Washington Medical Malpractice Claims Decreasing

October 25, 2007

A medical malpractice report on closed claims data indicates that overall claims are down in Washington. This is the third medical malpractice closed claim report issued by state Insurance Commissioner Mike Kreidler. It analyzes trends in medical malpractice claims for a 10-year period beginning July 1, 1997 and ending June 30, 2007.

“I’m not surprised by the findings in this year’s report,” said Kreidler. “The medical malpractice insurance market is cyclical by nature. The drop in claims revealed by this report bodes well for the health of the medical malpractice market in Washington.”

The participating insurers in this year’s report closed 7,134 medical malpractice claims that included a compensation payment, defense and cost containment expenses, or both types of payments over the 10-year period. Unlike previous reports, this year’s results do not include “zero dollar” claims or claims where no money was paid out.

Among the key findings:
* The number of paid medical malpractice claims decreased at an annual rate of 1.4 percent.

* The average amount of compensation per claim increased at an annual rate of 2.6 percent.

* Less than 40 percent of the claims were closed with an indemnity (compensation) payment to a claimant.
* Less than two percent of the total paid claims resulted in compensation payments of over $1 million.

* Of the 7,134 closed claims, 1.5 percent were decided by a jury and resulted in a payment to a plaintiff.<.li>

* Ninety-one percent of the claims were closed with defense costs, such as attorney or expert witness fees.

* Sixty-seven percent of the claims that incurred defense costs resulted in no compensation payment.

* Participating insurers spend 48 percent of all defense costs on claims that resulted in no compensation to the claimant.

* The number of claims with defense costs decreased at an annual rate of .3 percent.

* Average defense costs increased at an annual rate of 7.9 percent.

As in the previous reports, this year’s data was collected from five admitted insurers. At the end of 2006, the market share of the 5 insurers had dropped from 67.2 to 58.3 percent. The surplus lines market acquired much of this business, with premiums rising from $4 million in 2000 to $63 million by 2006.

“Unfortunately, surplus lines carriers, self-insurers, and risk retention groups that provide malpractice coverage for physicians are not regulated by my office and did not participate in the survey,” said Kreidler. “Under the Health Care Liability Reform law, which takes effect Jan. 1, 2008, these entities will be required to report claims and settlement data to us annually, giving us a sharper view into what’s really going on in the market.”

After Jan. 1, 2008, licensed and surplus lines insurers, self-insurers such as hospitals and large medical clinics, risk retention groups, and claimants must report medical malpractice closed claims to the Insurance Commissioner’s Office. Closed claims must be filed annually by March 1 of the following year and must include:

* The type of health care provider, specialty, and facility involved
* The reason for the claim and the severity of the injury
* The dates when the event occurred, the claim was reported to the insurer, and the suit was filed
* The injured person’s age and sex
* Information about the settlement, judgment, or disposition of the claim, including an itemization of damages and litigation expenses

In addition, the Commissioner must use the collected data to produce an annual report showing trends in frequency and severity of claims, types of claims paid, a comparison of economic and non-economic damages, a distribution of allocated loss adjustment expenses, a loss ratio analysis for medical malpractice insurance, a profitability analysis for medical malpractice insurers, a comparison of loss ratios and profitability, and a summary of approved medical malpractice rate filings for the prior year, including analyzing the trend of losses compared to prior years. The first annual report will be available by June 30, 2010.

To view the report, visit www.insurance.wa.gov/special/wic/State%20of%20Washington_10-4-07_FINAL1.pdf.

Source: OIC

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