Medical Malpractice Versus The Insurance Underwriter

In the early spring of 1970, I graduated from college and went to work as an insurance underwriting trainee. As those inside the industry know but those outside generally do not, "underwriter" has two very distinct meanings, depending on which type of insurance you are discussing.

If it is Life Insurance, "underwriter" is nothing but a glorified word for "salesman". Underwriting is a term dating back to Edward Lloyd's coffee house in London. Rich men interested betting on the safe arrival of a cargo ship would sign (write) their names under the description of the ship, the cargo, and the risk involved.

But in Life Insurance, the salesman-underwriter passes the application to the real underwriter at the company office. That person decides whether or not the potential risk outweighs the chance of profit, and eventually word reaches the customer: He can have his coverage at the price quoted, or he cannot.

In Commercial Property and Casualty Insurance, an underwriter is the "real thing", and that is the sort I hired on to be. The company office was in Spokane, Washington. After a year's worth of on the job training and three additional weeks studying in our nation's insurance capitol of Hartford, Connecticutt, I was given my first book of business to maintain.

Part of that book was composed of physicians' and surgeons' professional liability insurance. At that time a General Surgeon without a nasty claims record could obtain coverage for around $5,000 per year in premiums.

Ask your friendly surgeon what he pays today and see what answer you get. Inflation in that field of insurance has been truly astronomical.

In a way, insuring doctors, nurses, dentists, chiropractors, and even hospitals throughout eastern Washington, northern Idaho, and all of Montana became my favorite part of my job. Most of the health practitioners were highly competent professionals with zero claims

But there were some jim-dandy exceptions. The country boy out of the Big Sky Country of Montana was about to get a real education.

There were many insurance files involving doctors. To get through a day easily, naturally, part of me hoped for a batch of good, claims-free files to hit my inbox each morning. The other part of me, the morbidly curious part, perked up when I saw one of The Uglies. No, my coworkers did not call them that...but that is what they were. Here are some examples, all exactly true.

Where memory is even the slightest bit unclear, I have erred on the side of caution. In other words, the claims described were often worse than I state here:

1. The "usual" assortment of items left inside patients after surgery. There have been some unbelievable cases discovered over the years. Fortunately (if you can call it that), our office had only heard about sponges, clamps, and one (ouch!) pair of scissors.

2. The general practitioner from central Washington who had immigrated here from the Pacific Rim. He had already inspired several claims against himself, with the most serious (so far at least) involving a patient's broken leg. His treatment was so inept that the patient lost the limb, with the file indicating this never should have happened. The M.D. was scheduled to appear at a court hearing in Spokane but disappeared two days before the hearing date.

Our underwriting staff generally agreed that there seemed to be only two possibilities: Either he had cut and run to who knows where, or the folks in his area had planted him somewhere he was unlikely to be found, perhaps to fertilize a wheatfield or some such. When I left the insurance company three years later, he still had not surfaced.

3. Without doubt the most heartrending case involved a little boy just four years of age. He had managed to jam a small, squarish red plastic bead in his ear to the point that his mother could not get it out. It was during the evening, but Mom had the home number for her boy's pediatrician in her address book. The doctor agreed to meet them at his office.

By the time he got the bead out of the boy's ear, the M.D. had also destroyed every delicate bone he could reach--short of piercing the skull itself. The kid would never have hearing in that ear again, and the pain levels were most likely beyond what most of us could imagine.

How could such a thing happen? From notes in the file, it was clear that, (A) this man was a hardcore drug addict, most likely helping himself regularly to prescription medications for so-called recreational use. The night he ruined the boy's ear, he was high as a kite. (B) Not only were other doctors unwilling to take action against one of their own, but they were physically afraid of him. He stood only five-feet-four but was known to have a towering temper and to carry a loaded pistol in his little black bag at all times.

Not only that, but my superiors at the insurance company were also afraid of him. They did want to get rid of him as a client, big time, but were trying to figure out how to cancel or non-renew his insurance coverage without admitting the real reason: That he was simply a menace to society who should have been locked up for life

There was one more example that came to mind as I was planning this Hub.

About a year before I decided to change jobs and leave Spokane, a fascinating ALERT!! crossed my desk. As we were required to do, I read it, initialed it, and passed it on to the next underwriter on the list...but not before I memorized its contents, even going to far as to make a copy to keep handy "forever".

The ALERT!! was warning all company personnel to be on the lookout for a particular doctor. If we saw an application come in with his name on it, we were to immediately decline to cover him.

No kidding. This fellow had left California and moved to Hamilton, Montana, which was part of my underwriting territory. In California 32 lawsuits for malpractice were pending against him. Even so, he was known to be actually practicing medicine in Hamilton. Fortunately, I never saw his name on an application. When I later moved to Hamilton (long story), he was long gone from that community as well.

Final note: I am definitely not disrespecting doctors as a group. I have the greatest respect for the best of them. The 65-year-old surgeon who repaired a hernia for me on March 1, 2006, could not have been more skilled. I am quite certain he left nothing behind that was not supposed to be there, the entire operation was done under a local anesthetic (meaning I was conscious the entire time), and the results were fantastic.

On the other hand, it does pay to investigate your surgeon's reputation before putting yourself under the knife. Even after investigating, if you see a chainsaw sitting on the counter...run.

Thanks for reading,

Ghost32