Vertical Claims Management Focuses on
Medical Malpractice

by Mike Ference
From the Western Pennsylvania Hospital News
Friday, October 22, 2004

Clare Bello knows her way around the legal system. A paralegal, then a Duquesne Law School graduate, she has been an attorney with Kirkpatrick & Lockhart in Harrisburg and two Pittsburgh law firms. Along the way, she did plenty of regulatory litigation focusing on the environment, insurance industry and also professional liability insurance defense. That background was just what Jeff Tindall needed when a client of the law firm he and Bello worked for came to him with a request.

"Jeff had 20 years of medical malpractice defense and was representing hospitals in the area when the insurance PHICO was declared insolvent," Bello recalls. "Heritage Valley Health System decided to create a solo captive, and they wanted Jeff to manage the claims. When we decided we could do it, we also made the decision that it wasn’t the function of a law firm," she adds. "So we created a separate entity to handle the new business, and that’s how Vertical Claims Management (VCM) got its start."

According to Bello, VCM’s primary target market is the one- or two-hospital system that has been forced to go out and create a captive or self-insured trust. Since its launch in February 2002, VCM has done so well in this niche that Bello and Tindall started their own firm to better focus on it.

VCM’s client hospitals still work with a licensed insurance broker to create a self-insured or captive program. VCM manages claims once they come in. They also help during the setup process to design things such as lines of authority. "Who needs to authorize a settlement for a claim? We help decide if there should be a claims committee to review potential liability, who should be on the committee and how often they should meet," Bello explains.

Most importantly, VCM offers everything a commercial company may provide to a hospital in terms of a claims department. "We hire experienced medical malpractice claims managers who review the claims and then manage the claims. We can step in and negotiate a settlement or let the hospital negotiate on their own. And we have an advantage: We’re an objective third party," Bello says. She points out that a patient may feel the risk manager is saying no to a settlement because they work for the hospital. The hospital board may suspect the risk manager is willing to settle just to get rid of the case. "But VCM offers a recommendation based on our expertise in the legal, insurance and medical professions. Our function is to adjust the claim for the hospital, explain their potential exposures, recommend reserves to be set for each claim, settle the claim, or try the case in court. And we can truly guide them on how a claim may turn out," she adds.

VCM also provides access to information that is gathered through the claims process. For example, a risk manager may want to know where the claims are originating. "We’ll run a report on their claims and find that maybe 20% of the claims are coming from the Emergency Room, and those 20% are costing the hospital 60% of the claims paid out," Bello says. "They can take the information and do a loss prevention program focusing on the ER, or further analyze the data to try and solve the problem. And we’ll work with the risk manager through the process."

Also, with VCM, all programs have access to their claims information, which is not the case with most other companies, says Bello. "Companies can’t write to the system, but they have viewing privileges anytime they want to see how the claim is being handled and what is happening with the claim. Once a hospital is self-insured, it’s their money from dollar one, so they have every right to see every bit of information and to proactively try and control the cost," she explains.

VCM is also unique in being solely focused on medical malpractice claims. "And because of our expertise, we probably do it at a different level than some of the other companies. That’s what we strive for — that’s our goal," Bello adds.

VCM’s services are tailored for the self-insured while most other claims management companies work for an insurance company. This is a key selling point for hospitals, who appreciate that VCM’s services are designed for the insured — the people who are buying the insurance and other services. "With us, they know exactly what they are getting," Bello says.

Its unique focus and custom-tailored services helped VCM earn a coveted, exclusive, national endorsement from the American Hospital Association (AHA) for its Vertical Advantage Program.

VCM prides itself in being flexible, and is able to help different hospitals facing a range of situations. "A huge hospital system in St. Louis may require an in-house program. We’ve offered to place a dedicated team right in the hospital," Bello says. As another example, she cites a Boston hospital that wanted a say in the hiring process for the claims department. "Again, not a problem," she says.

"And we’ll work with smaller to mid-size hospitals that can only afford reasonable fees," she adds. "Part of the thought process in designing and creating VCM was finding a way to help community hospitals through this crisis."

The crisis she refers to is a nationwide crumbling of the commercial insurance market, the product of insurance companies undercutting the true cost of insurance and trying to make up the difference with investment dollars, combined with the rising cost of verdicts in malpractice cases. But Bello is confident that VCM will continue to grow regardless of how this crisis resolves itself. She believes that commercial companies will eventually offer more coverage again, but that many hospitals will remain self-insured. According to Bello, VCM can provide valuable services in either scenario.

"We have been working with these hospitals when they were self-insured and we can take them back into the commercial market. We can adjust to whatever program is needed," she says.

"VCM is a really special company with a dedicated team of employees who have given up perfectly fine careers to expand VCM because hospitals can truly benefit from our system," Bello adds. To find out more about the company, visit their website at www.vcm-llc.com