Hot Topics in Medical Professional Liability

PLUS Chapter MeetingRick NaumanSenior Vice President Underwriting & MarketingMay 3, 2007

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Topics to Cover

• Tort Reform “Lite”—HB 2292

• Changes in the business of medicine; new medical professional liability exposures– Bariatric Surgery– Medi Spas– Telemedicine

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Tort Reform: WA Legislative Front

• Spoke privately with all parties• Got commitments to discuss issues• 10 hours all parties, face to face• Staff – another 8 hours• Negotiations – also met separately

Wake of Dueling Initiative Failures in 2005; Governor took leadership role

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Participants

• Washington State Medical Association• Washington State Hospital Association• Washington State Bar Association• Washington State Trial Lawyers Association• Physicians Insurance A Mutual Company• Governor Gregoire

Separate Negotiations-Commissioner Kreidler

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Overview of HB 2292

Result: Tort Reform “Lite” Effective 90 days after June 7, 2006 adjournment

unless otherwise noted

• Covers 3 major areas:• Patient Safety• Insurance Reform• Health Care Liability Reform

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Overview of HB 2292 - Patient Safety Highlights

“I’m Sorry” Legislation• Statements of Apology– not admissible in a civil

action if conveyed within 30 days of act or discovery

• Includes any:– Statement– Affirmation– Gesture or conduct expressing fault– Apology, sympathy, commiseration, or condolence

that relates to pain, suffering, injury, or death.

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Patient Safety Highlights (cont.)

• Adverse Event Reporting (unfunded)– Hospital– Psychiatric Hospital– Correctional Medical Facility– Childbirth Center– Exempt from Public Disclosure– DOH regulations – DOH studies to promote patient safety

• Funding could be sought in 2007

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Patient Safety Highlights (cont.)

• MQAC– 2 more public members– 2 members must be from outside health care

• Incentives to report unprofessional conduct

• 5 or more providers can form a consortium to create a state-approved QI plan

• Prescription legibility– Hand Printed– Typed– Electronically Generated

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Overview of HB 2292 - Insurance Reform• Closed claim reporting starting with claims

closed in 2008– Extensive collaborative regulatory process recently completed– Significant issue for non-admitted market, RRGs, captives and

other self-insureds

• New underwriting standards prohibit penalizing policyholders– For a coverage inquiry– For reporting a potential claim that does not result in a claim– For a single claim closed without payment– Can be a factor if other substantive underwriting factor is present

• 90 days to cancel or non-renew

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Insurance Reform (cont.)

• Companies to provide better information to explain– Premium Increases– Coverage Restrictions– Cancellation or Nonrenewal

• Prior approval of rates and forms

• New regulations to implement underwriting standards effective September 10, 2006

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Overview of HB 2292 Health Care Liability Reform

• Modest strengthening of the existing exception to the collateral source rule– All third-party sources of compensation to the patient

will be disclosable to the jury except for future collateral source payments

• A three-year statute of limitations and eight-year statute of repose– Will apply to minors?– The courts will have to resolve

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Overview of HB 2292 Health Care Liability Reform (cont.)• New entirely voluntary arbitration process

– All parties must agree to arbitrate– Damages are capped at $1 million– Discovery limits apply– Arbitration proceeding must commence within nine to

twelve months after the agreement to arbitrate

• A plaintiff must give 90 days’ advance notice of intent to sue and must file a certificate of merit signed by a qualified expert when the complaint is filed

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Impact on Physicians and Their Insurers

• Apology could impact patient safety initiatives • Closed claim data may give us better information

on the PL claims universe• Insurance Changes

– Insured gets more explanation of premium increases and reductions of coverage

– More time to look for alternative coverage– No apparent impact on marketplace

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Impact on Physicians and Their Insurers (cont.)

• Little impact on premiums

• Voluntary arbitration is one to watch– Could be viewed as easy handling for

questionable liability case

• Did see rush to courthouse in May and June 2006 (to avoid notice of intent to sue)– Frequency (reported claims) down since then

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The Future on the Legislative Front

• Additional discussions regarding MQAC• Additional talks regarding specialists

working on call for ER• Could be additional insurance and DOH

regulations• If funded, adverse event reporting and

new data could reduce patient injury

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The Future on the Legislative Front (cont.)• Blue Ribbon Commission on healthcare costs & access

• Established by legislature in 2006

• Purpose – deliver a five-year plan for substantially improving access to affordable health care.

• January 2007 the Commission published a Final Report composed of 16 recommendations to improve health care in Washington.

• Includes several recommendations which have an emphasis on patient education and patient responsibility.

• Legislation is being introduced that supports the various recommendations of the Commission

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New Professional LiabilityUnderwriting Challenges:

Covering the Business of Medicine

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Bariatric (Weight Loss) Surgery

What are the business opportunitiesfor physicians?

– Severely overweight population– Weight causes/asseverates other health problems– Losing weight eliminates many of the health issues– Elective– Cash payment

• Insurers are beginning to pay for procedures

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Bariatric (Weight Loss) Surgery

Risky Procedure– Qualifying patient is morbidly obese

• 100 pounds or more overweight• Many other medical complications

– Very high complication rate– Patient expectations must be managed– Surgeons want to just cut, not counsel patients– Surgical procedures are not easy to learn

• See one, do one, teach one• 50 plus procedures to gain proficiency

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Bariatric (Weight Loss) Surgery

Underwriting the exposures– Evaluate physician’s training and experience with the

procedures– Look for care team

• Surgeon• Nutritionist• Psychologist• Properly equipped hospital partner

– What is continuum of care: from evaluation to post-surgical follow-up?

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Medical Spa

What is a Medical Spa (Medi Spa)?

According to International Medical Spa Association– Medical Spa is a facility that operates under the full-

time, on-site supervision of a licensed health care professional. The facility operates within the scope of practice of its staff, and offers traditional, complementary and alternative health practices and treatments in a spa-like setting. Practitioners working within a medical spa will be governed by their appropriate licensing board.

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Medical Spa

What are the business opportunitiesfor physicians?

– Baby Boomers fighting the aging process– Society obsessed with youth and looks– Elective– Cash Payment

• Insurers do not pay for procedures

– No night and weekend call

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Medical Spa

What’s the underwriting issue?– Medical treatments involve a laser, non-coherent light,

intense pulsed light, radio frequency and plasma devices for hair removal, age spots and similar skin procedures.

– Penetrating the skin or altering human tissue constitutes the practice of medicine

– Tremendous variation between states on what a practitioner is licensed to do and how they define the practice of medicine

– Even with licensed physicians, dispute on what specialty could/should be performing these procedures

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Medical Spa

How is WA handling Medi Spas?– New Medical Quality Assurance Committee

(MQAC) rules effective March 2007– Licensing requirements in WA define

requirements of physicians and PA who operate the devices commonly used in spas, to whom they can delegate to use the devices and degree of supervision required

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Telemedicine

Background on Radiology Specialty– Radiology is medical specialty based on the use of

technology to create medical images– Historically used some form of radiant energy (X-rays)– Today, utilizes “highly complex technologies that are

increasingly driven by the sophisticated computer and image processing systems that are used for the acquisition and display of imaging data for interpretation”(William Hendee, “An Opportunity for Radiology,” Radiology Vol. 238: No. 2, p. 390 February 2006)

– Technology explosion + demands of aging population = radiology services market worth billions

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Telemedicine

Background on Radiology Specialty (cont.)

– Specialty experiencing personnel shortages• Knowledge base grown dramatically• Challenge for radiologists to keep current with

developing technologies• Subspecialties emerging• Some facilities don’t generate enough volume to

develop or maintain subspecialty expertise

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Telemedicine

• Technology and demand combine to provide solution—telemedicine

• Business opportunity for physicians– Use of digital telecommunications in the practice of

radiology across great distances has become widespread

• Especially across state and international borders

– Costs are reduced– Care by treating physician improved with access to

contemporaneous image interpretations

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Telemedicine

Insurance Challenges

– Care for patient rendered in jurisdictions away from where the hands-on patient treatment takes place

– Some care is happening out of the country or in other states

– Potential vicarious liability on hospital and local radiologist who sends images away to be read

– Credentialing practitioners who actually perform the service

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Telemedicine

Solutions

– Requiring licensure of the physician in the state transmitting images

– Full credentialing conducted for physicians performing telemedicine services

– Reporting contractual relationships to PL insurer so clear coverage decisions can be made

– Establishment of communication protocols to deal with medical concerns which require immediate attention of the hands-on practitioner

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Business of Medicine

Summary

– Medicine is evolving and changing– Impact of technology just beginning to be felt– Medical professional liability insurance

providers will need to keep up!

Hot Topics in Medical Professional Liability

PLUS Chapter MeetingRick NaumanSenior Vice President Underwriting & MarketingMay 3, 2007