Some coverage headaches are caused by sloppy handling of claim reports by physicians and health care professionals. Consider a scenario where a physician did not immediately report an adverse medical outcome or a claim to her insurer. In fact, the physician procrastinated before reporting it to the insurer because (choose any of the following) . . .
_____ A. She wanted more information;
_____ B. The claim was ridiculous and did not deserve to be dignified with an answer;
_____ C. She thought the claim would not amount to anything and would go away;
_____ D. She thought she could reason with the lawyer and talk him out of pursuing a lawsuit;
_____ E. She feared that her medical malpractice insurance company would probably hike its insurance premium if it reported a loss.

A year later, the claim becomes a lawsuit. Reviewing the file materials, the insurer notices that the physician had prior knowledge of this occurrence but suppressed the reporting. The insurer claims representative is upset and “reserves rights” to deny coverage based on late notice. Now, you have uncertainty hanging over you and your practice. The certainty of your financial protection for the claim is clouded. How do you avoid this happening to you?

Remedy: Know and adhere to your reporting obligations and duties under the insurance policy. They are not onerous. They require that you report claims and accidents promptly and cooperate with the insurer in the defense and investigation of a loss. The CONDITIONS portion of the policy often states that policyholders must

“immediately send us copies of any demands, notices, summonses or legal papers in connection with the claim or suit.”

Elsewhere in the same portion of the policy, the insurer requires that

“You [the insured] must see to it that we are notified promptly in writing of an occurrence which may result in a claim.”

Conceivably, an insurance policy might require a physician/insured to report the same loss to its insurer on three separate occasions:

  • First, when there is an occurrence that could give rise to a claim;
  • Second, when an injured patient or an attorney makes a claim;
  • A third time when the claim becomes a lawsuit served on a doctor or hospital.

Moral: Take these reporting requirements seriously. Don’t think, “my insurer would never do something like that to me.”

In one case, a physician justified a late-reported lawsuit by stating that he had been trying to phone the plaintiff’s attorney to explain why he had no business being involved. Did the doctor talk the lawyer out of it? Hardly! In the real world, few claims simply evaporate, as much as insurers and doctors would like them to. Fewer still simply disappear because the physician telephones claimant’s counsel, a well-meaning gesture which might even inadvertently give the lawyer more ammunition.

The above was excerpted from Quinley, KM Bulletproofing Your Medical Practice: Risk Management Techniques for Physicians that Work (SEAK 2000).  Please click here to download a free complete copy of Bulletproofing Your Medical Practice: Risk Management Techniques for Physicians that Work.