Labor, birth, and subsequent neonatal care are complex processes that require an interdisciplinary collaborative team that is vigilant and focused on evidence-based principles of care. Furthermore, there is a near-universal expectation that all outcomes will be perfect. Obstetrics is often listed as a specialty that is more likely to be involved in litigation. Regrettably, record-setting verdicts for obstetric malpractice cases continue to rise. Earlier this year, a hospital in Maryland was found negligent in providing care that resulted in a child with severe cerebral palsy.1 A jury awarded $229 million to the family. This verdict was appealed and a final amount was reduced to $205 million.2 Maryland is not the first state to boast a triple-digit birth injury verdict. Juries have awarded more than $100 million in damages in Florida, New York, and Michigan. Currently, a birth injury case in Chicago has a potential to surpass a current Illinois record of $53 million.3

Depending on where a claim is litigated, cerebral palsy cases average $15 million to $20 million in value, while a maternal death case can be $3 million to $8 million.4 Given these high exposures, clinicians are often concerned about potential consequences of a lawsuit that results in a large verdict. If physicians carry insurance, is there an expectation that other healthcare team members purchase similar policies? This leads to a discussion of whether liability insurance is of benefit to nurses in these cases.

FINANCIAL DECISIONS WHEN CONSIDERING MALPRACTICE INSURANCE

One frequently asked question is whether a nurse is required to carry professional liability insurance. Clinicians often perceive that having malpractice protection provides a peace of mind. Perhaps nursing insurance will help, but in many instances a policy may not. Purchasing malpractice insurance is a financial decision made by clinicians after thoughtful consideration. An essential question is asking what is to be achieved by purchasing a policy. If an individual's answer to this issue is to have comprehensive protection from a liability claim, clinicians are often surprised to find out how typical insurance policies actually operate.

Primary versus excess coverage

Because clinicians are likely to be sued when there is a poor perinatal or neonatal outcome,5 malpractice insurance costs are high. Using Illinois as an example, in 2017, physicians typically purchased policies with limits of $1 million per occurrence and $3 million in aggregate with obstetricians paying about $177 441 per year in premiums.6 Similarly, physicians in Florida paid more than $190 000 for comparable coverage while New York approached $215 000 annually. These premiums are for primary insurance coverage for allegations made against professional care by a physician. Primary insurance provides financial protection even when care is provided within a defendant hospital. In most states, juries simply determine how much money to award a plaintiff among multiple defendants. Usually, each defendant pays an equal share up to the primary coverage value. Hospitals involved in multi-million-dollar cases may pay a larger portion of a verdict. This is known as joint and several liability because each party is held independently liable for an entire verdict.

Hospitals also carry primary coverage, often in form of a self-insured retention or SIR. Each hospital contributes several million dollars to fund its insurance plan. If a claim is made against a hospital, the SIR pays each claim directly from this hospital-controlled fund instead of an outside insurance company. Beyond an SIR or primary layer of insurance coverage, excess insurance is purchased.

Excess insurance coverage policies do not pay until a certain threshold is reached. This happens when a primary insurance layer is depleted. For example, if a clinician has a $1 million policy in primary insurance coverage, an excess protection policy can be purchased to pay on claims greater than $1 million. Excess coverage at a lower premium may be offered because insurance companies are not responsible for the first $1 million on any particular claim. These groups may also calculate the historical likelihood that claims exceeding $1 million will actually occur. This concept is important because nursing malpractice insurance is typically excess coverage.

PLACE OF EMPLOYMENT MATTERS

Place of employment may have an impact on any type of coverage purchased by a nurse. Clinicians may be mailed promotional brochures or receive electronic information advertising affordable nursing insurance coverage starting at rates as low as $100 per year. One aspect to consider when deciding to buy a policy is the cost discrepancy in physician versus nursing coverage. For example, a nurse may secure $1 million in advertised coverage for $100, but physicians pay nearly 2000 times more for similar insurance. Reading a policy's fine print is part of understanding this discrepancy. One sample policy states7:

This Policy is written as specific excess insurance over the insurance policy, self-insured retention, deductible, indemnification agreement, trust agreement, patient compensation fund or other fund or risk transfer arrangement of any sort ("other insurance") provided by a third party. If any "other insurance" is available to you, such "other insurance" must pay first. It is the intent of this policy to apply only to the amounts covered under this Policy which exceed the available limited of any "other insurance" whether primary, contributory, excess, contingent, or otherwise. As such, this Policy will not contribute with any such "other insurance."

Therefore, $1 million in coverage is only available if a nurse is held liable for an amount beyond all other available coverage. If healthcare care is provided in a state with a patient compensation fund (Indiana, Kansas, Louisiana, Nebraska, New Mexico, Pennsylvania, South Carolina, New York, Wisconsin, Florida, and Virginia), a policy will likely not pay until state funds are spent. If a private practice maintains insurance covering for an individual, a policy will not pay until the amount is fully exhausted. If a hospital maintains a robust SIR, an individual's policy will likely never be triggered. By including such a provision, insurance companies have substantially lowered the chance of having to pay a claim while still earning a premium for stakeholders.

LIABILITY INSURANCE AND THE DISCOVERY PROCESS

A policy purchased for peace of mind may become an opportunity for a nurse to appear at trial. When an attorney evaluates a potential claim for medical negligence, challenges involved in winning a case and potential monetary compensation for a client are carefully considered. Litigating a case, especially one involving a birth injury claim, can easily add up to hundreds of thousands of dollars. Ultimately, a legal team's objective is to collect a large enough verdict to provide monetary compensation for an injured party without claiming personal property or assets from clinicians. In Illinois, like many states, hospitals and other corporate healthcare providers are typically named as defendants because these institutions have greater insurance coverage and have allegedly done something wrong. Under differing legal theories, a hospital may be held accountable for employees, which is why nurses are sometimes named as defendants in malpractice cases.

Physicians who are independently insured often have little option but to settle or see the case through until the end. This situation can be very different for nurses. Juries find nursing professionals sympathetic witnesses, so there may be less value in a nurse remaining a defendant once a hospital's insurance coverage is involved. However, careful plaintiff attorneys will issue written discovery questions to a defendant nurse, such as availability of other insurance outside an employer's coverage.8 If a policy does not exist, there is a higher likelihood a nurse will be dismissed from a case as opposed to someone who holds a policy in addition to the hospital's coverage. This is because attorneys owe a duty to clients to maintain maximum coverage to pay potential verdicts. According to the example policy language, coverage is not available for payment until all other coverage is exhausted. Therefore, early settlement is not an option.

CAVEATS OF NURSING INSURANCE

There are instances when insurance may prove beneficial. If an employer does not have sufficient insurance coverage, clinicians may consider purchasing a separate policy. This may arise in rural areas with small family-based practices, underperforming community hospitals, or in states where physicians do not maintain large policies. In these circumstances, acquiring an affordable nursing insurance policy may not provide adequate protection in adverse outcomes or may be severely limited in application making the policy worthless.

Some nursing insurance policies provide a separate endorsement for license protection. When a nurse is put in an unfavorable position of defending a license before a state board of nursing, an attorney, along with expert witnesses, is typically hired. Without financial ability to support employing these individuals, a nurse is at risk of license forfeiture. Coverage varies between policies, but typical license protection endorsements will provide for $10 000 to $25 000 per year in legal defense fees, and often cover expenses associated with hiring experts. Ideally, if an employer has adequate coverage but license protection or other advertised incentives are desired, clinicians may consider exploring policy options that allow for these benefits.

CONCLUSION

In this era of increasing malpractice claims, nurses are obligated to practice within a standard of care in which a reasonably prudent nurse would perform under similar circumstances. When an event occurs resulting in an adverse outcome, nurses may become the focus of litigation. While experts may disagree whether a clinician is obligated to carry a separate insurance policy, there is no legal requirement at this time. Contents discussed in this column are the author's own, based on experience as a practicing attorney and as such, should not be viewed as actual legal advice. Clinicians may consider seeking guidance from a hospital's risk management team or financial and legal experts when formulating a plan for purchasing liability insurance.

-Adam Snyder, JD

Women's Health Alliance

Chicago, Illinois

References