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Published Wednesday, July 18, 2018
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Does Your Business Have $6.5 Million to Settle Healthcare Management Liability Claims?

That's the average settlement for Healthcare Management Liability claims in 2016 — an amount that has tripled since 2008, according to Advisen data.

Several factors have contributed to this increased cost and claim activity, including uncertainty surrounding the Affordable Care Act (ACA), increasing merger and acquisition activity, the evolving Healthcare system with its additional and complex risks, and the public perception that entities within the Healthcare industry have deep pockets.

Unfortunately, Healthcare businesses aren't immune to Management Liability risks, and lawsuits must be defended — even if they are meritless. In fact, your company can be sued by investors, employees, shareholders, customers, competitors, creditors, vendors or suppliers, who allege wrongdoing or breach of duties in the performance of your services. Although hypothetical, these situations stress why Management Liability insurance coverage is so necessary when it comes to protecting and addressing your business risks.

According to Advisen claim trend data, Employment Practices, breach of contract and business dispute lawsuits are most likely to be brought against your Healthcare business, while juries reward antitrust, regulatory fraud and abuse claims with the highest settlement amounts. In addition to these lawsuits, CNA has experienced a steady increase in Directors & Officers liability claims, due to the expanded merger and acquisition activity within the industry. Moreover, the Healthcare industry continues to be confronted with False Claims Act claims that arise from whistleblower actions alleging fraud.

Is your business prepared to defend these lawsuits? Here are three things to know about mitigating Management Liability settlement costs.

How to mitigate Management Liability settlement costs
 

  1. Purchase Management Liability insurance. Management Liability coverages include Employment Practices Liability, Directors & Officers, Fidelity and Crime, Fiduciary Liability, and Kidnap, Ransom and Extortion insurance. Whether you own a private company or a non-profit entity, you are responsible for a diverse workforce, and the appropriate insurance can mean the difference between bankruptcy and prosperity for your business.
     
  2. Consider increased insurance limits. Your business already has a Management Liability policy, but is it appropriate? According to Advisen data, the average limits of liability for entities within Aging Services, Allied Healthcare Facilities, and Hospitals with less than $1 billion in revenue, as well as for physicians, nurses and dentists, have remained consistent since 2008 — and even declined to less than $2 million in 2016. That figure represents less than one-third of the average Management Liability settlement within the Healthcare industry.
       
  3. Work with an insurance carrier that offers specialized products and services. Many insurance carriers are unwilling to underwrite coverage for Healthcare Professional Liability, due to its complex exposures. As a leader in the Healthcare Professional Liability marketplace, CNA has a long and proud history of insuring Healthcare companies and underwriting expertise, as well as specialized product offerings.
      

One or more of the CNA companies provide the products and/or services described. The information is intended to present a general overview for illustrative purposes only. Read CNA’s General Disclaimer.
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One or more of the CNA companies provide the products and/or services described. The information is intended to present a general overview for illustrative purposes only. Read CNA’s General Disclaimer.
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