Advocate, MD Insurance of the Southwest Enters Texas Malpractice Insurance Market

September 8, 2004

  • September 9, 2004 at 10:07 am
    Gregory D. Pawelski says:
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    Why is tort reform still on the national agenda at a time when insurance-industry profits rose, tort filings declined, only 2 percent of injured people sued for compensation, punitive damages were rarely awarded, liability-insurance costs for businesses were minuscule, medical-malpractice insurance and claims were less than 1 percent of all health care costs and premium-gouging underwriting practices were widely exposed?

    The property/casualty industry’s profits rose 997% in 2003! The industry made $29.9 billion in profits last year, almost ten times the $3 billion they made in 2002. (AM Best Statistical Report, Advanced Financial Results, Property Casualty Writers 2003, April 12, 2004; Insurance Services Office & Property Casualty Insurers Association of America, “Sharp Increase in P/C Industry’s Net Income Propels Surplus Upward in 2003,” April 14, 2004).

    The insurance industry’s “return on equity in 2004 is likely to soar above double digits for the first time since 1997.” (Insurance Information Institute, “Groundhog Forecast for 2004.”)

    According to the Department of Health and Human Services actuaries in 2002, health care expenditures rose to $1.553 trillion. expenditures on malpractice premiums reported to the National Association of Insurance Commissioners that year were $9.6 billion, making malpractice costs about .62% of national health care.

    Independent researchers reject the “defensive medicine” therory, extra medical tests given to avoid lawsuits. No independent researcher has been able to substantiate this.

    Doctors define as “frivolous” any lawsuit in which no payment is made to the victim. But as the PIAA Claim Trend Analysis states, they fail to mention that nearly all of those claims are withdrawn voluntarily by patients and their lawyers, after thoroughly investigating the cause of the injury, usually at great expense to the lawyer. Cases taken to trial and rejected by a jury consititute only 5% of all claims. Lawyers have no incentive to file frivolous cases because they are not paid unless they win a case.

    The period 1992 through 2001 saw an overall 9% decline in the number of tort filings, according to a joint tracking project of the Conference of State Court Administrators, the Bureau of Justice Statistics and National Center for State Courts. When adjusted for population growth, tort filings declined by 15%. Population adjusted filings dropped 25% of more.

    The medican jury verdict in personal injury cases peaked in 2000 at $45,000, declined to $42,945 in 2001 and dropped to $30,000 in 2002. Overall, this represents a decline of 33% in two years, according to a Jury Verdict Research News Release in 2004.

    Insurers have refused to lower malpractice insurance premiums after caps and other “tort reforms” have been enacted. States that have enacted legal restrictions have seen their insurance rates continue to shoot up, even after passing severe liability limits (e.g., Florida, Nevada, Ohio, Missouri and Texas).

    According to a review of Medicare records by HealthGrades, a health-care ranking group, there were 195,000 deaths annually from avoidable medical errors, twice the number estimated by the Institute of Medicine study.

    Legislation to place limits on medical malpractice liability hurts patients by restricting their rights to hold physicians, hospitals, insurance companies, HMOs, and drug and medical device manufacturers accountable for injuries or death resulting from negligent care. A bill will do nothing to make healthcare or medical malpractice insurance more available or more affordable.

    A report by the American Medical Association’s Board of Trustees to its House of Delegates acknowledged that increasing malpractice insurance premiums were linked to the insurance underwriting cycle.

    As for the claim of ever-climbing jury awards, studies of verdicts are skewed by what study sponsors leave in or leave out. The Medical Associations looked only at reported jury verdicts. The Trial Lawyers tracked all verdicts, including non-jury verdicts, through appeals, settlements and court-ordered reductions.

    Tort law not only compensates and deters, it prevents injury by removing dangerous practices, spurs safety and health innovations and serves as an early warning of the need for government action to prevent harm. Doctors will learn from their mistakes if their mistakes are brought to their attention in the form of a lawsuit.

    Solving this crisis will involve a three-legged stool of legal reforms (not tort reforms), insurance reforms and reduction of medical errors.

    Limits on the rights of people hurt by medical malpractice will victimize them and their families further while helping neither patients nor doctors. The real beneficiaries will be insurance companies, including the doctor-owned malpractice insurers.

    Why don’t the doctors who whine about medical malpractice insurance premiums band together and sue the insurance companies? The doctors are the insurance companies. According to the Physician Insurers Association of America, a trade group of about 50 doctor-owned malpractice insurers, they cover about 60% of U.S. doctors in private practice and hospitals. It’ the profits of these doctor-owned insurance companies that doctors want to protect.

  • September 9, 2004 at 1:21 am
    Policy Peddler says:
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    The repeated statement that the doctor is getting higher limits “for the same premium” is interesting. How are they making the comparison of premium? Using Med Pro? API? TMLT? JUA? Need more actual examples before I’ll be convinced. I’ve seen statements like this many times from new carriers trying to attract business. Good luck Mr. Lamb.

  • December 27, 2004 at 9:32 am
    Gregory D. Pawelski says:
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    The nation’s largest medical malpractice insurer, GE Medical Protective, has admitted that medical malpractice caps on damage awards and other limitations on recoveries for injured patients will not lower physicians’ premiums.

    The insurer’s revelation was contained in a document submitted by GE Medical Protective to explain why the insurer planned to raise physicians’ premiums 19% a mere six months after Texas enacted caps on medical malpractice awards. In 2003, Texas lawmakers passed a $250,000 cap on non-economic damage compensation to victims of medical malpractice caps after Medical Protective and other insurers lobbied for the change.

    According to the Medical Protective filing: “Non-economic damages are a small percentage of total losses paid. Capping non-economic damages will show loss savings of 1.0%.” The company also notes that a provision in the Texas law allowing for periodic payments of awards would provide a savings of only 1.1%. The insurer did not even provide its doctors that relief and eventually imposed a rate hike on its physician policyholders.

    When the largest malpractice insurer in the nation tells a regulator that caps on damages don’t work, every legislator, regulator and voter in the nation should listen. Medical Protective’s rate increase and this smoking gun document prove that the insurance industry cannot be trusted on the issue of malpractice caps.

    The Medical Protective document can be downloaded from:

  • May 3, 2005 at 2:40 am
    MYMD says:
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