Medical malpractice in the United States is facing a new era of complexity and risk, driven by a convergence of technological innovation, shifting staffing models, and mounting pressures within hospital systems. As digital tools like artificial intelligence (AI), telehealth, and electronic medical records (EMRs) become staples of modern care, the landscape of liability is changing—and not always for the better. Recent reports indicate that the size and frequency of malpractice claims are surging, while preventable medical mistakes are haunting hospital corridors at record levels.
On September 12, 2025, Risk & Insurance highlighted how rising costs, operational complexities, and evolving liabilities are fueling a wave of higher malpractice payouts across the U.S. health care sector. These aren’t minor increases: high-dollar awards, often dubbed "nuclear verdicts," now routinely surpass $10 million. In 2024, the top 50 medical malpractice verdicts averaged a staggering $56 million—more than double the $27 million average just five years prior, according to Liberty Mutual Insurance’s Kristin D. McMahon. "We always had multi-plaintiff class action suits, but even the individual verdicts are going for much larger dollar amounts than they did historically," McMahon noted.
This escalation in claim severity is sending shockwaves through the insurance market. Many smaller or regional insurers are bowing out of the medical malpractice business altogether, unable to weather the volatility. For those remaining, premium hikes are now the norm, with most physicians and health care entities facing annual increases of 10% to 25%. The hardening market is making it more difficult—and expensive—for providers to secure coverage, a trend that shows little sign of abating.
But what’s driving these ballooning claims and payouts? The answer, in part, lies in the rapid adoption of digital tools and alternative care models. The COVID-19 pandemic turbocharged the use of telehealth and digital diagnostics, bringing both convenience and new risks. AI-powered decision support systems, for instance, are now integral to specialties like radiology, oncology, and cardiology. Microsoft and other tech giants tout tools that can diagnose diseases with unprecedented accuracy, but when something goes wrong, the question of liability becomes murky. Bill Kanich, executive chairperson at MagMutual, put it plainly: "The challenge is when something goes wrong. Who is responsible? Is it the doctor who trusted the tool, the hospital that implemented it, or the software vendor? We don’t really have good answers to that right now."
Insurer data reveals that claims involving AI tools rose 14% between 2022 and 2024, with most arising in fields where diagnostic decisions hinge on complex imaging or pattern recognition. As courts wrestle with these novel scenarios, insurers are responding by introducing AI-specific exclusions and requiring special training for coverage eligibility. The uncertainty is palpable, and everyone from doctors to underwriters is searching for clarity.
Telehealth, too, presents a double-edged sword. While it has expanded access to care, it also introduces new opportunities for error. Brian King, health care practice leader for Trucordia, explained, "In telehealth, you’re trying to make the same diagnostic decisions without the same inputs. There’s potential for misdiagnosis just because of what you can’t see or do in person." Even the humble EMR, long considered a safety net, can become a source of error if data is entered incorrectly or critical alerts are missed.
Alternative staffing models add another layer of complexity. What was once a straightforward solo practice may now involve a patchwork of telehealth providers, contract nurse practitioners, and third-party staffing agencies. Each new participant introduces fresh risk, and as Dennis Cook, Jr. of Liberty Mutual observed, "It’s more complex, and each of those introduces more risk we have to consider." The ripple effects are felt not just in the boardroom but at the bedside, where patient safety hangs in the balance.
The situation in Maryland offers a sobering case study. According to a report published by the Maryland Department of Health on September 12, 2025, medical mistakes resulting in patient deaths or severe disabilities have increased for the fourth consecutive year. The state recorded 808 Level 1 adverse events—serious errors like preventable falls, medication mishaps, and surgical mistakes—in fiscal year 2023. That’s more than three times the annual average from 2013 to 2019, which hovered around 214 such incidents.
The report attributes part of this rise to a "positive shift in hospital safety culture," suggesting that hospitals are now more likely to voluntarily report adverse events. However, the Maryland Department of Health also acknowledges that the sustained increase may reflect a real uptick in preventable mistakes, fueled by persistent staffing shortages, increased patient acuity, and the lingering effects of the pandemic. Anna Palmisano, a microbiologist and leader of Marylanders for Patient Rights, didn’t mince words: "I find it horrifying to learn that so many people suffered deaths and serious disabilities that could have been prevented by Maryland hospitals making patient safety a bigger priority." She points to chronic understaffing as a root cause, arguing that "systems analyses are fine, but they seem to be a way to avoid focusing on the critical issue of safe staffing."
The Maryland Hospital Association, representing the state’s private hospitals, insists that the goal remains "zero harm." In a statement to The Washington Post, the group emphasized a commitment to "the safest, highest quality of care to every patient, every day." Yet, with more than five million patients served annually and errors on the rise, the path to that goal is far from clear.
To address these challenges, both insurers and health authorities are ramping up efforts to educate and support providers. In Maryland, the Department of Health is collaborating with the state’s Patient Safety Organization to help hospitals prevent falls, pressure injuries, and other harms. There is also talk of expanding the authority of the Office of Health Care Quality to verify that hospitals are actually implementing best practices. Nationwide, insurers are taking a more hands-on approach, offering provider training, risk assessments, and guidance on the safe use of telehealth and AI.
Meanwhile, the legal landscape is shifting beneath everyone’s feet. Several states are re-examining tort reform measures that once capped damages or limited plaintiff eligibility. Florida, for example, recently enacted legislation expanding plaintiff rights in medical liability cases, injecting a dose of uncertainty for insurers and providers alike. As Brian King noted, "In some states, legislation and court decisions are opening new avenues for plaintiffs. That adds a layer of unpredictability that’s hard to price for." Conversely, states like California and Arizona have tweaked the collateral source rule, allowing damages awards to consider compensation from other sources. McMahon sees this as "a positive in reducing windfalls for plaintiffs or plaintiff attorneys," aiming to ensure fair—but not excessive—payouts.
As technology continues to evolve and the health care system grapples with old and new risks alike, the stakes have never been higher. The challenge ahead is clear: balance innovation with safety, and ensure that the march toward digital health doesn’t leave patients—or providers—exposed.