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Medical Malpractice
Insurance
Is
the patient critical?
Diagnosing the
Problem
A Neurosurgeon in
New York
just opened his malpractice insurance renewal statement – his
annual malpractice premium is now over $200,000 per year.
An OB/GYN recently retired prematurely because of the
“obscenely” low reimbursement from insurers and managed care
companies – he couldn’t afford his malpractice premium.
Fewer and fewer companies are writing Malpractice policies.
Jurors in
Pennsylvania
awarded plaintiffs in two malpractice cases a total of $35 Million
– on the same day. Just
what the heck is going on? There
is no one answer that explains this growing crisis in medical
malpractice insurance in this country.
All we can safely say is…The Patient is indeed Critical.
Malpractice insurance is defined as coverage for Physicians
and other medical professional for liability claims arising from
their treatment of patients. The
Greater New York Hospital Association reported that medical
malpractice premiums in the greater
New York
metropolitan area have risen 150% since 1999.
Physicians across the nation are up in arms over, what they
feel are, exorbitant rate increases in premiums.
Insurance executives are quick to point at the trial lawyers
association, increases in jury awards, and the growing number of
frivolous lawsuits as reasons for these massive rate increases.
According to an article by Russell Tyldesly in the Baltimore
Chronicle, insurance companies are actually trying to disguise “a
long standing corporate effort to achieve virtual impunity for
corporations from lawsuits and class action suits.”
Although no clear cut action has been uncovered that will
cure the malpractice illness, according to the Insurance Information
Institute, the current crisis began in 2000-2001 – the third such
malpractice crisis since 1970. The
principle reasons cited for the crisis are:
- Rates began to increase
dramatically due the growing size and number of malpractice
claims filed;
- More and more insurers left
the marketplace due to difficulty of making a profit and rapidly
rising healthcare costs;
- Rate increases have caused a
true hardship for physicians;
-
St. Paul
’s – the nation’s
largest malpractice carrier, left the market citing an inability
to maintain adequate margins.
- The bombing of the
World
Trade
Center
on 9/11/01 left the insurance industry staggering under the
weight of huge settlements.
A study was undertaken under the auspices of the Robert Wood
Johnson Foundation and concluded that the crisis is more a factor of
Insurance cycles and practices.
Insurance companies periodically adjust their rates after the
fact to reflect actual losses. In
addition, companies invest heavily in stocks and bonds as an
additional source of income. If
stock prices are high, and interest rates are high, insurance
premiums are low. If
stock prices are low and interest rates low (an atmosphere we find
now), insurance premiums traditionally go up.
The non-profit public interest group Public Citizen concluded
that “the malpractice crisis is not due to lawyers or increased
awards but rather due to lost money on insurance company
investments…” This
rationale, unfortunately, is not substantiated by overwhelming fact.
Whatever the cause, what can be said is that the effects of this
crisis are real: fewer number of doctors – particularly in the
high risk specialties such as OB/GYN, Neurosurgery, etc.; fewer
companies providing malpractice coverage; and, what practitioners
remain do so with the cloud of defensive medicine hovering over
their heads.
Possible Cures
“The first thing we
do, let’s kill all the lawyers.”
William
Shakespeare, Henry VI
Most often cited as the panacea for our growing malpractice
dilemma is tort reform. A
tort, although delicious to eat, in this case refers to a wrongful
act for which relief may be obtained.
Most often cited as suggestions for tort reform are:
- Limit non-economic damage
awards or sometimes referred to as a damage cap
- Limit punitive damage awards
– also a damage cap
- Limits on the time allowed to
injured patients to file a lawsuit
- Establish fee schedule for
lawyers’ contingency fees.
Several states, including
Georgia
,
Florida
,
Nevada
,
Maryland
,
New Jersey
, and
Mississippi
, have adopted some form of tort reform to address this issue.
President Bush intends to re-submit a bill on tort reform
that was previously passed by the House but voted down by the
Senate. Unfortunately,
studies have not shown that any of these efforts have proven
effective in either keeping rising costs under control or opening up
the market.
Also suggested as a means to address the growing malpractice
dilemma, States are being asked to do a better job of disciplining
incompetent practitioners. As
a matter of public record, Public Citizen (a non-profit public
interest organization), in 2001 found that 5% of the physicians are
responsible for almost 60% of the malpractice claims.
Another suggestion for improving the malpractice situation is
to increase efforts in the area of Risk Management particularly for
the practitioner. For
example,
Massachusetts
requires MD’s to study malpractice prevention as part of their
licensing requirements. More
and more, insurance companies/consultants are stressing the
importance of malpractice prevention.
Conclusion
Although a number of reasons have been cited for the
malpractice crisis in this country, no one reason can be blamed and
no one solution will produce the needed cure.
The Trial Lawyers point at the Insurance Companies who, in
turn, point at the Physicians who, in turn, point at the Trial
Lawyers who, in turn,... a vicious circle where each of the
stakeholders refuses to agree on anything.
No one group is without guilt, no one effort will result in
the needed reforms. But…it
can be said that there are more malpractice claims being
filed; bigger awards are being made by jurors; less and
less companies are offering malpractice coverage; malpractice premiums
are increasing rapidly. Where
will it end? Is
medical malpractice soon to be considered an insurable risk that the
private sector refuses to underwrite like flood insurance, or damage
caused by terrorism or nuclear war?
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ACT
Anniversary Dates:
- Bryan Patterson, PhD;
Charlotte – 7 years
-
Erinn Moore
, President; Wilmington Office
– 7 years
- Craig Iversen, PhD;
Asheville
– 4 years
- Jeff Crawford, PhD; Lincolnton
– 4 years
- Ronny Wright, PsyD; Boone –
3 years
Birthdays:
- Karen Fulwood -
March 3rd
- Gretchen Belovicz - March 9th
- Chris Norris – March 11th
- Reagan Bell – March 18th
- Stacy Murphy – March 20th
- Barry A. Moore – March 21st
- Jeffrey Crawford – March 22nd
- Chris Bullard – March 24th
- Allen Greenway – March 28th
- Dan Earnest – April 17th
- Cathi Fithian – April 21st
- Judy Lefaive – April 21st
New Hires:
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Valerie
Matthiesen, NP GST member; Smoky Mountain Area
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Letitia
Hazel, MD Primary Care; Raleigh
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Michael
Marshall, VP Business Development;
Wilmington
Office
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Chris
Bullard, PhD;
Winston-Salem
Practice
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David
Smith, PA; Rocky
Mount
Practice
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Susan
Smith, NP;
Hickory
Practice
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