Indemnity payments jack up malpractice defense costs

Defense costs for malpractice cases range widely among specialties, but invariably are higher for claims resulting in indemnity payments, a recently published letter in The New England Journal of Medicine states.

Researchers at leading academic and medical institutions, and the RAND Corporation analyzed the defense costs associated with 26,853 malpractice claims closed between 1995 and 2005. Each claim contained information on whether or not a payment was made to a patient, the specialty of the physician involved, and the defense costs associated with the claim. The defense costs analyzed included only items directly associated with the defense of the individual claim, which include expert-witness fees and filing costs.

The mean defense cost was about $23,000. However, claims where an indemnity payment was made were associated with higher mean defense costs -- $45,070 vs. $17,130 -- than those where no payment was made.

Cardiologists had the highest defense costs, with claims against cardiologists resulting in indemnity payment carrying a mean defense cost of $83,056. Oncologists had the second highest defense costs on record, with a mean of $78,890 for cases involving indemnity payments. Neurology, family general practice, psychiatry, obstetrics, internal medicine, and pediatrics were other specialties typically associated with higher than average defense costs.

The specialties with the lowest defense costs were gynecology ($25,073), dermatology ($24,007), and ophthalmology ($23,780). 

The authors of the study are careful to point out that though there is a substantive variation in costs among specialties, this variation is not necessarily the same as the difference in the frequency or size of claims. “These findings show that although the costs of dispute resolution are higher for claims that result in indemnity payments, there is still a meaningful cost of resolving claims that never result in payment,” the researchers noted.

They concluded that, “lowering the costs of dispute resolution could lead to considerable savings for physicians and insurers, particularly in specialties with high mean defense costs.”

Ann W. Latner, JD, a former criminal defense attorney, is a freelance medical writer in Port Washington, N.Y.

More information:

To view the full report on mean defense costs for paid and unpaid claims, according to physician specialty, click here.

Accessed April 17, 2012.

Loading links....