effective ways to minimize rising claim payouts—and start bending the high-severity claims curve.

Structured Communication Can Mitigate Mega-Verdicts

Nobody wants a large-verdict case—not the patient, the provider, the hospital, or the insurer. As an industry, we need to introduce structured communication to critical transitions in care—from one unit to another, from hospital to home, from ambulatory care facility to hospital, and so on. The Journal of Patient Safety study suggests that interventions to improve transmission of critical patient information are directly responsive to communication-related factors fueling malpractice cases.

The research further demonstrates how handoff tools can avert risk and its associated costs: Of the 40% of malpractice cases with communication failures that included a handoff of care, 77% were deemed “likely preventable” with a handoff tool.

When tools like I-PASS (the mnemonic: Illness Severity; Patient Summary; Action List; Situational Awareness and Contingency Planning; and Synthesis by Receiver) are present in care transitions, high-quality care is delivered, and insurance carriers can sleep better at night knowing they have a strong defense. This not only directly benefits the patient receiving the care, but also the teams of providers who continue to live and practice under the mantra “first do no harm.”


 


Robert Hanscom is a Strategic Advisor at the I-PASS Institute.
Retroactive data indicates that patient care transitions between clinicians and care settings are highly vulnerable to communication failures.