Susan Durbin Kinter, BSN JD
CPHRM FASHRM
Vice President Claims, Litigation &
Risk Management
Maryland Medicine Comprehensive
Insurance Program
Steven Chang, JD
Healthcare Claims Team Leader
Beazley Group
Valentina Minetti
Healthcare Underwriter and Pricing
Actuary
Beazley Group
Deborah A. Miller, BSN
Vice President
Marsh

2020 Claims Odyssey: Current Trends and Managing Catastrophic Claims in the Future
Agenda:
• Overview
• Current claims environment from a Provider and Insurer perspective
• Changes to the claims landscape
• Changes to the healthcare industry and expected impact on claims
• Suggestions on tackling large claims
• Preparing for the future
• Questions

Overview: What is everyone feeling?
What Are You Feeling
• Some types of cases getting a little harder to resolve?
• Cases lifespan increasing?
• Increased anxiety?
• Verdicts getting bigger?
• Settlement values creeping up?
• Legal expenses increasing?
What We’re Seeing
• It’s NOT your imagination
• Claims environment is changing
• Certain classes of claims are becoming more difficult to settle for reasonable amounts
How Do You Feel About The Future?
• Optimistic?
• Anxious?

Claims Environment And Future Predictions: Might Depend On Who You Ask
Provider Perspective:
• High level of claims and clinical expertise
• Excellent insight into emerging patient trends and regulatory landscape and potential impacts
• Expertise can be localized
Insurance Claims Manager:
• Good at providing current on the ground observations and perceived claims trends
• National claims perspective
• Perceptions can be subjective
• Less attuned to overall industry
Actuarial:
• Good at providing historical perspective on loss development
• Quantifiable
• Rearward looking

Provider Perspective
Maryland
On paper a state with significant Tort Reform:
• Cap on Non-economic Damages
• All medical malpractice cases must be certified as meritorius
• Expert Witness Restrictions
Yet Maryland is viewed as a “worrisome” jurisdiction for insurers and reinsurers:
• 3 very large verdicts in urban venues
• Additional large verdicts creeping into conservative venues
• American College of Emergency Medicine Physicians ranked Maryland an A for quality and safety and an F for liability
What is wrong with this picture:
•
Cap is the second highest in the country and continues to escalate
•
Insufficient gate keeping by Courts to exclude fabricated testimony
•
Certificate requirement ineffective

Provider Perspective
What We’re Seeing
Frequency Stable
Payouts Increasing Significantly
• Past 3 years payouts increased by 67% over previous 7 years
• Injuries/allegations haven’t changed
Catastrophic cases driving the increase
• From 2004 – 2010 cases alleging a catastrophic injury accounted for 49% of the total payouts; in
2011 – 2013 they accounted for 74% of the total payouts.
• Plaintiffs are alleging huge, inflated economic losses to get around the cap
• Plaintiffs’ attorneys are aggressive; the defense bar slow in changing their game plan

Provider Perspective
$60
$50
$40
85
$30
$20
$10
$-
$19
AY 04
Asserted Cases by Assert Year, Frequency and Total Incurred
98
$20
91
$30
89
$18
98
$29
91
$14
93
$53
92
$46
92
$28
AY 05 AY 06 AY 07
Total Incurred
AY 08 AY 09
Assert Year
AY 10
Number of Cases Asserted
AY 11 AY 12
107
$25
60
40
20
AY 13
0
120
100
80

Provider Perspective
140
120
100
80
60
40
20
-
$6,7M
FY04
Closed Claims/Suits & Indemnity Payments by Fiscal Year
$9,3M
$19,5M
$21,3M
$25,2M
$14,5M
$11,6M
$37,0M
$43,5M
FY05 FY06 FY07 FY08 FY09
Fiscal Year
Indemnity Paid on Closed Claims/Suits
FY10 FY11 FY12
Claims/Suits Closed Per Fiscal Year
$42,5M
$50 000 000
$45 000 000
$40 000 000
$35 000 000
$30 000 000
$25 000 000
$20 000 000
$15 000 000
$10 000 000
$5 000 000
$-
FY13

Insurance Claims Manager Perspective
• Claims : We are currently managing approximately 3,000 open claims across our Hospital, Long Term Care and Miscellaneous Medical portfolios. Risks range from primary duty to defend accounts with low retentions, to accounts with very large underlying amounts.
• Volume : Overall volumes are steady, but the number of “large” claims is increasing. We have paid more claims above $1m over the past 24 months than ever before.
• Size : The big claims are getting bigger. Plaintiffs are trying to make $10m the new $5m. Our highest paid claims have all been made in the last 12 months.
• Venue : “Bad” states seem to be getting worse, but the “good” states are getting tougher as well.
• Plaintiffs’ Bar: Top tier plaintiffs’ firms are getting more aggressive and demanding more. More often than not, severe cases are requiring multiple mediations.
• Anxiety : Certain insureds seem to be more anxious and likely to overpay.

Insurance Claims Manager Perspective
Getting Walloped for a $20,000,000 Verdict: The Good Old Days
• CT : Birth injury trial in CT resulting in a $58m verdict. (May 2011. State Record)
• PA : Birth injury case tried in Philadelphia resulting in a $78m verdict. (July 2012)
• MI : Birth injury trial in Oakland County, MI, resulting in a $144m verdict.
(October 2011. State Record)
• FL : Severe neurologic injury to an adult male follow bariatric surgery resulting in a $178m verdict. (January 2012)
• CA : Alleged sexual assault of a 30 yo patient resulting in a $65m verdict.
(November 2011)
• CA : Birth injury claim resulting in a $74.5m verdict. (April 2012)
• FL : LTC case in Tampa resulting in a $900m verdict. (February 2012)
• AL : $140m in AL for a Wrongful Death Claim. (December 2012)
• NY : Birth injury claim resulting in a $130m verdict in Nassau County, NY.(April
2013)

Insurance Claims Manager Perspective
Not Just the Usual Suspects
• CO : Alleged paralysis to a 36 year old man resulting in a $15m verdict. (April
2012. State Record)
• WY : Alleged paralysis to an adult male secondary to an alleged failure to diagnose a neck fracture resulting in a $9m verdict. (November 2011. State
Record)
• ME : Alleged wrongful death of a 44 year old man resulting in a $6.7m verdict.
(June 2011. State Record)
• VA : Alleged failure to timely diagnose impending myocardial infarction to a 37 year old resulting to diminished life expectancy. $25m verdict. (February 2013.
State Record)

The 1%’ers
• Court and judge issues
• Recognized/Successful Plaintiff’s Counsel
• Poor Liability Pictures
• Potential for Significant Damages
• Inflammatory Facts
• Generally Venued in “Bad” States

Insurance Claims Manager Perspective
Consequences
• Top plaintiffs’ firms are demanding a premium and second tier firms want to emulate the top firms
• Bad cases are becoming more difficult to settle for expected amounts
• Cases that would have been settled in the past are being tried, resulting in more large verdicts
• Increased anxiety and potential for fear-based decisions
• A willingness to overpay and increasing the floor on subsequent claims

Actuarial Perspective
Hospitals Claims Frequency

Hospitals Claims Severity
Average closed claim with indemnity

Hospitals Claims Severity
Average closed claim with indemnity, by state group

Hospitals Claims Severity
Average closed claim with indemnity, by state group – primary $2m vs excess
High Capped to $2m
High Excess of $2m
Overall US Capped to $2m
Overall US Excess of $2m
Tort Reform Capped to $2m
Tort Reform Excess of $2m

Hospitals Claims Severity
Average expense paid on closed claims – all claims vs claims >$1m

What Will The Future Look Like?

What Will The Future Look Like?

Drivers of Future Claims Environment
Patient Protection and Affordable Care Act:
• It’s happening!
• Things are going to change
• Some good, some bad
Tort Reform:
• Under threat
• Delusion of reprieve
Technology:
• Automation
• EMR
• Improved efficiency and delivery
• New risks

Patient Protection and Affordable Care Act
Impacts:
• As of September 2014, 7.3 million people enrolled through the Exchange.
• CBO estimates the population of insured non-elderly US population will increase by 4% by the end of 2014 (84%) and by 9% in 2016 (89%).
• Translates to approximately 12 million more people with insurance in 2014, 19 million by 2015 and 25 million in 2015.
• Changes to Medicare reimbursement: fee for service to bundled payments
The Good:
• Improved access to healthcare and preventative care may result in healthier patients and less catastrophic outcomes
• Less patients presenting in an acute crisis
• Emphasis on decreasing utilization and reimbursement driven in part, by quality
The Bad:
• Will more patients mean more claims?
• Will reimbursement rates impact the delivery of care and effect severity of claims?

Tort Reform
Under Siege:
• Challenges in Mississippi
• Referendum on increasing MICRA cap amount in California
• Partial loss of non-economic damages cap in Missouri, Florida, Georgia and
Oregon
Legislative Intervention:
• Little indication that non-tort reform states are actively contemplating some measure of reform
• Unlikely that state legislatures will act unless a true crisis develops
• Unpredictable
Not a Magic Bullet:
• Tort reform mostly works
• Sometimes it doesn’t…(Sorry Sue!)
• Severity increasing even in tort reform states

Technology
Automation:
•
Insertion of clinical guidelines into medical decision support
•
Alerts, warnings, and hard stops for guideline use
Improved Efficiency/Safety:
•
Artificial intelligence
•
Revolutionary diagnostic and treatment clinical support
•
Accurate and effective clinical analysis and decision making utilizing enormous database
•
IBM Watson Demo: Oncology Diagnosis and Treatment

Technology
New Risks:
• Documentation short-cuts
• Cut and paste, copy forward, cloning
• Errors in documentation and order entry
– Multiple patient screens open at the same time
• Physician notification of panic labs
• Abnormal path reports
– How does the EMR alert the provider?
• Medi-data
– Revealing all the alerts that were silenced
• Highly complex EMRs that have faulty or non-existent interfaces

Solutions and Suggestions for Tackling Large Claims
Options:
• Capitulate and continue making increasingly large payments?
• Put up a fight and dig in?
• Try the case?
Considerations:
• Raising the floor
• Potential for a run away verdict
• Reputation
• Becoming an easy mark
How do we stem the tide?

Solutions and Suggestions for Tackling Large Claims
Be Patient !
• Sometimes “being proactive” can be interpreted as fear
• You don’t have to pay what they want: you hold the cards
• Work up liability, causation and damages defenses: sometimes cases do get better with discovery
• Big cases often don’t settle, if at all, until the eve of trial or beyond
• Make them earn it
Buy-In from Senior Management:
• Common board objections to being more aggressive
• Reputation – don’t want to be in the paper
• Start the dialogue early – education
• Strengths/weaknesses of case
• Dangers of overpaying

Solutions and Suggestions for Tackling Large Claims
Getting the Right Counsel:
• No more gentleman’s lawyer
• Prepare for trial not settlement
• No more business as usual approach
Trial Strategies:
• Set up appellate issues early
• Know who you are dealing with – plaintiff bar, experts, judges
• Daubert/Frye
• Conceding liability
Legislative Avenues:
• Engaging other providers to identify common issues
• Jointly working with legislatures on tort reform and birth injury funds

Solutions and Suggestions for Tackling Large Claims
• Start the discussions early
• Candid discussions on strategy, valuation and expectations
• Unified front
• Using collective experience for best results

2020 Claims Odyssey: Current Trends and Managing Catastrophic Claims in the Future
• Susan Durbin Kinter (skinter@mmcip.umm.edu)
• Steve Chang (steven.chang@beazley.com)
• Valentina Minetti (Valentina.Minetti@beazley.com)
• Deborah Miller (deborah.a.miller@marsh.com)