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Medical Malpractice Insurance FAQ

What is Texas Medical Professional Liability Insurance? 

Texas medical liability insurance, commonly referred to as medical malpractice insurance, protects doctors and other healthcare professionals from liabilities resulting from their errors, omissions, or negligence while practicing their specialty. Situations that can give rise to such liabilities include medication mistakes, misdiagnosis, surgical errors, childbirth injuries, and so on. Claims for such injuries may be brought by the victim or immediate relatives in wrongful death cases or claims for loss of consortium. 

When such claims arise, what malpractice insurance will cover vary depending on the specific terms of each insurance contract. However, most policies usually include settlement costs, arbitration costs, attorney and court fees, as well as compensatory and punitive damages. It is important to note that while insurance policies cover the costs of defending claims or actions against the practitioner, regardless of whether they are true or not, the coverage does not extend to purposeful and illegal conduct. Some policies may, however, cover defense costs until the nature of the claim is revealed.

In any case, insurance companies usually prefer to take up cases on behalf of their clients. In which case, they would try to offer a sum as a settlement after reviewing and verifying the claims of the victim. The process of verification is usually strict, and the insurance adjusters will usually require some documents as proof of liability including medical reports and records. The insurance company is not likely to offer a settlement amount that is more than the practitioner's policy. However, victims can still pursue a medical malpractice claim in court after rejecting the settlement and claim compensation they require. 

What are the Types of Medical Malpractice Insurance Policies?

Like several professional liability insurances, medical malpractice insurance comes in two basic forms: occurrence policy and claims-made policy. 

An occurrence policy provides lifetime coverage for liabilities arising from incidents that occur while the insurance was active, irrespective of when the claim is filed. For example, if a medical practitioner held an occurrence policy through 2010, and a patient brings a claim in 2020 for an incident that occurred in 2010, the insurance covers the practitioner for that claim even if the policy is no longer active.

On the other hand, a claims-made policy covers only incidents that occurred and were reported while the insurance coverage was active. As a result, both the incident and the claim must occur when the insurance is in force. Using the example above, though the incident occurred in 2010, during the span of the insurance, a claims-made policy would not cover it unless the patient brought the claim in 2010 too. 

Nonetheless, parties may specify an earlier retroactive date to have the policy cover incidents that occurred before the original effective date the insurance started. Likewise, to ensure that a claims-made policy covers incidents that occur even after the policy expires, the insurance holder can purchase a tail coverage to make the policy indefinite. Tail coverage is usually more expensive than an annual premium. An alternative to tail coverage is to include coverage for liability from a dropped claims-made policy in a new insurance policy. This is known as nose coverage.

Finally, each kind of coverage has its pros and cons. As such, though occurrence policies offer a great deal of security, it is usually more expensive considering that it covers claims no matter when they are reported.  On the other hand, claims-made policies also offer an attractive option because they are cheaper for the first several years of coverage since the potential for claims builds slowly as policy years accumulate. However, it requires more attention and is more complex than occurrence policies. 

Who Pays for Malpractice Insurance?

In Texas, medical malpractice insurance can be funded either by an employer or by the practitioners themselves. Each option has its pros and cons. 

When funding employees' malpractice insurance, health facilities usually create group plans to which practitioners can be added or removed based on their employment status. If it is a claims-made policy, employer-sponsored plans would usually contain each worker's effective and retroactive dates. 

One major advantage of this arrangement is that with employers taking care of things, the workers do not have to worry about shopping for and maintaining coverage. However, on the flip side, this kind of insurance does not provide as much flexibility and freedom considering that they are usually based on the employer’s preferences. Likewise, coverage would likely not extend to services outside the employer’s work. Depending on the contents of their employment contract, practitioners may have to pay for their tail or nose coverage. For example, an employment contract may stipulate that a physician is responsible for their tail coverage if they quit without cause or are fired for a legitimate reason. It may stipulate that the employer is responsible for tail coverage if the physician is laid off without cause or quits for a legitimate reason. 

In any case, health workers can have a personal medical liability insurance policy tailored to their professional needs, which offers them more flexibility. However, they are responsible for shopping for their plans and ensuring that their policy does not lapse. It is usually advisable to engage the services of an insurance agent to help in this process. Self-insurance allows practitioners to work at multiple locations rather than only working for the facility that offers them a group plan. Self-insurance can also enable a practitioner to switch providers easily when their plans are up for renewal.

How Much Medical Liability Insurance do I Need in Texas? 

The amount of liability insurance a healthcare practitioner needs in Texas depends on the person's specialty. Professionals who practice in high-risk specializations like surgery will generally require more coverage than other professionals due to the increased risk to the patient they provide care to. Nonetheless, the minimum coverage many facilities require in the state is $200,000 per claim and an annual limit of $600,000, which is a relatively low liability limit when compared to other states. This is primarily because certain legal provisions in Texas limit the liability of healthcare practitioners in medical malpractice claims. Notably, the maximum amount of non-economic damages a medical practitioner can be liable for in Texas is $500,000 for wrongful death and $250,000 for all other cases. Likewise, a medical negligence case must be brought before a court within two years of its occurrence, or it will be considered statute-barred. This is known as the statute of limitation for the claim.  

For the purpose of these provisions, medical practitioners include not only physicians. The term also covers other professionals like nurses, dentists, podiatrists, pharmacists, and veterinarians. Also, note that the Texas Department of Insurance recognizes four kinds of organizations that can offer medical malpractice insurance in the state. They include licensed or legislatively created insurance companies, higher education medical professional liability funds, surplus lines insurers, and risk purchasing and risk retention groups. 

Is Medical Malpractice Insurance Required in Texas?

Legally speaking, Texas is one of many states that do not require physicians or other health care practitioners to have malpractice insurance to work. This has been the case following the Texas Torts Law reform in 2003, which limited the liability medical practitioners can incur in personal injury claims arising from their practice. This reduced the rate healthcare workers paid for malpractice insurance and made going bare without insurance an option that can be considered. However, it is always safe to have malpractice insurance as a medical practitioner in any case. Despite existing reforms, medical malpractice claims are still costly, time-consuming, and can be unpleasant for all parties, including health practitioners. Malpractice insurance can protect physicians and other health workers from losing a large sum of money in medical malpractice claims, including awards, settlement, and the cost of hiring a medical attorney. 

What are Non-economic Damages?

Non-economic damages under Texas personal injury law refer to compensation for non-monetary losses and injuries caused to the plaintiff by the defendant’s negligent action. It also covers injuries the plaintiff is reasonably likely to suffer due to the defendant’s negligence, including dealing with a changed future. The rationale behind providing non-economic damages in medical malpractice cases is to ensure that victims are compensated for having to experience suffering they did not deserve. As opposed to economic damages, the plaintiff need not prove that he has suffered any loss in monetary terms, as the injuries are themselves not financially quantifiable. Examples of injuries that non-economic damages seek to compensate for include; 

Pain and Suffering: this refers to physical and emotional suffering the plaintiff experienced due to the incident caused by the defendant. Proving this would require tendering of medical records evidencing the plaintiff’s complaints, pain, and prescription. Sometimes, the plaintiff may be required to testify during a court trial to prove the extent of pain and suffering. 

Mental Anguish: this includes trauma experienced due to the incident. This might form simultaneously with physical injuries, but they are treated separately. The court may admit psychological evaluation to prove the impact of the incident on the plaintiff’s mental state.

Physical Impairment: it is also possible to recover compensation for loss of enjoyment of life or diminished quality of life due to physical impairment caused by the incident. Physical impairment includes loss of ability to earn a living, and participate in sports, hobbies, or other recreational activities. 

Disfigurement: this includes instances where the incident substantially affected the victim’s body and physical appearance temporarily or permanently. 

Loss of Consortium: this covers situations when the medical negligence causes death or severe injuries to the victim whose loved ones then claim their loss of love, affection, companionship, protection, and care. Texas law only allows the spouse, parent, or child to recover damages under this classification.

It is important to note that Texas law generally limits the amount of non-economic damages recoverable in medical malpractice claims to $500,000 in wrongful death claims and $250,000 in other claims.  

What is Risk Retention?

Risk Retention is an arrangement where a facility or practitioner decides to take responsibility for certain risks instead of seeking insurance. This means that they decide to pay for any of such losses out-of-pocket. 

When determining which risk to retain as a medical practitioner, it is important to consider whether shouldering the possible losses can have significant consequences on one's finances. Risk-retention is more suitable when the cost of doing so is less than purchasing insurance, whether partial or full. 

Risk-retention is also an alternative to standard medical liability insurance for healthcare workers in Texas. Risk-retention groups offer a form of coverage where members of the group, usually persons of similar professions, retain risk by insuring one another against liability claims and lawsuits.

What is not Covered by Malpractice Insurance?

Though medical malpractice insurance has a broad reach, it does not cover every instance of medical negligence in Texas. A malpractice insurance policy will not cover liability arising from willful conduct, unlawful activities such as sexual misconduct, criminal conduct, inappropriate manipulation of medical data, or hospital administrative mistakes. Likewise, it would not normally cover liabilities medical workers incur while operating under the influence of drugs or alcohol. 

Finally, medical malpractice insurance typically does not also cover liabilities arising from cyber security issues. As such, it is essential to have a separate cyber security liability policy or include a cyber security sub-limit to an existing policy to protect against liabilities arising from cyberattacks and data breaches involving personal medical records.

Get more information on medical  liability insurance claims from a qualified and experienced medical malpractice insurance attorney. Such a lawyer understands Texas specific laws concerning malpractice insurance and can help in providing adequate legal representation on any legal issues that may arise in court. To find a malpractice insurance attorney in Texas, concerned individuals may conduct a google search for terms such as "medical malpractice lawyer near me" or "malpractice insurance lawyer near me". Concerned individuals may also visit the website of the state bar association or use the lawyer referral services of local bar associations within their area to find the contact information of qualified medical malpractice attorneys in Texas.