The Era of Mega-Verdicts: The Efficacy of Malpractice Insurance Risk Assessments

Abstract

The U.S. spends about $55 billion annually on the medical liability system, with nearly 10% of healthcare costs dedicated to insurance and defensive medicine. This highlights the urgent need to address the increasing severity of malpractice claims, as defense costs have skyrocketed due to excessive verdicts. Malpractice insurance carriers, such as the project site, that provide insurance for this type of defense, use loss control measures to minimize the financial impact on the insurance company. This project had three aims: to examine the efficacy of the project site’s risk assessment process in providing its clients with evidence-based solutions to mitigate risk exposures that could lead to a claim, to identify common recommendations that were implemented, and to identify the barriers organizations face in implementing recommendations made by the insurance carrier. The Plan-Do-Study-Act (PDSA) improvement model was used to develop a new internal process and deploy a post-risk assessment questionnaire to gather data related to the process. A response rate of 59.4% (n = 32) was achieved, and all survey respondents reported that the risk assessment increased their self-efficacy. All but one noted that the recommendations would be implemented, with the reason for non-implementation being a lack of resources. Using these findings to support the risk assessment process can have significant implications for closing organizational gaps. Increasing the focus on patient safety and implementing evidence-based recommendations can reduce preventable harm to patients, enhance the organization’s risk profile, and lower unnecessary spending on claims defense by both the organization and insurance carriers.