West Virginia court OKs self-funded trust to cover liability

Experts say more doctors are self-insuring as an alternative in areas with high premiums.

By Amy Lynn Sorrel, AMNews staff. April 2, 2007.

A West Virginia surgeon won the right to provide his own medical liability coverage in a case that prompted the state to clarify tort reforms to allow doctors to find coverage outside of traditional insurance carriers.

The West Virginia Supreme Court of Appeals, the state's highest level, in February unanimously rejected a hospital's appeal of a 2005 lower court ruling that the doctor's $1 million self-funded trust met the requirements of the state's Medical Professional Liability Act.

The 2003 law requires doctors to carry $1 million in individual coverage per claim to be protected under the state's tort reform law. The statute limits noneconomic damages to $250,000 per occurrence in most medical liability cases, and $500,000 in certain instances. The caps are adjusted annually for inflation. The law also restricts hospitals' liability for actions by doctors who meet the statutory liability coverage standard.

Charleston Area Medical Center's medical staff policy requires physicians to have no less than $1 million in current, valid professional liability insurance to work there.

But general surgeon R.E. Hamrick Jr., MD, sued CAMC in 2004 for revoking his privileges when he chose to set up a trust specifically for paying medical liability claims, instead of obtaining his coverage through a commercial insurer.

For many physicians facing unaffordable insurance premiums year after year, self-insuring is one way to ease the financial strain, his attorney, Karen H. Miller, said.