Regulatory suits and high punitive damages are a constant reality in the medical business. In early 2014, Takeda Pharmaceutical Co., Ltd., was hit with $6 billion in punitive damages when a U.S. Federal Court found the company in the wrong for concealing cancer risks associated with a diabetes drug it manufactures. Eli Lilly and Co. – Takeda’s co-defendant in the case – was ordered to pay $3 billion in damages.
It’s not just the goliaths in the medical industry who get hit. Regulatory suits and punitive damages awards can be devastating to midsized businesses and medical practices. From makers of medical instruments to the doctors who use them, defending the suits takes a huge amount of time and money, and settling them can be just as costly.
Making it through the storm
Consider the industry you’re in and the potential your company has for facing a regulatory suit. Are you prepared to battle a government agency? Do you even know a law firm that specializes in defending cases that you could be named in? And when you think of what a suit like this might cost your business – in lost time, bad PR, and dollars – do you have an idea of what kind of insurance you have to cover it? Many policies contain inadequate coverage and/or very high deductibles.
Think about how regulations may have changed since you worked with your insurer to write that policy – or how your company’s role in the industry may have evolved over the last few years, are you covered?
Is your business covered?
Take a really good look at your situation, and work with your insurance provider to see what kind of coverage you have. If you feel your company is vulnerable, consider starting a captive insurance company – a captive can help cover the deductibles if you’re ever under investigation. You can also purchase insurance that’s more in tune with your industry and the specific needs of your company. For anyone in a highly regulated field, this is a good idea. We’re happy to talk with you about options and help you find out of a captive is right for you.