Medical Professional Liability Carriers Cut Costs 9 Percent, Shorten Turnaround on Legal Bills
Client: MIIX Insurance Company
Challenge: Enforce company legal billing guidelines across a wide range of outside law firms
Solution: CSC’s Legal Solutions Suite software for Web-based submission of bills, legal bill analysis, budgeting and planning
Results: MIIX reduced its legal costs more than 9 percent and improved analysis of law firm costs; using CSC’s hosting services, MAG Mutual introduced a paperless billing process with a guaranteed turnaround on payments to law firms.
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Since the late 1990s, the cost and availability of malpractice insurance has been a high-profile concern of America’s medical community. Malpractice cases on average take 52 months to get to trial, so in addition to retaining the most qualified defense available, medical malpractice insurers must closely monitor their spending on outside counsel. Many of these carriers have turned to technology to help their claims professionals review legal bills and manage cases. And some companies, such as New Jersey-based MIIX Insurance Company, licensed CSC’s RISKMASTER software and formed a litigation bill review team to oversee the process.
Significant Reduction in Legal Expenses
The need to control costs was imperative for MIIX in 2002 when the company licensed CSC’s Legal Solutions Suite. At its peak, the company offered medical malpractice coverage in 38 states. In 2002, however, spiraling claims costs forced MIIX to stop writing new policies as the company was placed into rehabilitation by the state court. With its business in runoff mode controlled by the New Jersey Department of Banking and Insurance, MIIX continues to reduce its legal spending by using CSC’s Web-based Legal E-Bill and Legal Bill Analyzer components to enforce its billing guidelines.
“Because we’ve gotten more efficient, we were able to reduce our legal expenses in excess of 9 percent in 2002, and in 2005 we still managed to achieve 4 percent in savings,” said Richard Moore, general counsel for MIIX. “The firms know that someone is watching.
MIIX also uses the system to generate reports on types of cases, the average cost per case. Combined with average indemnity payouts from the firms, MIIX has devised a very effective means to evaluate the effectiveness of its outside counsel.
“We are able to identify the most efficient law firms, and we can see who is getting the best results and at what cost,” Moore said.
Simplifying IT Support with CSC Hosting
Atlanta-based MAG Mutual, the Southeast’s largest physician-owned Carrier, licensed Legal Solutions Suite in 2005. Rather than install the system in its own processing environment, MAG Mutual relies on CSC to host the software at a CSC data center. That arrangement allowed the company to avoid committing IT staff to support the new technology and isolate MAG Mutual’s core processing system from access by external users.
The transition to Legal Solutions Suite for both internal claim representatives and outside attorneys went smoothly, according to MAG Mutual CIO Alan Mercaldo. “We found that over 50 percent of our firms were already using Legal Solutions Suite, so we went to three of those firms and asked them to be our early adopters,” Mercaldo said. “They gave us input on adopting best practices that we incorporated into the overall management of the program.”
Legal Solutions Suite also supports the company’s goal to move to a paperless claims environment. “Next to the actual claim file, legal bills are the second-largest source of paper for the department,” Mercaldo said. “We licensed the system to help improve the productivity of our claims professionals, so they can focus on claims — not paperwork.”
Shortening Turnaround Time for Payments
And as professional liability carriers improve their internal efficiencies, their outside attorneys benefit too, according to MIIX's Moore.
“In the past, it was taking up to 90 days to pay some of our bills,” Moore said. “That was certainly the exception, but these things happen. Today, our law firms have much more certainty about our turnaround time. They know we are going to process that bill within 30 days, and if we have an inquiry, it’s going to happen within 45 days. The attorneys tell us that even if they may not like our rates, at least they know they’re going to get paid within a reasonable amount of time.”
Moore added that the system has helped to reduce the inherent conflicts associated with legal billing.
“We had billing guidelines in place before, but Legal Solutions Suite helped remove any subjective interpretation of our guidelines,” he said. “By and large, our firms are complying with our guidelines, and after we received feedback from them, we actually made some general adjustments to our guidelines to address their concerns. We want to be working with the firms, as opposed to working against them.”
