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Understanding Terms: Claims Based Insurance v. Occurrence Based Insurance

Insurance policy coverage can be very confusing regardless of how simple televisions commercials may claim it can be. Sometimes insurance companies limit their liability by setting a time period within which the policy applies. In other circumstances, insurance policies limit their liability by creating categories of actions that can be instituted against it. For example, if an insurance policy states that it protects a health care provider for one year after the policy begins, this may mean that 366 days later a patient is out of luck if the doctor performs malpractice. Some insurance companies create distinctions on the types of actions that fall under the policy. For example, coverage can extend either based on occurrence or claims.

The distinction here is important, especially as it relates to the time period to bring a claim. If an insurance policy begins on January 1 and ends on December 31, the malpractice occurs on November 10, and the plaintiff files suit in March of the next year, the definitional difference is important. If the policy is occurrence based, the plaintiff will likely have no problem. In an occurrence based policy, coverage extends to any malpractice which occurred within the policy period. In our set of facts, since the malpractice occurred on November 10, it is covered because it is within the policy period. In a claims based policy, coverage extends to any claim that is filed within the insurance coverage period. In this case, although the malpractice took place within the time period of the insurance policy, the claim was not filed until after the coverage period had extinguished. Thus, in out facts, if the policy was claims based, the insurance company would not be liable for the malpractice.

In a recent case, Dewayne Wright v. Willis-Knighton Medical, the plaintiff, Ms. Wright suffered cramps, a coma, insulin shock, and stroke as a result of medical malpractice. The mother of the plaintiff filed suit on behalf of Ms. Wright. She filed initial suit against the facility, Willis-Knighton Medical. At a later date she amended her brief and added the ER doctors to the suit as well. Later, the plaintiff discovered that the insurance policy did not include the health care facility and only included the medical practitioners who decided to join under the coverage. The doctors that she added under the amended brief were originally protected by the coverage.

The problem for the plaintiff begins, though, when the insurance company that she sued later based its policy with the doctors on a claims based basis. Only the claims that were filed within the insurance coverage period were covered. Unfortunately for Mr. Wright, the period ended the day before the brief was amended. Mr. Wright argued that because the doctors were employed by Willis-Knighton, they were solidary defendants. However, because the policy did not cover the medical facility there is no legal basis to extend the coverage of the policy more than the contract states. Thus, because the coverage period had expired by the time the claim was brought against the insurance company and doctor, the claim failed to meet the requirement within the policy’s scope and thus must fail in court to make the insurance provider liable for the alleged malpractice.

This case shows that if you feel that your rights have been violated or that you have been injured because of medical malpractice that you should seek legal counsel as soon as possible. By waiting before speaking to an attorney you increase the chance that time may run out on your ability to protect your rights.

You should call the Berniard law Firm to speak to attorneys who can help.