WILLMAR -- A $23 million jury verdict in a malpractice case has contributed to bumping up Rice Memorial Hospital's professional liability insurance premiums by more than 50 percent.
The city-owned hospital was hit with the premium increase when its professional liability policy was renewed Aug. 1.
"It would be unrealistic to not expect a premium increase, given what happened," Dale Hustedt, chief administrative officer, said Friday. He called the case "catastrophic."
The family of Kylie Rodgers sued Rice Hospital and Affiliated Community Medical Centers after Kylie, who is now 3, suffered severe and permanent disabilities as a result of being deprived of oxygen during birth.
This past January, a Kandiyohi County jury awarded Kylie's parents, Elise Rodgers and Matthew Larson of Paynesville, $23.2 million in damages. The jury found Rice Hospital, where Kylie was born, 20 percent negligent. ACMC, which employs the physician who oversaw the delivery, was declared to be 80 percent negligent.
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The verdict was the largest ever awarded in Kandiyohi County.
Even before the case went to trial, Rice Hospital had already been notified by Midwest Medical Insurance Company that its hospital policyholders would see a 10 to 15 percent premium increase across the board this year.
The lawsuit clearly contributed, however, to the 53 percent increase Rice Hospital saw when its professional liability policy with the company was renewed at the beginning of August, Hustedt said.
"Certainly our premiums went up because of our experience," he said. "It's just the way it'll be."
It's not clear how long the lawsuit will continue to be reflected in Rice Hospital's professional liability premiums, but Hustedt said it will more than likely be a factor in the premium rate for at least the next few years.
The lawsuit might also have affected the hospital's ability, at least temporarily, to obtain competitive prices in the liability insurance market.
After the jury verdict, Midwest Medical Insurance Company reassured Rice officials that the hospital wouldn't be dropped from its professional liability policy as a result of losing the case, Hustedt said. "They've been really good to work with over the years."
But when Rice decided this summer to get a premium quote from a second liability insurance carrier, the carrier declined to offer a price, citing the size of the Rodgers family's malpractice award, Hustedt said.
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He said Rice's share of the civil damages was covered by the hospital's professional liability and liability umbrella policies. The umbrella policy, which also was renewed Aug. 1, is increasing by 1 percent this year.
Despite these increases in what Rice Hospital is paying for professional liability coverage, the two policies still make up a relatively small percentage of the hospital's overall insurance premium costs, Hustedt said. Worker's compensation accounts for about half of the $1.1 million Rice will spend on insurance premiums this coming year.
The hospital holds 11 insurance policies, ranging from vehicle and property insurance to general liability. This year a new cyber-risk policy was added, covering losses such as an electronic breach of confidentiality or the theft or loss of electronic medical records, laptops, PDAs and other digital assets.
