Kreidler’s office details options to improve insurance for carceral healthcare providers

 OLYMPIA, Wash. — Washington state Insurance Commissioner Mike Kreidler’s office submitted a report to the state Legislature on Thursday on liability insurance for community-based healthcare providers. 

The report presents six policy options the Legislature could consider to improve the availability of health care malpractice coverage — and other liability protection options — for providers that deliver transition of care services to incarcerated individuals.

Background

Under Washington’s Medicaid Transformation Project 2.0, funds can be used to reimburse

community healthcare providers (CHPs) for transitional services they provide to people during their last 90 days of incarceration. The state received federal approval for this amendment in 2023.

Medical and correctional leaders — who were interviewed as part of the report — strongly support this initiative, as people with an established relationship to CHPs before release from incarceration are more likely to continue treatment when re-entering their communities. This reduces recidivism, overdoses and other negative behaviors upon release and encourages compliance with medical or opioid use disorder treatment programs.

When CHPs started to consider this work, however, they found medical professional liability coverage either unaffordable or unattainable. Private insurers were reluctant to provide coverage in carceral settings, due to:

• Legal entanglements of the Eighth Amendment and medical malpractice lawsuits. 
• Possible existing medical complications and a lack of continuity of care for incarcerated individuals. The location of care. 
• Reinsurance market restrictions. 
• The impacts on insurance companies’ financial ratings. 

Policy options

• Option 1: Expand data collected for the Office of the Insurance Commissioner’s confidential Annual Medical Professional Liability Study. Additional data could allow insurance companies to more accurately assess risk and provide coverage. This could also bolster future, broader carceral medical liability studies.
• Option 2: Create a new risk pool (or other insurance mechanism) to provide medical liability insurance for transitional services. The state could subsidize the cost if the risk pool charges less than actuarially justified premiums for the coverage. 
• Option 3: Establish a joint underwriting association or similar mechanism to provide medical liability insurance for CHPs.
• Option 4: Extend the state tort claims act to CHPs that meet certain criteria established by the state. The CHPs would be designated as employees of the state only when providing transitional services.
• Option 5: Implement different negligence standards for transitional services provided by CHPs to reduce costs, so they can only be held liable if they display gross negligence or bad faith.
• Option 6: Combine different policy options.

Kreidler’s office worked with Davies Actuarial and Alvarez & Marsal Financial Services on the report, which was prepared at the direction of the Legislature.

The Legislature convenes for its 2025 session on January 13, 2025.