Insurance Perils For Health Providers Using 3D-Printing Tech

November, 2022  | By Paul N. Farquharson

Originally published by Law 360 

A recent report has highlighted the burgeoning demand for medical polymers used in the 3D printing of medical devices.

The report, issued by UnivDatos Market Insights, disclosed that the medical polymer market had a value of nearly $16 billion in 2020. The market is expected to grow at an annual compounded rate of at least 8% through 2027. Consequently, we can expect to see a similar increase in the use of 3D-printing technology to treat patients in a number of areas.

Patients are benefiting and will continue to benefit from 3D-printed medical devices, which include individually designed templates for surgical procedures, uniquely fitted prosthetics — particularly helpful in treating young patients who grow quickly, catheters, stents, implants and many other applications.

Many of these devices can be both designed and 3D-printed by the health care provider in their offices, surgicenters or even hospitals. Sometimes a consulting health care provider can design, print and oversee — via online connectivity — the use of a printed medical device for a different health care provider in a different jurisdiction.

In addition, the instructions for a 3D-printed device, known as the print file, can be created and then sent to or downloaded by a printer at a health care provider’s facility for their use.

All of these uses and applications promise improved access to state-of-the-art health care and, in many instances, a lower cost to the patient. The internet of things is quickly growing to include the internet of medical things, including 3D printers.

While the expansion of 3D-printing technology in the medical field is encouraging, it does pose certain challenges to health care providers, insurance companies and insurance brokers. When a medical procedure using a 3D-printed device injures a patient, liability issues are not the only concern. Issues can arise with respect to licensing of the health care provider, insurance coverage for the health care provider, insurance coverage for the person or entity that printed the device, and potential professional liability for an insurance broker who placed the insurance coverage.

These issues arose in a recent case we worked on that was settled before trial.

The plaintiff alleged that her dental implant surgery was performed improperly causing catastrophic injuries.

The plaintiff sued: her local Maryland dentist; a consulting dentist in New York; and the New York dentist’s limited liability company. The case was pursued as a claim for medical malpractice in Maryland state court.

The plaintiff alleged that her Maryland dentist retained the New York consulting dentist to provide both implants and a template or guide for use in her implant surgery. The Maryland dentist provided sufficient patient information for the New York dentist and his LLC to design and print a template for the plaintiff’s implants.

It is significant to note here that the New York dentist and his LLC had an online presence and that the LLC resold dental implants manufactured by others.

The Maryland dentist used the template, but the surgery proved unsuccessful.

The resulting lawsuit was tendered by the New York dentist to his medical malpractice insurance company. The medical malpractice insurance company denied coverage because the complaint sought damages for medical negligence in Maryland — a jurisdiction where the New York dentist was not licensed to practice.

After receiving the declination, the New York dentist tendered the defense to his LLC’s product liability insurance company. The product liability insurance company accepted the defense under a reservation of rights.

However, as the case progressed, it became clear that the plaintiff was not pursuing a product liability claim related to the design or manufacture of the implants but rather for medical negligence in providing professional services during the development of a treatment plan that included a 3D-printed template.

Consequently, the product liability insurance company withdrew from the defense, and the New York dentist, left without insurance coverage, settled the case.

The combination of an internet presence and the use of 3D printing exposed the New York dentist to liability for which he thought he had procured insurance coverage. However, in this case, and likely in other cases yet to come, the law has yet to fully address whether a 3D-printed medical device is a service or a product. Moreover, the ultimate determination of that issue may depend largely upon the plaintiff’s allegations and state law.

What this case brought clearly to the forefront was the tension between a health care provider’s professional services and that same health care provider’s creation and use of a medical device. Health care providers, brokers, insurance companies and coverage counsel can benefit from an understanding of the quickly developing best practices in this area.

Health care providers who design or 3D-print medical devices must fully understand their insurance coverage. They must determine if their medical malpractice insurance includes product liability coverage for 3D medical devices they design, sell or print. Many insurance policies that would otherwise cover products and completed operations also have a professional services exclusion. Thus, if designing and 3D-printing medical devices are professional services, coverage for such claims may be excluded.

Insurance brokers need to be vigilant in determining what their health care provider clients are doing in this arena. Current applications and renewal applications may not inquire about designing and 3D-printing medical devices.

Moreover, insurance companies that service the medical arena may not be in a position to remove, or may be unwilling to remove, a professional services exclusion from their product liability coverage. In such situations, brokers will need to advise their clients that existing coverage forms may be inadequate.

Insurance companies that service the health care arena will need to examine their policies to ensure that they are providing the coverage they wish to extend. For example, to the extent a prospective policyholder has an extensive internet presence, the practice area or licensing provisions may need to be expanded. If that same policyholder provides 3D-printed products and design services, the insurance company may need to consider adjusting policy language or developing an endorsement so that the policyholder actually has the coverage the insurance company intended to provide.

Finally, coverage counsel should be alert to the proper choice-of-law analysis if the claim involves an internet or multijurisdictional presence. In addition, should the claim involve a 3D-printed device, the nature of the allegations and whether the policyholder designed the 3D device, printed it or both may be the key to coverage. Correctly resolving the tension between a traditional product liability coverage analysis and a 3D-printed medical device or medical services coverage analysis can be the key to a fair and proper coverage determination.

The takeaway from this case, especially in light of the burgeoning growth in 3D-printed medical devices, is to carefully examine insurance coverages so that health care providers who take advantage of the exponential growth in medical technology are properly protected. Policyholders, insurance brokers and insurance companies have an interest in clarifying and properly underwriting the risks associated with a health care provider using cutting-edge technology in the treatment of patients.