Page 3 - South Florida Hospital News Nov 2021

Malpractice Insurance

EXPERT ADVICE

Social Inflation, Nuclear

Verdicts Causing Concern

in Insurance Industry

BY VANESSA ORR protected against nuclear
verdicts.
As jury awards have “When you layer COVID
gotten larger over the on top of this, it’s going to
past decade, it has had a get even worse,” predicted
significant impact on the Gracey. “Approx imately

legal environment, espe- 90-95 percent of last year’s
cially those awards being cases concerning COVID
made against corpora- have not been heard yet,
tions and doctors. One of and while a lot will get
the reasons for this is thrown out, we’ll probably
social inflation, a term see even more nuclear ver-
that is used to describe dicts because of COVID
the increasing amount of Matt Gracey dissatisfaction and anger in
awards that juries are society.”
now giving to plaintiffs Gracey adds that these
as a result of societal trends and views. awards could also be the result of plain-
“These awards seem to be breaking all tiffs having access to a better plaintiff bar
records; they can’t be predicted as they these days, with attorneys working
are way out of the norms of any actuarial together during trials to solve problems
projections or normal trends that the in real time. “They are working with a lot
industry could expect,” explained Matt more psychologists, and are using other
Gracey, managing director, Risk analytical tools as well,” he said.
Strategies Danna-Gracey Division. “Advertising has ramped up consider-
“We’re seeing more and more of these ably; you’re now seeing many more big
‘nuclear’ awards, which is considered billboards from attorneys looking for
anything over $10 million.” auto cases or other cases.”
Gracey gives the example of a recent The industry is also seeing an increase
Florida verdict in which the jury came in litigation funding, with companies - Gale
back with a $1 billion award for a traffic offering to finance plaintiffs and their

lung cancer

accident. “This sent shockwaves through attorneys for a return of a percentage of or
surviv
the insurance industry as a result,” he the jury award, which means that these
Ib
I be
ea
ea
e
said. “There was another billion-dollar cases are extremely well-funded.
verdict in Georgia in a 2019 sexual As a result, the insurance industry is
assault case, and another $441 million having a difficult time figuring out pric- Ibeea t t t
awarded during a 2020 Florida motorcy- ing.
cle accident case. “In actuarial models, which is how the

“These awards have gotten out of con- entire industry sets rates, a billion-dollar
trol, and this is bleeding over into all sec- judgement sets all projections on their
tors of the insurance market,” he added. ears,” said Gracey. “Pricing is problemat-
“It has certainly affected insurance rates ic at best, and this also affects settle- ccancercccancerc
for doctors and hospitals throughout ments.”
Florida.” While the majority of medical mal-
There are a number of reasons driving practice cases go away without payment
these immense awards, according to and the rest are usually settled, a very
BR W

Gracey. Some believe that millennial dis- small percentage are taken to trial. with RO ARD HEEAL TH
satisfaction and their distrust of large “Because of the potential for nuclear ver-
corporations are the impetus behind dicts, settlements are also now affected,
these jury decisions. and insurance companies are under siege
“Millennials are very focused on ‘mak- because of that,” said Gracey. A t Br o w ar d H ealth w e ar e dedica t ed
,
ing things right’ in our society and they “According to the National t o the figh t againstt canc er .
are against big corporate, big pharma Practitioner Data Bank (NPDB), between
and big medicine,” said Gracey. “They 2014-20, there has been a 42 percent
are also concerned about pay disparity in increase in payments of medical mal- Learn abou t our com ehensive oncology s services:
ehensiv
mpr
mpr
e oncology sservices:
e
earn about our com
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our culture. They see these huge data practice cases,” he added. “During that Br o w ar dH ealth.or g/Bea t Canc er
breach cases in the news, like the ones time, the U.S. inflation rate rose 15.3
against Monsanto and Pfizer, which lead percent. Medical malpractice awards and
to huge class action suits awarded with settlements have been going up much
huge settlements, and it distorts the faster than inflation.”
value of money.”
The fact that caps on noneconomic For more information, contact Matt
damages have been thrown out in many Gracey at (800) 966-2120 or visit
states including Florida may also be www.dannagracey.com.
partly to blame as those caps previously
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Br o w ar dH ealth.or g
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