Hospital As Defendant

WHO INSURES AND DEFENDS THE HOSPITAL DEFENDANT

Excerpt of a Paper Presented by Maria Damiano

HIROC

In Ontario, most, but not all, hospitals are provided liability insurance by the Healthcare Insurance Reciprocal of Canada, otherwise known as HIROC. Prior to 1985, Hospitals obtained its liability insurance from typical for-profit insurance companies. However, by the mid-1980s, with rising malpractice claims and payouts, and with one major insurance company no longer providing coverage, insurance premiums began to sky rocket. As insurance premiums are paid out of the hospital’s operating funds, many hospitals, especially smaller hospitals, could not afford insurance.

As a result, HIROC was formed in 1987 when 53 healthcare organizations banded together to self insure themselves. Known as “subscribers”, healthcare organizations who sign onto HIROC coverage pay into a pool of funds. That pool of funds is then utilized across its subscribers to, amongst other things, defend and/or payout any claims. Both legal fees and any associated litigation payouts are covered. HIROC coverage not only protects the subscribing organization (e.g. the Hospital), but also that organization’s employees (e.g. nurses or respiratory therapists). HIROC is a not-for-profit. And, as it states in its name, it is a healthcare reciprocal meaning that payouts are spread across its subscribers with any surplus funds paid back to the subscribing healthcare organizations. Since 1987 HIROC has returned over $200 million back to its subscribers.

HIROC is now the largest provider of liability insurance for healthcare organizations. HIROC is made up of more than 700 not-for-profit health care organizations across Canada, including hospitals, nursing homes, and midwife organizations.

Over the last few years, HIROC has developed a strong in-house counsel team which often deals with initial claims and, depending on the complexity of the matter, may carry the case through to and including trial. Most larger claims are handled by outside counsel. In Ontario, hospital claims are most frequently handled by the law firm Borden Lander Gervais. Dealing with the same defence firm across multiple cases and over multiple years can be beneficial for plaintiff’s counsel as familiarity, and relationships, can be fostered and developed.

However, given its representation of different healthcare groups, multiple law firms may be appointed to defend the claim despite HIROC being the ultimate insurer. As an example, in a recent birth trauma case involving physicians, hospital and midwife defendants, Borden Ladner Gervais represented the hospital defendants while Rogers Partners LLP represented the midwife defendants, despite HIROC ultimately being the insurer for both the midwives and hospital defendants.

Given HIROC’s mandate to manage risk, and its need to account to its subscribers, with surpluses going back to its member subscribers, litigation risk and cost is an important consideration in any given case. As a result, where the hospital is the sole defendant and liability is clear, HIROC can be more willing to settle a claim early on. They are also typically more amendable to dismissal of actions on a no cost basis. However, where the co-defendant is a physician, who is normally represented by the Canadian Medical Protective Association (CMPA), the hospital behaviour is typically affected. Issues of apportionment as between the defendants often means that the litigation process is dragged out as the co-defendants negotiate their deals between themselves.

Non-HIROC Hospitals

While HIROC does not insure all of the hospitals across the province. Non-HIROC hospitals are typically insured by traditional for-profit insurance companies. Given the insurers are for-profit, as with HIROC hospitals, these insurers are more likely to settle on an economic basis.

Traditionally, many hospitals in southwestern Ontario, including all London hospitals, were not insured by HIROC. However, even some of those hospitals are now starting to sign onto HIROC In February 2022, the London Health Sciences Centre’s Board of Directors approved signing onto HIROC stating in part, “Increased premiums required the organization to look at alternatives and has resulted in the recommendation that is before the organization to change providers”. Of note, this will only cover incidents occurring after February 23, 2022.

Conclusion

Whether defended by HIROC or a traditional for-profit insurer,  hospital defendants are often more willing to settle cases earlier on in the litigation process given litigation costs are a consideration in its analysis.