NCC Loss Prevention Program Results in Dramatic Claims Reduction

By Michael J. Schroeder, Esq.

The National Chiropractic Council (NCC) has just announced the results of a four-year chiropractic, malpractice pilot program in California, employing a number of loss prevention techniques never previously employed with chiropractic doctors. This program has resulted in a 78.5 percent reduction in claims, as compared to National Chiropractic Mutual Insurance Company (NCMIC). Currently, NCMIC reports that 1 out of every 23 NCMIC's insureds has a claim against him. By stark contrast, only 1 out of every 107 persons insured through the NCC's program has a claim against him.

What distinguishes the NCC program from those of NCMIC and other malpractice programs are two claims-reducing features: selective underwriting and mandatory arbitration.

Selective Underwriting

The NCC is selective about the kind of doctors it will let into its program. Like most malpractice applications, the NCC's covers the applicant's history of claims, crimes, and disciplinary proceedings. Unlike other applications, though, the NCC application asks about many specific practices that the NCC feels can lead to malpractice suits. For example, does the doctor use procedures that are outside the scope of chiropractic or of questionable value, such as obstetrics, colonics, the toftness device or gemstone therapy. Does the doctor use collection agencies and sue patients to collect overdue bills? If so, the NCC will warn that doctor that they have a specific policy exclusion relating to collection suits, because collection suits are very likely to cause a countersuit by a patient, for malpractice.

Nationally, cardiovascular accidents (CVAs) and cancer are the most costly malpractice claims against chiropractors. One NCC application question asks if the doctor commonly uses certain tests to avoid CVAs. Another asks if the doctor always does retakes of marginal x-rays, a practice that NCC believes helps avoid claims of failure to diagnose, especially failure to diagnose cancer.

Another matter the NCC looks into is whether the doctor collects his fee in a lump sum payment prior to treatment, rather than only after services are rendered. An NCC representative explained, "We have had some applicants answer yes to that. After we described the problems associated with prepayment plans, most of the doctors gladly agreed to stop, and we accepted them into the program. We feel that collecting fees in advance is a bad idea for two reasons: First, it could be construed as a guarantee of results. Second, it may indicate the doctor is an overutilizer who plans on a lengthy treatment plan regardless of the patient's treatment needs. We have had doctors refuse to stop collecting in advance who then decide to stay with NCMIC, but we believe it is important to maintain our high standards in order to keep claims down."


The NCC program is the only chiropractic malpractice program in the country to require mandatory arbitration. Prior to treatment, the doctor and patient sign an arbitration form, thereby agreeing that any disputes will go to arbitration rather than to a jury trial. With arbitration, the patient has a lawyer who presents the case to a neutral arbitrator whose decision is final and binding on both the doctor and the patient. Because of arbitration's simplified procedural rules, a case is usually decided with a year of the claim. By comparison, with the jury trial process, procedural delays and backlogged civil calendar can mean three to five years before a decision, and possibly several more years of appeals. "With a jury trial, an injured patient may have to wait seven years before he sees any money," points out NCC. "A fair, quick process like arbitration benefits both the patient and the doctor."

"The use of arbitration forms, by themselves, will cause a 30-35 percent reduction in the rate of claims," stated the NCC spokesperson. "Statistically, only one-half of the one percent of all patients will refuse to sign the forms and will go elsewhere for treatment. These are the patients that a doctor does not want to treat, because they are coming through the door already thinking about suing the doctor if they are in any way dissatisfied."

Arbitration also dramatically reduces attorneys' fees, and therefore reduces both claims costs and premiums. Attorneys' fees in a typical medical malpractice case that goes the full course and is heard by a jury, costs between $50,000 to $150,000 as opposed to $15,000 to $45,000 for the same case, in arbitration.

The high cost of attorneys' fees has resulted in dramatic increases in insurance rates by most carriers. Since 1985, NCMIC has raised rates by about 144 percent for low limits of liability of $50,000/150,000 and 57 percent for higher limits of $1,000,000/1,000,000. NCMIC rates are about 1/3 higher than those of NCC for limits of $1,000,000/1,000,000.

The NCC offers a choice of limits of either $1,000,000/1,000,000 or $500,000/500,000. The NCC does not offer lower limits such as $50,000/150,000 because, statistically, insureds who purchase the lowest limits incur the greatest percentage of claims. According to the NCC, doctors who are conservative and careful in their practice prefer higher limits and incur fewer claims. With this program, such doctors avoid subsidizing higher risk practitioners.

The fact that other insurance programs, such as NCMIC's, do not use arbitration is not surprising to the NCC. Explained an NCC representative, "There are a lot of misconceptions and fears about arbitration. We at NCC see no reason why chiropractors should lag behind the rest of the medical community in using arbitration. MDs, hospitals, HMOs and major health plans, such as Kaiser, have been using mandatory arbitration successfully for over 25 years. We think if chiropractors know the advantages of arbitration forms, they will use them. In fact, that's one of the topics we cover in the NCC malparactice seminars."

The NCC reports it has lost a few insureds who simply don't like using the forms. Nevertheless, the NCC remains committed to arbitration forms, because they reduce claims and make lower rates possible.

Michael Schroeder has formed more than 300 chiropractic-medical practices since 1982. He is the current vice president and general counsel for the American Acupuncture Council, and for the last twelve years has been the vice president of the National Association of Chiropractic Attorneys (NACA). In 1995, NACA honored Mr. Schroeder as their "Attorney of the Year."

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