Can an Insurer Settle a Malpractice Suit Against Your Wishes?

A recent state court ruling in favor of a malpractice insurance company highlighted the need for physicians to examine their liability coverage to see if insurers are allowed to settle cases against a physician's wishes, according to a report in American Medical News.

In the Rhode Island Supreme Court decision, Mohan Papudesu, MD v. Medical Malpractice Joint Underwriting Assn. of Rhode Island, the high court ruled that an insurance carrier had the right to settle a wrongful death suit, despite the objections of the physician defendant.

"Essentially, it's the doctor's reputation against the insurer's caution," said Charles Wick, attorney for obstetrician-gynecologist Mohan Papudesu, MD, told American Medical News. "An insurance company is going to make a decision based on its own business reasons."

According to American Medical News, the suit was brought against several defendants, including Dr. Papudesu, after a patient delivered a stillborn child in her eighth month of pregnancy. The patient claimed that Dr. Papudesu was on call and had not responded adequately when called by an answering service about the woman's condition. Dr. Papudesu contended that he was not on call, and claimed no wrongdoing.

Dr. Papudesu's insurer, Medical Malpractice Joint Underwriting Association of Rhode Island, settled the case for $500,000 halfway through the trial, over Dr. Papudesu's objections, American Medical News reported. The doctor in turn sued the insurer, alleging breach of contract, negligence and bad faith, among other claims.

A Rhode Island trial court dismissed the suit, and Dr. Papudesu appealed to the state Supreme Court. In its April 18 opinion, the high court focused on a central clause in the doctor's policy that stated, "The [insurance] company may make such investigation and settlement of any claim or suit as it deems expedient," according to American Medical News.

Almor M. Afonso, vice president of claims for ProMutual Group, one of the largest medical liability insurers in Rhode Island, told American Medical News that many insurance companies, including ProMutual, have a "consent to settle" policy clause that prevents settlements without a physician's approval. Conversely, a "deems expedient" clause gives the insurer the right to settle without a physician's consent.

"It's the obligation of the policyholder to understand what they're signing," Afonso told the publication. "They want that control in their hands, not the insurance companies'."

Physicians should examine their policies and contact their insurers to determine what type of coverage they have to determine whether should revise their policies.

Read more about the Papudesu case here.