Patient Beware: Some Hospitals Do Not Carry Medical Malpractice Insurance

Though it might be quite a surprise to some patients, there are a number of hospitals in some of the busiest cities in the U.S. that do not have standard, full policy malpractice insurance. Some hospitals are “naked” or “bare,” industry terms for operating without medical malpractice insurance. There are several hospitals in New York, according to The New York Times, that have used up the money earmarked for malpractice reserves: one hospital has even closed its obstetric practice to avoid lawsuits. Administrators say a tough financial environment and skyrocketing premiums have made it impossible to pay the money needed to maintain malpractice insurance.

While dropping insurance may seem necessary in the short term in order to meet other financial obligations, it could easily come back to bite them, should a large medical malpractice judgment force a hospital to declare bankruptcy. Many states do not require hospitals to carry malpractice insurance. In some area hospitals in Chicago, New York, Philadelphia and Florida, the cost of malpractice can seem prohibitive to hospital executives, so they gamble and hope there won’t be dire consequences if they forego malpractice insurance.

New York State Department of Health surveyed “self-insured” hospitals in 2009 and found that one dozen New York-based hospitals acknowledge that they did not carry malpractice insurance and instead were partially self-insured or had some mix of primary coverage and excessive coverage. In addition, several hospital administrators stated that the house physicians had their own, subsidized insurance.

When they do not have malpractice insurance, some hospitals have a separate reserve of funds with which they plan to cover claims, but according to The New York Times, several hospitals investigated did not have sufficient funds in case of a large malpractice judgment, while two had no funds set aside at all.

Hospitals are cutting costs in other ways too, which sometimes means an actual denial of services. In Ohio, for example, some smaller hospitals no longer offer obstetric deliveries due to rising costs; malpractice insurance for obstetrics is particularly high. According to the Ohio Department of Health, there are 23 counties in Ohio that do not offer maternity units in their hospitals, with 19 separate hospitals no longer offering maternity services since 2004.

When an uninsured hospital becomes bankrupt, the creditors—which can include malpractice plaintiffs—often find they are unable to do anything but accept less of a payment than they were awarded via litigation.

Nathan Williams is a Brunswick personal injury lawyer, Brunswick divorce attorney, criminal defense and Brunswick DUI lawyer in Southeast Georgia. Visit or call 1.912.264.0848.

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