Surgeons have medical malpractice insurance coverage in order to provide compensation to victims in cases where surgical errors occur. Malpractice insurance providers have multiple legal obligations, both to doctors who are their policyholders and to victims of surgical mistakes who seek compensation for losses. These insurers often end up negotiating with patients or their family members after serious injuries or deaths occur, and insurers must negotiate in good faith. This means following policy provisions, aiming to minimize personal financial loss to doctors, and treating those making claims fairly.
Unfortunately, insurance companies often fail to provide the compensation victims of surgical errors actually deserve. This can lead to patients and family members filing a civil lawsuit after an insurer either improperly denies responsibility for losses or refuses to settle a case for a reasonable amount of money based on the extent of loss. If the plaintiff goes to court and wins a judgment, the insurer is usually only obliged to pay for the damages up to policy limits. However, exceptions can occur in certain cases. One example is when an insurance company acts in bad faith.
Surgical Errors and Bad Faith Claims Against Malpractice Insurers
In one recent case reported by the Tribune, plaintiffs whose child was killed by medical negligence ended up suing physicians who had provided care. While the hospital and the ER doctors were represented by insurers who settled, one insurance company representing two involved caregivers was unable to negotiate a settlement offer the plaintiffs would accept.
Not only was the insurer unable to come to a settlement agreement, but evidence indicates the insurer deliberately misled the parents of the deceased child about the amount of money available to cover losses and failed to provide information to policyholders about a settlement offer which would have protected the physicians from personal financial loss. When a surgeon or other physician is clearly responsible for causing harm to patients and an opportunity arises to settle within policy limits, insurers generally should accept that offer, rather than putting the physicians at risk of a verdict which exceeds policy limits.
In this case, the parents of the deceased child did take their case to court when the insurer proved unwilling to settle the case. The parents were awarded compensation exceeding policy limits and the insurer paid only up to the amount of coverage available. The parents at this point had two options: seek to recover from the physicians personally, or pursue a bad faith claim against the insurer. They chose the later of the two options.
The jury reviewed the actions of the insurer and determined the insurance company had acted in bad faith. The parents were awarded $14.3 million in damages, including $1.3 million they were still owed from the original malpractice claim and $13 million in punitive damages as a result of the insurer's bad faith.
The insurance company had been accused of bad faith 25 times over a decade. The case illustrates the egregious nature of insurers' behavior when refusing to settle claims after care providers clearly make mistakes, as well as the potential compensation victims of medical error can be entitled to when they develop an effective legal strategy for pursuing a damage claim.