Risk Management



Large Loss Indemnity Payments and Limits of Professional Liability

By Paul Weber, JD

[Digest, Winter 1997]

An area of great interest and concern to OMIC insureds and prospective insureds is that of large indemnity payments against ophthalmologists. This subject often comes up when ophthalmologists are deciding what limits of coverage they should obtain. Many ophthalmologists want to know the “worst case scenario” so they can select sufficient limits to protect their personal assets should a claim arise. This article briefly reviews ophthalmology claims statistics and OMIC’s large losses; however, this information is just one component of the detailed analysis necessary to correctly determine specific individual coverage limits.

Overview of Claims

First, it is important to understand that the overwhelming majority of claims against ophthalmologists are settled with no indemnity payment to the plaintiff or claimant. Of the 479 closed claims in OMIC’s database, approximately 77% (368) were resolved with no payment to the plaintiff. A review of the Physician Insurers Association of America (PIAA) claims database of 3,714 closed claims against ophthalmologists also reveals that approximately 70% of those closed claims were settled with no indemnity payment to the plaintiff. Second, the average (mean) OMIC indemnity payment is approximately $113,880; the median payment is approximately $50,000. The PIAA data average (mean) payment is $123,823.

Approximately 15% of OMIC’s paid claims (17 cases) closed with a “large loss,” that is, $250,000 or more. While these claims make up only 15% of all paid claims, they represent 59% of OMIC’s total paid indemnity. OMIC’s average (mean) “large loss” is $433,285. Interestingly, there is a striking similarity between OMIC’s and PIAA’s large ophthalmic losses: 15% of all paid PIAA ophthalmic claims are $250,000 or more and represent 54% of the total indemnity paid; the average (mean) large payment is $454,578.

OMIC’s Large Losses

One notable aspect of OMIC’s large losses (see table) is the variety of procedures and treatments from which claims arise and the different subspecialties represented. The largest number of losses (8) has occurred against general ophthalmologists – not surprising since this is the largest group OMIC insures. However, four subspecialties are represented in the top five large losses, indicating that these large losses occur across a broad range of subspecialties.

The assortment of procedures and “medical misadventures” (e.g., failure to diagnose, improper performance, etc.) is also quite diverse. Failure to diagnose or delayed diagnosis resulted in the largest percentage (40%) of the paid large losses. But medication errors, improper performance during surgery, and failure to refer or manage patients show that there are various ways in which large losses can arise against ophthalmologists.

One significant factor that can affect large loss cases is when multiple defendants are sued. Unfortunately, this can have the effect of codefendants blaming each other for the injury caused to the plaintiff. This often occurs in cases of ROP when there is a breakdown in communication over who is managing treatment of the baby (e.g., the pediatrician or neonatologist) during and after hospitalization. This problem is not limited to ROP cases, however, as evidenced by the four other large loss cases where multiple defendants were involved.

In conclusion, there are many factors to consider when selecting coverage limits of professional liability, including the fact that large losses can occur across the spectrum of subspecialties and procedures. At the moment, however, OMIC has not paid any loss in excess of $1 million in its ten year history, although some doctor-owned companies have reported ophthalmic indemnity payments over $1 million.

Ophthalmic Practice Focus Allegation Injury Indemnity Paid
General Failure to diagnose brain tumor Death $790,000 *
Glaucoma Delayed diagnosis of infection following surgery Enucleation $735,000
Vitreoretinal Delayed retinal surgery Double vision $675,550
Oculoplastics Improper performance of lid surgery (corneal perforation) Blindness $656,776
Pediatrics Failure to properly manage ROP patient Bilateral Blindness $575,000 *
General Improper administration of drug during surgery Blindness $500,000
Vitreoretinal Delayed diagnosis of infection after surgery Evisceration $455,437
Oculoplastics Delayed treatment of hemorrhage following lid surgery Blindness $425,000 *
General Failure to diagnose cancer (chest x-ray ordered prior to cataract surgery showed malignancy) Metastases $400,000 *
General Delay in diagnosis and treatment of infection post surgery Enucleation $325,000
Pediatrics Failure to refer/manage ROP patient Bilateral Blindness $319,681 *
General Failure to diagnose retinal detachment VA 20/200 $275,000
Vitreoretinal Failure to diagnose and treat infection post surgery Enucleation $259,906
Oculoplastics Improper performance of lid surgery Difficulty closing eyes $257,500
General Failure to diagnose glaucoma Loss of peripheral vision OS $250,000
General Delayed diagnosis of temporal arteritis Blindness OS $250,000 *
General Improper instillation of drug Corneal burn/PKP required $250,000

Note that indemnity payments are predicated on many complex medical and legal factors. Similar procedures and outcomes could result in significantly different indemnity payments.

*Indicates other codefendants in case; additional indemnity over and above the OMIC payment was made to plaintiff.

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