Professional liability insurance for doctors and dentists

– LegalLegal regulation of medical liability through the Patients’ Rights Act (PatRG) since 26.02.2013 –

Up to more than 170,000 medical malpractice cases – without compulsory insurance?

Experts estimate that there are up to more than 170,000 medical malpractice cases per year. Until the PatRG came into force, there was only case law on medical liability.

A distinction is now made between liability cases:

(1) Malpractice due to medical malpractice,

(2) Breaches of the duty of disclosure pursuant to Section 630e of the German Civil Code (BGB),

(3) Violation of economic duties of disclosure according to § 630c III BGB, as well as

(4) Breaches of documentation obligations pursuant to §§ 630f, 630h III BGB.

A typical example would be the joint crowning of molars by splinting, with the consequence that dental floss can no longer be used. If there is a lack of documented information and consent, this already constitutes, among other things, bodily injury (OLG Hamm, judgment of 17.12.2013, Case No. 26 U 54/13). At most, doctors have to insure themselves according to a professional code of conduct or state law, as do obstetricians or midwives, for example.

Statutory and private long-term care insurances as well as statutory health insurances are to support the patient in the enforcement of damages due to treatment errors according to an amendment of § 66 of the German Social Code, Book V (SGB V). Since then, this support has been the legal rule in normal cases – which some health insurers still find difficult to implement.

Coverage gaps depending on the definitions of the insured event in the policy

Depending on the contents of the policy, including the terms and conditions of the insurance, there are commonly quite different insurance coverages.

Here the expert distinguishes:

(1) the causal event as a breach, with the gap in cover in the case of temporal non-ascertainability after the VSH insurance has been renegotiated and/or temporally limited subsequent liability insofar as it is not a case of compulsory insurance (§§ 113 I, 114 II 1 VVG),

(2) the loss event as a consequential event, with the gap in cover in the case of late claims without a supplementary liability provision,

(3) the first verifiable assessment of damage, also with a gap in cover for late claims,

(4) the claims-made principle, with the option of extension through retroactive insurance and/or agreement on subsequent liability.

Unfortunately, even some insurance agents only realise where the differences in their own liability cover might lie when they have their own – allegedly then uninsured – claim.

Trap when reinsuring through insurance brokers

Even if there was a complete insurance coverage in the professional property damage liability (VSH), the case can occur that it is no longer possible to prove when a damage occurred. Then, especially when changing professional liability insurers, neither pays, which could be affected.

The OLG Celle (judgement of 10.05.2012, file no. 8 U 213/11) ruled that in the event of a change of insurer it is solely up to the policyholder to prove at which point in time a loss occurred. “The policyholder’s evidentiary shortcoming cannot be overcome either procedurally or substantively.” Despite VSH coverage without any gaps in time, there is no insurance benefit. In many cases, this gap can only be closed by negotiating with the insurer – addressing this in the event of a loss is regularly too late, as there is no longer any retroactive extension of cover for houses that are already on fire.

Case of the time-limited subsequent liability

As in the case of a change of legal protection insurance, it can also happen in the case of a change of professional liability insurance that the liability claim for damages is not time-barred, but the risk carrier, i.e. the insurer, refers to its insurance conditions with time-limited subsequent liability. In such cases, however, the policyholder can plead that he did not know about the claim and that the failure to report within the deadline was therefore blameless (OLG Frankfurt/Main, judgement of 5 December 2012, ref. 7 U 73/11; OLG Stuttgart, judgement of 27 November 2008, ref. 7 U 89/08). In this case, an action for coverage against one’s own insurer for a determination of the obligation to indemnify has a regular chance of success as long as the statute of limitations has not yet expired.

Case of the unsuitable insurance intermediary or broker

Insurance brokers are just as vulnerable to liability as doctors and architects. What doctors, architects and insurance brokers have in common is that faulty or omitted documentation can lead to a reversal of the burden of proof in the event of a claim. Brokers have to inform their customers, i.e. the policyholders – such as the doctor in the case of a mediated medical malpractice insurance – about the supreme court rulings (OLG Hamm, judgement of 11.05.1995, file no. 18 U 57/94). This includes, for example, that the Federal Court of Justice had at some point surprisingly judged an unwanted child “as damage” in the case of a failed sterilization. However, in practice it is often the case that insurance brokers seldom observe the case law concerning their insurance clients in order to provide clarification.

For example, the Federal Court of Justice (BGH) decided (judgement of 29.01.2001, file no. II ZR 331/00) that in the case of joint professional practice as a joint practice or partnership, the aggrieved party can not only sue the partners, but also this BGB partnership itself has legal capacity and party capacity. It was not until more than a decade later that some VSH insurers came up with the idea of extending off-the-shelf VSH coverage accordingly. The vernacular insurance broker perhaps first recognized the problem of this coverage gap in his client’s claim.

Or you can take the contract conditions of your own VSH insurance broker to hand. In these, one will often read that liability is limited to intent and gross negligence, or that liability is limited to a good one million euros as the minimum insurance amount. One would expect that the insurance mediator knows that for decades such clauses are ineffective (e.g. with the hospital contract: OLG Stuttgart, judgement of 07.12.1977, Az. 1 U 46/77), even by courts simply as profession-adverse as well as a offence against “good faith” were described. For example, a chamber professional recently commented after being told about the ineffective brokerage agreement form “this to me is the best evidence of overreaching or ignorance.”

Risk prevention through quality management

The Higher Regional Court (OLG) Frankfurt/Main (judgement of 21.09.2012, file no. 3 U 140/11) ruled that in the case of “extensive checks and inspections” at the policyholder’s premises in order to “shoot out or promptly uncover” financial losses, it is possible to prove that a failure to report by the deadline was not the fault of the policyholder. In this sense, the managing director of an at least medium-sized GmbH is already obliged to operate a risk management system. With corresponding insurance brokers with freelancers and tradesmen as clientele, one often looks in vain for such expertise. Finger time for the doctor to look around for more expertise with knowledge of supreme court case law.

Sufficient sums insured through risk assessment

The determination of a sufficient sum insured also falls within the insurance broker’s duty of examination. Not only birth defects, but also, for example, anaesthesia errors – such as an unrecognised drop in the oxygen concentration in the blood – can lead to losses of several million euros for doctors and dentists, particularly in the case of small children. Treatment costs often represent the smallest part of this – care costs, on the other hand, add up to more than two million euros over a lifetime, discounted to the time of occurrence of the loss in accordance with life expectancy and the increase in costs, and loss of income losses amounting to the lifetime income that could be expected without the loss add up to more than three million euros, as calculations in actuarial reports show. In about half of such cases, this ended in insolvency for the doctor concerned because there was insufficient VSH insurance.

by Dr. Johannes Fiala and Dipl.-Math. Peter A. Schramm

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About the author

Dr. Johannes Fiala
PhD, MBA, MM

Dr. Johannes Fiala has been working for more than 25 years as a lawyer and attorney with his own law firm in Munich. He is intensively involved in real estate, financial law, tax and insurance law. The numerous stages of his professional career enable him to provide his clients with comprehensive advice and to act as a lawyer in the event of disputes.
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