NP practice owners assume the liability exposures of their practice, including those of their employees and independent contractors…………….evolving state licensure laws permitting NPs to practice more independently have contributed to the increase in percent and severity of claims.
By Jahna Jacobson | February 14, 2023
The distribution and severity of nurse practitioner (NP) office practice setting claims have increased sharply since 2017, according to a new report from CNA in collaboration with its business partners at Nurses Service Organization (NSO), “Nurse Practitioner Professional Liability Exposure Claim Report: 5th Edition, Minimizing Risk, Achieving Excellence.”
The claim report is a snapshot of the 2022 costs of malpractice and license defense claims and how claim allegations and settings have changed with the evolving roles of nurse practitioners. It includes data and analysis of professional liability and license protection claims, legal case studies taken from CNA’s claim files, risk management recommendations and more.
Analysis of claims by NP-owned practices
In the previous edition of the report written in 2017, the percentage of NP office practice setting closed claims was 8.0%, with an average total value incurred of $335,767. In the 2022 report, both those numbers went up, with a closed claim rate of 13.8% and an average total incurred of $431,634.
Claim expenses can vary widely, and even claims that are resolved without an indemnity payment can incur costs, such as claims that are successfully defended in favor of the NP, dismissed by the court in favor of the NP, or withdrawn by the plaintiff before trial. The average total expense of professional liability claims that closed without an indemnity payment in the 2022 dataset increased 11.1% to an average of $26,349 over those costs in 2017.
The new report found that closed claims costing $10,000 or more closed in an average of 4.5 years. Those less than $10,000 closed in 3.1 years. In closed claims with expense only, the average closure time was 4.1 years.
Although the 2022 dataset includes professional liability claims and license protection matters that closed in 2020 and 2021, the lengthy lag between allegations and resolution means the events that gave rise to the majority of claims in the dataset occurred before the COVID-19 pandemic. The effect of COVID-19 on litigation, claim frequency and severity will play out over the next few years.
Areas of greatest risk
Where should NP practices be focusing efforts to reduce allegations and claims?
The top three allegations against NP-owned practices comprise 93.8% of all claims included in the study. For closed claims with an indemnity of $10,000 or more:
- Diagnosis allegations make up 40.6%, with an average total incurred of $425,978.
- Medication prescribing makes up 34.4%, with an average total incurred of $544,744.
- Treatment and care management makes up 18.8%, with an average total incurred of $290,164.
The top three most prevalent closed claims by injury are:
- Death at 31.3%, with an average incurred cost of $652,294
- Loss of organ or organ function at 12.5% at $394,248
- Cancer at 12.5% at $266,472.
The average total cost incurred for all NP-owned practice closed claims is $431,634.
NP practice owners assume the liability exposures of their practice, including those of their employees and independent contractors. The study suggests practice owners can lower exposures by ensuring that they are providing adequate training, communications and reviews to support their staff.
Owners also need to keep up to date with practice licensure laws for NPs in their state and implement standard processes for credentialing NPs in their employment.
What has changed?
Since the last study was released in 2017, evolving state licensure laws permitting NPs to practice more independently have contributed to the increase in percent and severity of claims.
Today, half of the states and U.S. territories have adopted Full Practice Authority (FPA) licensure laws for NPs. FPA give NPs the authority to evaluate, diagnose, order and interpret diagnostic tests, prescribe medications and initiate and manage treatments for patients under the exclusive licensure authority of the state board of nursing. Ongoing changes and updates to state licensure laws will likely create an increase in NP-owned practices.
However, the study recommends that NP practice owners consider the full scope of increasing practice authority; being the primary source of insurance coverage for multiple parties, such as the corporation, employees and independent contractors, increases liability and potential cost exposures.