Obstetrics Saw the Largest Claim
The largest health care professional liability (HPL) claim of 2011 occurred in October in Michigan, in the Detroit suburb of Southfield (Oakland County). The jury award totaled $144 million. The case had been filed against an obstetrician and a hospital by the family of a child who suffered injuries and brain trauma during a delivery.
The chief allegation, as is often seen in obstetric cases, was a failure to perform a Caesarean section, resulting in cerebral palsy. The case also alleged that the infant was too large for the birth canal thus resulting in additional injuries such as a fractured clavicle. The defense argued that the brain trauma occurred in utero consistent with studies published in the obstetrical literature over the past ten years. The verdict will be appealed.
Although this is a substantial verdict, it is a very rare one in its amount for Michigan and the U.S. It more than doubled the next largest malpractice award of $58 million in another obstetrics case in Connecticut last May. Obstetric cases remain of great concern to hospitals but there are innovative patient safety programs now available to manage that risk.
Impact on the Med Mal Market
It is highly doubtful this Michigan case will affect the very stable and profitable health care professional liability insurance market at the end of 2011 and the beginning of 2012. There has been no notable increase in malpractice claims frequency in recent years and severity has been rising at a very actuarially predictable 4-6% nationally in recent years.
Large verdicts involving injured children can and do occur even in states with very favorable claims climates like Minnesota and Wisconsin. Caps on non-economic damages do little to reduce awards in cases involving severely injured children.
Health care professional liability insurance has gone from a perennial loser to becoming the most profitable line in property/casualty insurance in recent years. The only segment where there have been some rumblings of rates firming has been in long-term care.
Carriers are experiencing continued near-record profitability with little end in sight given favorable claim frequency and severity trends. There is no real trend towards judicial rulings overturning favorable malpractice reform laws despite a few losses in states in recent years.
Other favorable factors promoting stability in this line include an over-abundance of capacity in both the direct insurance market and the reinsurance market. Reserve development trends have also been very favorable with almost no indications of a movement towards adverse development in the future. Industry reserves are indicating redundancies in recent years.
Perhaps the most puzzling aspect of these historically stable and most favorable conditions in HPL are that they have occurred during one of the worst economic downturns since the Great Depression. Patients have not been turning to the courts to seek financial compensation. One case in Michigan will not cause the very favorable market conditions in HPL to deteriorate.