Liability Exposure Research Articles

Fixed Odds Bookmaking with Stochastic Betting Demands

This paper studies fixed odds bookmaking in the market for bets in a British horse race. The bookmaker faces the risk of unbalanced liability exposures. Even random shocks in the noisy betting demands are costly to the bookmaker since his book could become less balanced. In our model, the bookmaker sets appropriate odds to influence the betting flow to mitigate the risk. The stylised fact of the favourite-longshot bias only arises from the model under specific assumptions. Our model offers insights into the complexity of managing a series of state contingent exposures such as options.

Identifying and Minimizing Risk Exposures Affecting Nursing Practice to Enhance Patient Safety

A study analyzing closed professional liability claims against nurses over a 5-year period was completed by CNA HealthPro and Nurses Service Organization. Of 516 closed claims, the average total incurred payment per claim was $204,594.The study identifies current liability patterns and trends and provides risk-control recommendations to enhance patient safety and minimize liability exposure. Study results indicate that nurses continue to be held strictly accountable for acting within their scope of practice as well as within the policies and procedures of their place of employment. The data also show a need for all spoken and written communication to be documented fully in the patient’s health information record. The claims demonstrate that nurses are expected to serve as the patient’s advocate and are responsible for obtaining alternative practitioner intervention if the initial practitioner does not respond appropriately to the patient’s medical needs. A study analyzing closed professional liability claims against nurses over a 5-year period was completed by CNA HealthPro and Nurses Service Organization. Of 516 closed claims, the average total incurred payment per claim was $204,594.The study identifies current liability patterns and trends and provides risk-control recommendations to enhance patient safety and minimize liability exposure. Study results indicate that nurses continue to be held strictly accountable for acting within their scope of practice as well as within the policies and procedures of their place of employment. The data also show a need for all spoken and written communication to be documented fully in the patient’s health information record. The claims demonstrate that nurses are expected to serve as the patient’s advocate and are responsible for obtaining alternative practitioner intervention if the initial practitioner does not respond appropriately to the patient’s medical needs.

Enhance patient safety by identifying and minimizing risk exposures affecting nurse practitioner practice

A study analyzing closed professional liability claims against nurse practitioners over a 5-year period was completed by CNA and Nurses Service Organization (NSO). Of 200 closed claims, the average total incurred payment per claim was $285 645. The study identifies current liability patterns and trends and provides risk-control recommendations to enhance patient safety and minimize liability exposure. Study results indicate that while the number of nurse practitioner claims have been relatively stable over the past 5 years (2007-2011), the number of claims resulting in very severe indemnity payment have increased 19% since 2009. The data also show that many claims develop from a failure involving core competencies, such as treatment and care management, and medication prescribing. Allegations related to failure to diagnose and delay in making a correct diagnosis were found most frequently. The claims demonstrate that nurse practitioners are responsible for obtaining and documenting the results of appropriate tests, consultations, and overall need for medical intervention to meet the patient's medical needs.

Ambulatory surgery

To summarize the currently available data on malpractice claims related to ambulatory anesthesia and provide an insight into the emerging patterns of anesthesia liability in this practice setting. At present, studies are mixed about how the continued growth of outpatient surgery will impact liability for anesthesiologists. Data derived from the ASA Closed Claims Project suggests that malpractice claims for major damaging events are less common in the outpatient settings than in inpatient settings. Correspondingly, the payment amounts for outpatient claims are significantly lower than those for inpatients. Nevertheless, nondisabling adverse events are common and involve respiratory, cardiac, equipment-related, and drug errors. In addition, the vast majority of injuries in outpatient claims was the result of substandard care and judged preventable by better monitoring. Although major incidents leading to malpractice suits are less, new liability exposure may be on the horizon, due to the changing landscape of ambulatory practice that permits care for sicker patients who require more complex surgeries. The areas of potential concern include postoperative discharge criteria, care for the obstructive sleep apnea patient, and the choice of anesthetic techniques such as neuraxial blocks and monitored anesthesia care. With steady increase in outpatient surgery, anesthesiologists are confronted with new areas of liability. More data are needed to identify these risks and reduce exposure to malpractice claims.

Risk Reduction for Nursing—Understanding Your Role in Reducing Liability Exposure

It has taken many years for RNs to achieve recognition as healthcare professionals possessing the exceptional skill and knowledge necessary to provide high-quality care. RNs need to be aware that the care they give and the documentation of that care may be reviewed by others from a legal perspective, and protect themselves accordingly by being as accurate and attentive as possible throughout each and every shift.1 Exposure to malpractice liability is an unfortunate consequence of modern-day nursing practice. An understanding of malpractice will assist nurses in identifying situations that may expose them to legal liability, and will hopefully lead to improved patient care.2

A Review of State Sovereign Immunity Statutes and the Management of Liability Risks by States

The liability exposure in the majority of states is limited by law, specifically states’ sovereign immunity statutes. However, the sovereign immunity of states and state entities have been challenged in both federal and state courts for nearly 200 years. This article reviews the principle of sovereign immunity, the sovereign immunity statutes of the states, and how states manage risk. It also discusses relevant case law and recent legislative activity related to these statutes and how the outcome may impact the risk management decision of states.

Nursing Home Culture Change: Legal Apprehensions and Opportunities

There continue to be serious deficiencies in the quality of life available to many nursing home residents in the United States. One significant response to this undesirable situation is the nursing home "Culture Change" movement, which attempts to improve the nursing home environment-and consequently residents' quality of life-by making facilities less institutional and more homelike. One of the impediments often interfering with the adoption and implementation of culture change in specific facilities is apprehension by staff, administrators, and governing boards about potential legal liability and regulatory exposure if residents suffer injuries that might arguably be attributed to facility conditions or policies that were inspired and encouraged by the culture change movement. This article addresses and responds to the provider liability and regulatory apprehensions that impede the progress of culture change in nursing homes, using proposed new dietary services standards as an example.

LEGAL RISK MANAGEMENT IN THE AUSTRALIAN FITNESS INDUSTRY: IDENTIFYING THE PUBLIC LAW RISKS

BackgroundThe fitness industry has a critical role to play in supporting healthy lifestyles. However exposure to legal liability risks represents a potentially significant cost to many service providers that may...

Negligent Tort Liability of the Design Professional

AbstractDesign professionals such as architects and engineers (A/Es) are experiencing increased liability exposure from contractors seeking to recover construction-related damages. Legal action is usually sought based on the principles of tort law, but this area of the law may not be well understood by nonattorneys. As a result, contractors may spend precious financial resources pursuing a claim in which there is little chance of recovery. The purpose of this paper is to present in general terms the main elements of tort liability, specifically negligence. The issues described include the economic loss rule and the implications thereof. Several exceptions to the economic loss rule are described, most notably foreseeability. If a contractor can successfully navigate around the economic loss rule, the contractor must prove that the A/E owed the contractor a legal duty and that duty was breached because of A/E negligence. A/Es must follow the process that other similarly situated A/Es would have followed. Co...

Unbounded liabilities, capital reserve requirements and the taxpayer put option

When firms access unbounded liability exposures and are granted limited liability, then an all equity firm holds a call option, whereby it receives a free option to put losses back to the taxpayers. We call this option the taxpayer put, where the strike is the negative of the level of reserve capital at stake in the firm. We contribute by (i) valuing this taxpayer put, and (ii) determining the level for reserve capital without a reference to ratings. Reserve capital levels are designed to mitigate the adverse incentives for unnecessary risk introduced by the taxpayer put at the firm level. In our approach, the level of reserve capital is set to make the aggregate risk of the firm externally acceptable, where the specific form of acceptability employed is positive expectation under a concave distortion of the cash flow distribution. It is observed that, in the presence of the taxpayer put, debt holders may not be relied upon to monitor risk as their interests are partially aligned with equity holders by participating in the taxpayer put. Furthermore, the taxpayer put leads to an equity pricing model associated with a market discipline that punishes perceived cash shortfalls.

Liability Exposure for Surgical Robotics Instructors

Surgical robotics instructors provide an essential service in improving the competency of novice gynecologic surgeons learning robotic surgery and advancing surgical skills on behalf of patients. However, despite best intentions, robotics instructors and the gynecologists who use their services expose themselves to liability. The fear of litigation in the event of a surgical complication may reduce the availability and utility of robotics instructors. A better understanding of the principles of duty of care and the physician-patient relationship, and their potential applicability in a court of law likely will help to dismantle some concerns and uncertainties about liability. This commentary is not meant to discourage current and future surgical instructors but to raise awareness of liability issues among robotics instructors and their students and to recommend certain preventive measures to curb potential liability risks.

Why Some Disaster Insurance Does not Exist

The failure of some disaster insurance market has been a very serious problem. This paper focuses on why disaster reinsurance fails and how that will affect the availability of primary disaster insurance. The insurer’s unexpected costs are added to the expected costs associated with the insured event to illustrate the necessary and sufficient conditions for the existence of disaster insurance and reinsurance. Particularly, investors’ negative response to an insurer’s huge, disaster-related liability exposures may lead to availability problem unless the insurer’s asset value losses in the financial market can be minimized. A large insurer may be more likely to withdraw from underwriting disaster insurance. Three different pricing schemes for disaster reinsurance contracts are investigated. The one which is based on the Option Pricing Theory is rejected because it leads to market failure.

Food Allergy Risk Management: More Customers, Less Liability

Food allergies present risk management problems and business opportunities for restaurants. Personal injury litigation may result in million-dollar liability exposure and conviction in the court of public opinion. Many businesses are unprepared or under-prepared to meet the needs of the growing number of food-allergic consumers. Restaurants that implement comprehensive food allergy risk management plans can help reduce liability and capitalize on the emerging market of allergy-conscious consumers.

Investors' Perceptions of Audit Quality: Effects of Regulatory Change

SUMMARYIn an experiment using M.B.A. students as proxies for individual investors, I examine the effects of two important regulatory changes on investors' perceptions of audit quality. The first change examined is from a bottom-up coverage-based approach for auditing internal controls to a more top-down risk-based approach. The second change is litigation reform further limiting auditor liability exposure following an alleged audit failure. I find that investors perceive a reduction in audit quality following each of the two regulatory changes. These observed effects are mediated by a perceived focus on efficiency for the new auditing standard and by a perceived change in the auditor's economic incentives following the proposed litigation reform. I also find that investors believe the perceived reduction in audit quality will lead management to invest fewer resources in internal controls.Data Availability: Contact the author.

The Changing Regulatory Scheme in Northeast British Columbia

The Northeast British Columbia (NEBC) oil patch is undergoing a boom in land tenure sales, exploration, and production. This comes at a time of increasing public concern over the use of hydraulic fracturing (or “fracking”), an unconventional technology that ushered in a new era of production in NEBC, along with several new contentious issues. Recently, four significant regulatory changes have been enacted or planned for the immediate future. The first, likely in response to public concern over fracking, occurred in October 2010 with an overhaul of the decades-old Petroleum and Natural Gas Act and the coming into force of the bulk of the provisions in the Oil and Gas Activities Act. The changes primarily affect production and environmental management, and several new provisions have a direct impact on fracking. The second change under development is the creation of a long-awaited groundwater licencing regime, marking a stronger environmental presence in the NEBC, and possibly abrogating pre-existing extraction rights. The third change arises from the expiry of Crown-First Nation Consultation Process Agreements (CPAs). Recent jurisprudence continues to point to the need for improved consultation and accommodation, but current negotiations may or may not succeed in arriving at a more comprehensive successor to the expired CPAs. Finally, under British Columbia’s contaminated sites regime, new measures expand the liability exposure of oil patch operators for contaminated sites in both civil actions and government enforcement proceedings.

Technology and torts: Memory costs, nondurable precautions and interference effects

This article examines the influence of nondurable precaution technologies on the expansion of tort awards. We provide four contributions to the literature. First, we present a general, formal model on durable and non-durable precaution technology that focuses on memory costs. Second, because liability exposure creates interference, we argue that tort law perpetuates the expansion of awards. Third, because plaintiffs do not consider the social costs of interference effects, private litigation induces socially excessive suits. Fourth, while new harm-reducing technologies likely increase accident rates, such technologies also raise the ratio of trial costs to harm, leaving undetermined the overall effect of new technologies on the rate of litigation.

Soft Negligence Standards and the Strategic Choice of Firm Size

AbstractIn risky activities the extrinsic incentives for care are driven mainly by liability rules and by the asset levels of potential injurers. When the level of assets of the potential injurer is endogenous, we show that softer standards outperform the traditional standards based on first-best behavior, as well as strict liability: firms have incentives to choose to be larger, the lower the standards are. We also show that liability standards should increase in the costs of reducing assets and liability exposure. This means, counterintuitively, that when other instruments that restrict firms’ size are relaxed, the optimal response is to relax, and not to tighten, liability standards. Also, in a regulatory competition setting we find that a country lowering its regulatory standards will not attract worse firms in terms of size. On the contrary, the best firms in terms of assets and care will be those benefiting from regulatory competition.

Fixed Odds Bookmaking with Stochastic Betting Demands

This paper studies fixed odds bookmaking in the market for bets in a British horse race. The bookmaker faces the risk of unbalanced liability exposures. Even random shocks in the noisy betting demands are costly to the bookmaker since his book could become less balanced. In our model, the bookmaker sets appropriate odds to influence the betting flow to mitigate the risk. The stylised fact of the favourite-longshot bias only arises from the model under specific assumptions. Our model offers insights into the complexity of managing a series of state contingent exposures such as options.

Medical malpractice - april 2011 update.

Although the malpractice crisis--the inability of health care providers to obtain affordable liability insurance--has abated in many states, medical liability costs and pressures remain a concern. In addition, the perceived threat of litigation spurs "defensive medicine"--the practice of ordering services primarily to reduce the physician's liability exposure rather than because they are medically necessary. There is wide consensus that liability pressure undermines efforts to curb overuse of health services, although there is disagreement about the magnitude of its effect. This Update reviews the evidence on the effects of medical malpractice reforms published since the Medical Malpractice: Impact of the Crisis and Effects of State Tort Reforms synthesis was released in 2006. Key findings include: Except for caps on noneconomic damages, there is little evidence that other traditional tort reforms affect medical liability costs or defensive medicine. Average awards are reduced by 20 percent to 30 percent, and premiums in states with caps on noneconomic damages rise 6 percent to 13 percent more slowly than premiums in states without caps. There is evidence that tort reforms-particularly caps on noneconomic damages-reduce health spending, but the size of the reduction is subject to debate. Because of the lack of success of many traditional tort reforms, a number of innovated tort reforms are receiving increased attention. Although they show promise in theory, they have not been widely evaluated so the evidence of their effectiveness is weak.

Intrapartum Fetal Monitoring

Litigation in obstetrics is common, and evidence suggests that a disturbingly high number of poor outcomes are preventable. Risk management related to fetal monitoring must include both the creation of systems to provide safer care and the mitigation of liability exposure through the use of protocols and documentation strategies that are designed to provide evidence of clinicians' attentive and appropriate care. A simplified approach to documentation is reviewed, along with suggestions for frequency of documentation, standardization of common abbreviations, and samples of concise but inclusive progress notes.