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Insurer Conflicts of Interest

August 29, 2009

Here is an excellent article from Medscape about some of the potential conflicts of interest that may arise when insurers represent physicians in medical malpractice cases.

Note that if physicians invoke a “consent to settle” clause, the policy may also contain something called a “hammer clause”. The “hammer clause” means that if an insurer wishes to settle a case for a given amount and the physician refuses, then the physician could be forced to pay for any judgment over the proposed settlement amount. In other words, if the judgment is more than the settlement offer, the “hammer” comes down and nails the physician.
For example, suppose an insurance company wants to settle a case for $500,000. The physician refuses to consent to settle, believing that the case against him has little merit. The insurance company will still defend the physician, but if the case is decided against the physician and there is a judgment of $750,000, the physician will have to pay the extra $250,000 out of his own pocket.
Some hammer clauses are difficult to recognize, so it is a good idea to have an experienced attorney look over your malpractice policy to inform you of your options.

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