Hospitals and Doctors Not Required to Carry Malpractice Insurance

It may surprise some to learn that hospitals and doctors in Illinois are not required to carry medical malpractice insurance. Although the law requires a driver to be insured before getting behind the wheel, professionals engaged in the practice of medicine may choose to forgo purchasing insurance.

While the vast majority of hospitals and doctors do carry insurance, it is not required by law. In an attempt to avoid the high cost of malpractice premiums, hospitals and doctors may choose to “go bare” by not carrying insurance. Instead, they may try to limit liability by creating a corporation which can file for bankruptcy in the event of a large malpractice verdict.

While malpractice premiums are undoubtedly high, especially in the Chicago area, this is not the result of large payouts in medical malpractice lawsuits, as the insurance industry incorrectly claims. Several studies have shown that there is no connection between increases or decreases in payouts and changes in the premiums charged. Rather, because much of insurance companies’ profits come from investments, premiums tend to rise and fall according to the health of the overall economy.

Hospitals that forgo malpractice insurance are also not required to inform patients of that fact. Such institutions may claim to be self-insured, maintaining adequate cash reserves to pay malpractice claims, but in reality those reserves are not always sufficient. An institution may use the specter of bankruptcy in malpractice settlement negotiations, so it is important for injured patients to obtain representation from an experienced attorney knowledgeable about such issues.

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