Terminated Clinical Trial Results in Hospital Law Suit

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Recently, an Illinois appellate court determined that a law suit brought as a result of a terminated trial has grounds for recovery under a hospital professional liability policy.  This decision has serious risk management implications.

In this case, a hospital was acting as a sponsor of a cancer vaccine trial. The trial was funded in part by the physician who discovered and developed the vaccine.

Trial Subjects Bring Suit

The trial spanned several years but was eventually terminated because the vaccine was not meeting expected clinical efficacy in addition to some safety concerns.  50 trial subjects brought suit alleging that the trial discontinuation put their lives at risk.

Why Malpractice Policy Applies

The appellate court ruled that the claims were not covered by the hospital D&O policy’s medical professional exclusion but could be considered under the hospital’s malpractice policy. The court stated that the significant allegation represented “specialized medical knowledge” and that the decision to terminate the clinical trial involved “an exercise of medical judgment.”

Given that the hospital’s medical professional liability policy insuring agreement covers damages “resulting from a medical incident arising from professional services,” the court held that the coverage should respond.

What to do

What are the implications for hospital risk managers and legal counsel?

  • Regardless of who is the sponsor (hospital or third party), the clinical trial informed consent should include a clear explanation about what happens when a trial is terminated or is completed and treatment stops.  The trial subject must understand and agree to the terms of the informed consent.
  • The hospital should insist on indemnification from any outside sponsors for any suits brought as a result of trial termination or completion.  And sponsors should expect to be asked for this indemnification.
  • Hospital risk managers need to analyze the hospital’s risk transfer financing (insurance, captive, trust, etc.) to anticipate how these types of claims will be funded and managed when they arise.

About David Shuey

David is an Executive Vice President & North America Practice Leader for Willis Life Sciences, based in Radnor,…
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