Incidents impacting multiple patients can create coverage challenges for health care providers.
RISK REPORT: HEALTH CARE
With Batch Claims, Stop the
Bleeding Related or “batch” claims, particularly
in health care, are a
issue with the potential
to keep growing.
By Susannah Levine
It’s a nightmare scenario: A distraught man walks into a hospital emergency room, undergoes a psych evaluation, confides frightening thoughts about hurting people he loves. He walks out with a prescription for anxiety medication. Several hours later, he shoots his wife and six other people. Four die, three are seriously wounded.
Sadly, the scenario hits close to home, with similar tragedies happening on
an all-too-regular basis. Such an event, obviously, is a nightmare for the families
involved. It’s also extremely complex from an insurance perspective, said Shep
Tapasak, managing principal, Integro Insurance Brokers, because it creates a set of
“batch” claims, a term used for certain sets of related events.
In this type of scenario, Tapasak asks, which coverage responds? A number
of things could create inconsistent treatment up the tower of policies, especially
if the secondary/excess coverage does not adopt the terms and conditions the
primary coverage spells out in a follow form, which is intended to impose
consistency throughout the tower.;
For example, if the lead carrier’s professional liability policy specifies that
it responds to claims from a medical incident, that coverage would be in play
because of the shooter’s treatment at the emergency room.
However, some excess carrier forms might respond to this scenario as a general
liability event, he said, since the claims were not brought on behalf of a patient.
“Then the situation gets complicated,” he said.
While captive policy forms generally help mitigate inconsistent terms or
conditions, Tapasak said, “reinsurers may have their own ideas about policy
language, especially in such key issues as ‘batch.’ ”
Many facilities, including hospitals, carry high self-insured retentions.
Insureds are able to transfer much of their risk to their excess insurers through
these aggregation/batch provisions, said Robert Nils Lane, Esq., executive vice
president, WTW Resolutions.
Although the exact definition of a batch claim varies by policy and jurisdiction,
Lane said, the term refers colloquially to “an aggregation of multiple claims
or claimants into one bucket,” so the claim must satisfy only one self-insured
retention to trigger the excess coverage.
These claims occur mostly in the context of general liability insurance coverage
or professional liability and pivot on “a consistent act or omission that led to
allegation of wrongdoing, typically around bodily injury,” Lane said.
To avoid carriers in the tower of policies pointing fingers at each other over
ambiguities, Holly Meidl, senior vice president, North American health care,
Allied World, looks for “consistent definitions within a single program tower and
contract language that dovetails between policies” when more than one cover
might apply. In her previous life as a broker, she sought broad language on all
policies to insure coverage overlaps that would provide a bulwark against any fact
pattern that plaintiffs’ counsel might uncover. For example, a medical malpractice
policy could be triggered because of
the way a physician was credentialed,
but credentialing irregularities might
provoke a lawsuit that would trigger a
Directors’ and Officers’ policy.
Because general liability policies
often have a lower retention than
professional liability policies,
insureds;might prefer that general
liability policies respond, Tapasak said.
The health care industry is “ripe”
for batch claims, he said, because
hospitals might unwittingly employ a
rogue employee or take on exposure to
“The recent flurry of mass
torts involves hundreds of
plaintiffs suing one or only
—Darryl K. Thomas, chief claims officer, HCPL,
• A variety of factors can create
conflicts in how policies respond to
• Consistent definitions and
contract language can help avert
finger-pointing between carriers.
• Batch claims are becoming an
emerging risk issue as attorneys
link events to maximize recovery.