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June 1999
Volume 63 |
Number 6
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| How Much Professional
Liability Coverage Is Enough? Lessons From the ASA Closed
Claims Project |
Frederick W. Cheney,
M.D., Director
ASA Closed Claims Project
The question is often asked, "How much coverage should be purchased
for professional liability insurance?" While the answer will vary
from state to state, "conventional wisdom" calls for $1 million/$3
million, or in some cases $2 million/$6 million. The first amount
is for any single claim and the total annual claims cannot exceed
the second number. We examined the ASA Closed Claims database
to see if this "conventional wisdom" has any basis in fact.
At the time of this analysis, there were payments in 56 percent
of the 4,459 claims ranging from $15 to $23.2 million. One-third
of the payments were for $30,000 or less, one-half were for $100,000
or less, and three-quarters were for $375,000 or less. There were
40 payments for $1 million and 193 payments (4.3 percent of 4,459)
of more than $1 million. Sixty percent of the payments over $1
million were made for brain damage and 27.5 percent were made
for death. Sixty-five percent of the claims over $1 million were
settled for less than $2.5 million [Figure
1]. The peak year for the number of patient injuries leading
to a payment greater than $1 million [Figure 2] was 1985, when
26 such injuries occurred. Since 1986, the percent of claims for
which a payment of over $1 million was made ranged from a high
of 7 percent of total claims for the year 1988 to 1 percent in
1993 [Figure 2]. Inflation
does not seem to be a major factor in that the number of payments
for more than $1 million have remained relatively stable in the
late 1980s and early 1990s. The small number of payments over
$1 million in 1992 and 1993 may reflect incomplete data as injuries
during those years may still be undergoing litigation in the late
1990s.
For claims over $1 million, the care was considered substandard
in 70 percent of cases and standard in 20 percent. In 10 percent,
the standard of care was impossible to judge by the reviewers.
Justice seems to be served as far as the patient is concerned
in that most payments of more than $1 million were for substandard
medical care. For the anesthesiologist, however, it is not reassuring
to have payments for more than $1 million made when the care met
acceptable standards.
The data should be interpreted with a number of reservations
in mind. First, the amount of payout recorded for each case was
the total amount from all sources, e.g., anesthesiologist, surgeon
and hospital. Second, the amount does not include the cost of
defense, which some companies may deduct from the policy limit.
Third, we do not know from the data whether the settlement was
structured, so the actual cash value, in many cases, may have
been less than $1 million. Therefore, the figure of 4.3 percent
of the claims from the database costing more than $1 million may
be an overestimate of the anesthesiologist's liability. Finally,
due to the lag time between patient injury and settlement/award,
the data about the number of payments for events occurring in
1992 and later may be incomplete.
From these data however, it would seem that the "conventional
wisdom" of a $1 million policy limit per claim is supported by
the data from the Closed Claims Project.
Frederick W. Cheney, M.D., is Professor
and Chair, Department of Anesthesiology, University of Washington,
Seattle, Washington.
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