In a medical malpractice lawsuit, your defense is completely in the hands of the malpractice carrier, and, make no mistake of it, its interests come first. However, the medical malpractice insurance contract is more instrumental in the defense of a doctor than insurance companies realize. There are clauses in the contract that, at first glance, seem to benefit carriers. However, there is a flip side to each clause.
First the cooperation clause. This clause requires the cooperation of the policyholder. It ensures that information is provided by doctors to the insurance company as soon as the physician is aware of the claim so that an expedient resolution of a claim is possible. The clause legally compels the policyholder to provide the information when the provider is aware of the incident.
The cooperation clause enables the carrier to get all the necessary information so that it does not indemnify a frivolous claim or futilely defend a meritorious one. Lack of cooperation increases the costs of claims that result from these circumstances. When the cooperation clause is enforced, the insurance company can settle claims expediently and defend cases most appropriately as these solutions best suit the company, not the doctor. Even the attorney retained by the carrier in your defense has agreed to defend you with a reservation of rights.
If policyholders fail to cooperate, they can forfeit coverage. If the carrier is not able to get correct information from the insured doctor, the carrier will not indemnify the claim and may cancel coverage altogether. Also, if a court later determines that the policyholder withholds information, it may permit the insurance company to file a case against the policyholder for breach of contract. Lastly, when policyholders are found to be untruthful, they may incur court-related costs apart from losing their insurance.
The cooperation clause is in the contract because the carrier has an inherent mistrust of its insured physicians. It protects the interests of the insurance carrier over those of the doctor in the name of transparency or the lack thereof. Nevertheless, it also can be used to the advantage of physicians.
If there is a duty to disclose information when aware of an incident — disclose information when aware of an incident. Whenever an adverse outcome follows a medical intervention, the doctor likely is the first to know of this unfortunate outcome. Because all doctors have a 5 percent chance of being sued each year, it is prudent to assume that litigation will follow.
As soon as doctors are aware of an unfortunate outcome, that is when they report the claim to the carrier in as much detail as possible, including reasons why the doctor believes the adverse outcome is an error of nature or a medical error, as may be the case. Such prompt reporting is made in advance of being served with a lawsuit. At this time, events are clear in the doctor’s mind and are not distorted by time. Then, the original medical record is secured in a safe deposit box, protecting it from any accusation of tampering. They are replaced in the patient’s chart with a certified copy for reference.
How the carrier responds to this report once it is received is up to it, but at least there is a report. Suppose one purpose of the cooperation clause is to enable the carrier to get all the necessary information so that it does not indemnify frivolous claims or futilely defend meritorious ones. In that case, the ball is now on its side of the field. Suppose this unfortunate outcome is an error of nature, and the carrier takes the doctor’s report seriously. In that case, the malpractice carrier has ample time to prepare for any event should a lawsuit follow. It also creates a paper trail of how it responds. It could either set reserves aside to protect your interests, or it could do nothing. How it acts remains to be seen.
Second, the defense and settlement provisions. Generally, consent to settle requires the insurance carrier to obtain the policyholder’s agreement. These provisions also require that the policyholder shall not unreasonably withhold this consent. Once doctors submit a statement as discussed above, especially when they provide 95 percent confidence that this claim is completely defensible, doctors satisfy this provision. The insurance company will be reluctant to coerce a settlement when such a statement completely outlines these circumstances. Any coercion can be regarded as a violation of a doctor’s Seventh Amendment right, which guarantees that all the facts outlined in the document are presented, evaluated, and impartially judged at trial by a jury.
When doctors report the claim, especially when they do so with 95 percent confidence in their conclusions, the issues of lack of transparency no longer apply as long as the statements doctors give are the truth. The insurance company now knows and should know that no vital information is withheld, and the doctor does nothing to derail its efforts to secure the truth about a claim.
Nothing speaks more positively about a doctor’s duty to comply with the medical malpractice insurance contract than this report. In the cooperation clause, doctors are required to assist during the investigation of the claim. In defense and settlement provisions, the carrier is not to settle without mutual consent. It is specified that a claim should be reported when the doctor is aware. If a doctor is aware immediately following a maloccurrence, even before a lawsuit is served, nothing prohibits a doctor from making such a report at this time. If anything, doctors live to the letter of the medical malpractice insurance contract, and this could never be held against them.
Howard Smith is an obstetrics-gynecology physician.