Recent headlines have confirmed that health care providers are increasingly being held liable for multiple patient injuries and deaths, an issue previously highlighted in research by Willis Re.
Since our initial blog following the conviction of breast surgeon Ian Paterson, reports have emerged concerning more than a half-million pieces of “lost” correspondence between medical practitioners and hospitals — correspondence that contained crucial information that could have delayed treatment for thousands.
We’ve also heard recently about the hundreds of women who have brought legal cases against the U.K.’s National Health Service and vaginal mesh implant manufacturers, and the scandal at Treloar College, where children with haemophilia were given the blood of drug addicts and Russian corpses, actions which resulted in few long-term survivors.
Paterson is currently serving a 20 year jail sentence for his wrongdoing. In the meantime, hundreds of his victims are pursuing legal action, seeking compensation from the two private hospitals where he operated; however, because Paterson was a consultant, not an employee, the hospitals do not feel liable. Neither does his insurer, the Medical Defence Union (MDU), which cited a clause in Paterson’s policy that doesn’t cover him in the event of a criminal conviction. Moreover, settling these claims, according to press reports, would potentially bankrupt the organization.
So what’s driving this trend of multi-patient losses, and why does it pose a particular financial issue for health care liability insurers?
A growing global issue
Willis Re’s database of medical systemic events includes several hundred examples drawn from across the world. Around half of the cases occurred in North America, with a further quarter in Western Europe. Interestingly, a growing proportion of cases in our database – particularly those involving medical devices such as implants, and pharmaceutical products – involve multiple geographic territories, hinting at the globalisation of the issue. Other notable categories include individual practitioners, hospitals, clinics and nursing homes, business practices and medical procedures, and epidemics and pandemics.
While the massive technical advances in medicine over the last decade have undoubtedly improved outcomes for millions of patients, they have also resulted in greater complexity in the practice of medicine, increasing the risk of systemic loss. Case studies suggest that among the factors driving the increased exposures to multi-patient injuries include:
- Changes in health care financing and delivery
- Continuous search for efficiencies and cost savings
- New medical procedures such as telemedicine
- Increasing demand for elective and cosmetic treatment and the rise of so-called medical tourism
- Ambulance-chasing lawyers and moves towards collective redress and contingent fees
- The emergence of antibiotic-resistant viruses and superbugs
Insurance and reinsurance challenges
Regardless of the cause of multi-patient losses, when there’s legal liability or insurance loss, policies can accumulate, including medical professional, general and products liability covers. Defence costs are also frequently incurred regardless of indemnification. Some events impact multiple policy periods, particularly where a batch issue or pattern of behaviour is repeated over time, or where latency is recognised or abuse uncovered long afterwards, so multi-year stacking further magnifies resultant financial loss.
Unfortunately, conventional excess of loss reinsurance usually responds to each loss individually rather than as a whole, and as such the financial loss falls mainly or entirely within insurers’ net retained book, bringing with it the threat of severe financial strain or even insurer bankruptcy as exemplified by the Paterson case.
Building sustainable (re)insurance solutions
To address such threats Willis Re works closely with our clients and reinsurers to design, develop and build capacity to support practical and robust reinsurance solutions. The first step is to try to understand how and why such losses materialise, a subject we’ll revisit shortly.