Liability Is Rooted in Elective Spine Cases – Four Years of TDC Data Analyzed

Some neurosurgeons have given up cranial surgery privileges, and therefore emergency room coverage, primarily because of liability exposure. According to the 2002 CSNS Neurosurgery Medical Liability Survey, 56 percent of neurosurgeons have limited the services they provide and no longer treat brain tumors or aneurysms, operate on children, or perform complex spinal procedures. The survey also showed that 35 percent of neurosurgeons have altered emergency call coverage by eliminating certain emergency services, reducing hours or days on call, or stopping emergency call altogether. The key question is why: What factor or factors drive this profound change in practice design and economics?

Data Source: The Doctors Company

2000-2004 TDC Data Show Trends in What Leads to Loss Payments
The 2004 AANS/CNS Neurosurgical Emergency and Trauma Services Survey indicated that a common reason neurosurgeons offer for relinquishing cranial surgery privileges and emergency room coverage is that the professional liability crisis has forced them to limit their risk of lawsuits. The relevant statistics that motivate neurosurgeons include the likelihood of being sued every two years, a 70 percent chance of a plaintiff victory in a case involving a claim of cognitive impairment, an increasing number of extremely large settlements and judgments, and finally a real risk of these settlements and judgments exceeding their policy limits. This situation has influenced some neurosurgeons to limit their practice to avoid the liability of intracranial and complex spine surgery. However, based on liability data from The Doctors Company, it appears that routine elective spine practice may be the origin of most lawsuits.

The statistics of lawsuit frequency according to type of case that would justify this conclusion — that is, number of intracranial cases compared with spinal cases, or emergency cases compared with elective cases — have not yet been published in the neurosurgical literature or in the indemnity insurance statistics. The purpose of this paper is to provide 2000-2004 data from The Doctors Company that show trends in the professional liability risk profile for the types of encounters leading to loss payments.

Data Source: The Doctors Company

The Three Components of “Total Loss”
Insurers list three components of the total loss costs in medical professional liability:

1. indemnity;
2. unallocated loss adjustment expense; and
3. allocated loss adjustment expense.

• Indemnity is the actual or estimated (reserve) amount to be paid in damages to the plaintiff. The total amount incurred represents the amount either paid or held in reserve to pay current open claims.
• Unallocated Loss Adjustment Expense (ULAE) is the cost to the insurance company of managing its claims department to adjust and resolve claims, including such expenses as overhead and staff. These costs are not allocated to any individual claim, but are a general expense to the insurance company as part of their operations. For the most part ULAE is combined in financial reporting as part of “underwriting” expenses.
• Allocated Loss Adjustment Expense (ALAE) is the specific cost of adjusting a specific claim or loss. Therefore it is allocated to a specific claim or loss. It is expressed as both actual (paid) and reserve (estimated) amounts. The components of ALAE include defense attorney expenses and fees, costs of records duplications, expert witnesses, trial preparations, etcetera.

Data Suggest Primary Lawsuit Source Is Elective Spine Cases
The 2000-2004 data in the tables were obtained from The Doctors Company, which provides coverage to approximately 200 neurosurgeons nationwide. These data are assumed to be representative of the trends among neurosurgeons insured by other companies, although carrier and regional differences may exist. Conclusions drawn from this sample are not statistically significant. However, perceptions regarding liability exposure that affect decisions to renounce intracranial privileges may be altered by this trend analysis.

A review of the professional liability risk profile data from The Doctors Company suggests the following trends and additional analysis.

1. Lawsuits are predominantly related to elective spine cases.
2. Emergency and trauma cases do not lead to a significant number of lawsuits.
3. Collection of data from other carriers that provide neurosurgical liability coverage should be accomplished.
4. An aggregate analysis should be performed in order to obtain a statistically valid professional liability risk profile leading to loss payments.

In conclusion, while some neurosurgeons have given up their craniotomy privileges and therefore their emergency room coverage primarily because of liability exposure, 2000-2004 data from The Doctors Company demonstrate that routine elective spine practice is the origin of most lawsuits and that emergency and trauma cases do not lead to a significant number of lawsuits. Additional data from other insurance carriers should be obtained in order to compile a statistically significant neurosurgical liability risk profile.

Richard N.W. Wohns, MD, MBA, is chair of the AANS Professional Liability Committee and chair of the Northwest Quadrant of the Council of State Neurosurgical Societies. He is president and founder of South Sound Neurosurgery, PLLC, in the Puget Sound region, Wash.