What the insurance industry can learn from historical hospital losses

Hospital losses are not only a concern for the risk professionals at hospitals, but also for the carriers writing the risks and brokers and agents placing them. Today, the biggest challenge facing healthcare establishments and organizations may not be fatal diseases, but a broad spectrum of risks.

Hospital Losses Affecting the Insurance Industry

While some types of liability are unique to hospitals and healthcare organizations, others are similar to those troubling other industries. A case in point: A Catholic healthcare ministry agreed to pay a total of $358.4 million in 2014 to settle allegations that it violated the Employee Retirement Income Security Act of 1974 (ERISA). According to the complaint, the hospital failed to fully fund their workers’ retirement plan, depriving more than 70,000 employees of critical protections designed to ensure their security in retirement.

Advisen’s loss data experts published Notable Hospital Losses to illustrate losses the insurance industry has experienced in the past decade.

Hospital Losses Common in Other Industries

Some of the biggest losses that hospitals have faced over the years include three issues that are also common within other industries:

  • Data breaches
  • Privacy issues
  • Sexual assaults

Examples of these types of hospital losses include:

  • A hospital’s settlement following an unintentional health information breach of nearly 20,000 emergency room patients
  • A hospital’s settlement after its obstetrician/gynecologist was discovered secretly videotaping more than 12,000 patients
  • A lawsuit against its pediatrician who was accused of sexually abusing scores of patients


Lessons on fraud and malpractice

Brokers and carriers also have to take a closer look at typical losses experienced in specific industries. The most common sources of lawsuits for hospitals and healthcare organizations are:

  • Fraud
  • Medical malpractice
  • Negligence
  • Liability

Cases that illustrate this include:

  • A hospital’s payment to settle a whistleblower lawsuit that accused it of paying kickbacks to doctors in exchange for referrals
  • Settlement of 55 hospitals after they were found submitting false claims to Medicare for kyphoplasty procedures
  • A hospital’s settlement after a woman died due to misdiagnosis

Expect the unexpected

Lastly, the insurance industry must prepare for lawsuits that are important but are often overlooked, including these examples:

  • A hospital’s payment for property damage after a lightning bolt caused one of the most serious fires in Dutchess County’s history
  • A hospital’s settlement after a man sued for emotional distress, claiming the hospital allowed his mother’s corpse to decay

Download Notable Hospital Losses

Download Notable Hospital Losses to learn more about the financial impact of these and other cases with losses of up to $190 million.