Dive Brief:
- New research concludes that the size of hospital professional liability claims rose for the eighth consecutive year in 2013.
- The study was done by Beazley,a hospital professional liability insurer that maintains a claims database covering 39% of US hospital beds. Beazley researchers concluded that the cost of an average hospital professional liability claim rose 2% in 2013, to $492,000.
- Beazley also found that the proportion of claims exceeding $2 million has increased by 14% in the last five years, now representing 28% of all the claims with indemnity recorded by the insurer.
Dive Insight:
Given the upward march of hospital professional liability claims, it's not surprising that many providers are concerned about recent trends in tort reform. A number of states have put weekend caps on non-economic damages lately, and others are still attempting to make such changes.
Perhaps the most visible tort reform action aimed at loosening caps on non-economic damages is California's Proposition 46, which would raise the cap on noneconomic damages from $250,000 to over $1 million and index the cap to inflation from then on. Prop 46 would repeal a cap which has been in place for 39 years.
It can be argued whether such caps on non-economic damages are ethically appropriate, but it does appear that removing them does increase claim size, at least according to Beazley's data. In 2013, the average severity of close claims in tort reform states was $71,000 lower than in states with no such measures.