Medical specialty and Malpractice Insurance Claims in the United

Medical specialty and Malpractice Insurance Claims in the United States

Medical specialty and Malpractice Insurance and the Practise of Medicine

Malpractice risk according to Physician specialty is variable.
Certain specialty has a higher risk compared to others.
Data are limited on the number of Physicians who face malpractice claims, the exact size of the claims and the cumulative career malpractice risk associated with each specialty.

Based on a pretty large volume of insurers from a large professional liability insurer in the United States with a nationwide client base of over 40000 physicians and over 230000 physician-years of coverage for 25 different specialty- a report was created informing the proportion of physicians who had malpractice claims every year.

There are specialties which fall in high risk and low-risk categories.
About 7.5% had malpractice claims. Only 1.5% having claim lead to payment of compensation.

The mean indemnity payment was 275000 USD. and the median was 111000 USD. 

By the age of 65, 75% of low-risk specialty Physicians had faced a malpractice claim at some stage of practice and 99% of high-risk specialty Physicians had faced a malpractice claim.

Describing Malpractice Risk

For each specialty, we began by calculating the proportion of physicians who faced a malpractice claim in a given year. We distinguished between claims leading to indemnity payments versus over-all claims (those with a defense cost but not necessarily a payment). In sensitivity analysis, we adjusted for physician age, year, and state to examine whether these adjustments would affect our reported estimates.

Given the long period studied, we separated our sample into three periods (1991–1995, 1996– 2000, and 2001–2003) in order to investigate how claims rates varied over time for high- and low-risk specialties, which were defined as the five specialties with the highest and lowest proportions of physicians with a claim in a year, respectively. We did not include 2004–2005, since many claims that had been filed during that period might not have been closed by the end of 2005.

We then characterized the size of malpractice payments for each specialty by computing mean and median annual payments. We also determined how many payments exceeded $1 million to characterize specialties with outlier awards. Payments were normalized to 2008 dollars on the basis of the Consumer Price Index.

Finally, we analyzed data on physician age to estimate the cumulative career malpractice risk of being sued at least once by a given age for both high- and low-risk specialties. We first estimated a multivariate regression model of the probability of facing at least one claim in a given year as a function of physician age, physician random effects, physician specialty, state of practice, and county–year demographic variables (per capita income, age distribution, and the proportions of residents who were white or male). We allowed the effect of age to vary according to specialty. Physician random effects were included to account for unobserved differences among physicians that might have led some physicians to have been sued more frequently than others. This estimation yielded predicted annual rates of facing a claim at every age of a physician's career and for each specialty. These estimated lifetime risk profiles were then used to compute cumulative career malpractice risks for physicians in high- and low-risk specialties, as well as in each of the largest specialties in our data (internal medicine and its subspecialties, general surgery and surgical sub-specialties, anesthesiology, obstetrics and gynecology, and pathology).

Our model assumes that the probability of being sued was unrelated to the duration of coverage by the insurer and that the probability of being sued at a given age was independent of being sued at an earlier age (after adjustment for physician random effects). To ensure that estimates of the cumulative risk of being sued in each specialty were not determined by the experience of a few idiosyncratic physicians, we conducted two sensitivity analyses: we excluded physicians after their first claim (consequently ignoring the subsequent experiences of physicians who were sued repeatedly) and estimated fixed-effects specifications that allow for correlation between physician characteristics (such as age) and unobserved propensities to be sued.

Trends in Claims

The proportion of physicians facing a malpractice claim varied moderately across the study period. Between the 1991–1995 and 2001–2003 periods, the average annual proportion of physicians in low-risk specialties with a claim decreased from 8.3% to 5.8%. Among high-risk specialties, the proportion of physicians with a claim was highest during the 1996–2000 period. Claims with an indemnity had similar patterns, and the differences between periods were significant (P<0.001 for all comparisons). Differences in overall and indemnity claims were stable between high-risk and low-risk specialties over time.

Size of Malpractice Indemnity Payments

Across specialties, the mean indemnity payment was $274,887, and the median was $111,749. The difference between the mean and median payment reflects the right-skewed payment distribution. Specialties that were most likely to face indemnity claims were often not those with the highest average payments. For example, the average payment for neurosurgeons ($344,811) was less than the average payment for pathologists ($383,509) or for pediatricians ($520,924), even though neurosurgeons were several times more likely to face a claim in a year. The estimated correlation between the proportion of physicians with a claim and the average payment amount was 0.13 (P = 0.52). The correlation between the proportion of physicians with an indemnity payment and the average payment was similar and was not significant. This suggests that factors driving the likelihood of a claim are largely independent of factors that drive the size of a payment.

Cumulative Career Malpractice Risk

Among physicians in low-risk specialties, 36% were projected to face their first claim by the age of 45 years, as compared with 88% of physicians in high-risk specialties. By the age of 65 years, 75% of physicians in low-risk specialties and 99% of those in high-risk specialties were projected to face a claim. The projected career risk of making an indemnity payment was also large. Roughly 5% of physicians in low-risk specialties and 33% in high-risk specialties were projected to make their first indemnity payment by the age of 45 years; by the age of 65 years, the risks had increased to 19% and 71%, respectively.

Discussion

There are few recent estimates on the likelihood of malpractice claims and the size of payments according to physician specialty. Using physician-level malpractice claims from a nationwide liability insurer, we found substantial variability across specialties in each of these descriptors of liability risk. Specialties in which the largest proportion of physicians faced a claim were not necessarily those with the highest average payment size. For example, physicians in obstetrics and general surgery — both fields that are regarded as high-risk specialties — were substantially more likely to face a claim than pediatricians and pathologists, yet the average payments among pediatricians and pathologists were considerably greater. The same pattern was noted in a national analysis that was performed more than two decades ago.

For many high-risk specialties, our estimates of annual and career malpractice rates match self-reported claims rates reported in a recent AMA survey of physicians.1For several low-risk specialties, however, our findings suggest that the proportion of physicians facing claims is consistently higher than that reported in the AMA survey. This finding suggests underreporting by physicians in low-risk specialties, perhaps because these physicians did not report a claim or because those with previous claims were less likely to respond to the survey. Such a trend could be because the stigma of a claim is worse in specialties in which such claims are less common or because recall bias is more severe for rare events.

Our study uncovered an important aspect of malpractice liability: the high likelihood of claims that do not result in payments to a plaintiff. Annual rates of claims leading to indemnity payments ranged from 1% to 5% across specialties, whereas rates of all claims ranged from 5% to 22%. Our projections suggest that nearly all physicians in high-risk specialties will face at least one claim during their career; however, a substantial minority will not have to make an indemnity payment.

Our results may speak to why physicians consistently report concern over malpractice and the intense pressure to practice defensive medicine,20 despite evidence that the scope of defensive medicine is modest. Concern among physicians over malpractice risk varies far less considerably across states than do objective measures of malpractice risk according to state (e.g., rates of paid claims, average payment sizes, malpractice premiums, and state tort reforms).1 For example, 65% of physicians practicing in states in the bottom third of rates for paid malpractice claims (5.5 paid claims per 1000 physicians) express substantial concern over malpractice, as compared with 67% of physicians in the top third (14.6 claims per 1000 physicians).1 Although these annual rates of paid claims are low, the annual and career risks of any malpractice claim are high, suggesting that the risk of being sued alone may create a tangible fear among physicians.

The perceived threat of malpractice among physicians may boil down to three factors: the risk of a claim, the probability of a claim leading to a payment, and the size of payment. Although the frequency and average size of paid claims may not fully explain perceptions among physicians,1 one may speculate that the large number of claims that do not lead to payment may shape perceived malpractice risk. Physicians can insure against indemnity payments through malpractice insurance, but they cannot insure against the indirect costs of litigation, such as time, stress, added work, and reputational damage.23 Although there is no evidence on the size of these indirect costs, direct costs are large. For example, a Harvard study of medical malpractice suggested that nearly 40% of claims were not associated with medical errors and that although a low percentage of such claims led to payment of compensation (28%, as compared with 73% of claims with documented medical errors), they accounted for 16% of total liability costs in the system.

Our study has several limitations. As in a previous study, we used data from a single insurer, which may not be nationally representative, even though it is one of the largest in the United States and covers physicians in every state. Whether the claims rates in our study are representative of those nationwide depends on whether physicians who were covered by the insurer that we studied were more or less likely to be sued than physicians who were insured elsewhere. To assess the representativeness of the data, we compared our weighted estimates with the probability and size of indemnity claims reported by the National Practitioner Data Bank. The results are reassuring: the weighted number of indemnity claims per 1000 full-time, nonfederal physicians during the period from 1991 through 2005 was 17.1 in our sample, as compared with 19.6 in the federal database. The weighted average payment in our sample was $274,887 (in 2008 dollars), which is only 4.8% less than the average in the database. These small differences may reflect the fact that the mix of specialties in our sample may not be nationally representative.

Our estimates provide a glimpse into U.S. malpractice risk among physician specialties. High rates of malpractice claims that do not lead to indemnity payments, as well as a high cumulative career malpractice risk in both high-and low-risk specialties, may help to explain perceived malpractice risk among U.S. physicians.

In conclusion, the cumulative risk of facing a malpractice claim is high in all specialties although most claims do not lead to Payments.

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