South Carolina’s 2005 Reform Reducing Claims Against Doctors

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Fewer lawsuits are being filed against South Carolina doctors since a state law limiting damages went into effect in 2005.

An insurance executive told a state Senate panel that patient claims are down about a third and premium increases have dwindled to about 3 percent since the state imposed limits on non-economic damages.

Now a Republican-backed Senate bill would attempt to broaden that by imposing a $250,000 punitive damage cap for other small businesses. Businesses with more than 50 employees would face no more than three times the actual damages or $250,000, whichever is greater.

“The trendline before were significant double-digit increases,” said Timothy Ward of Marsh USA Inc. runs the South Carolina Medical Malpractice Liability Insurance Joint Underwriting Association. Ward said his estimates are preliminary.

“There are many variables that go into play,” Ward said. “But this is very suggestive and it does support the hypothesis that the reform is having an impact.”

Ward said more insurance carriers are willing to write policies in South Carolina, a sign of competition that’s been absent for years.

Sen. Larry Martin, R-Pickens, the bill’s chief sponsor, said it’s important to have the legislation in place as the economy turns around so the state will be more competitive as businesses look for places to expand.

“Those data are extremely positive,” particularly with more competition to write policies and keep prices in check, said Martin. “That’s what happens when you have a competitive market. They do compete and get better.”

But others cautioned that Ward’s numbers don’t tell the whole story. The 2005 law required arbitration and other measures to reduce lawsuits. Trial lawyers argued the limits harm people who are hurt and do little to discourage firms from putting people at risk.

“They’re not changing the pot of damages,” said Terry Richardson, a Barnwell lawyer. Punitive awards force companies to operate more care and “reduce the number of injuries which really and truly is the only way you save money.”