ProMutual to Increase Malpractice Insurance Rates

May 3, 2001

Beginning July 1 of this year, ProMutual, Massachusetts’ largest provider of malpractice insurance for physicians, will raise its rates for malpractice insurance an average of 14 percent across specialties.

According to the Boston Globe, doctors who diagnose disease, such as radiologists, will see the greatest increases. Their rates will jump 40 percent. But

Massachusetts MDs are not the only doctors who are affected by the growth in malpractice rates.

Doctors and insurance executives in many states place the blame on what they say is a growing number of lawsuits and jury awards against physicians. Lawsuits and insurance claims usually are brought against internists, family doctors and radiologists. These specialists have historically not been sued as often as obstetricians and surgeons but whose operating room mistakes are often obvious and result in immediate injury.

Last month, Pennsylvania doctors closed their offices to approach the legislature in masses and demand malpractice reform. In West Virginia, 1,000 physicians drove to the capitol and threatened to shut down their practices permanently and move to states where insurance is cheaper.

Obstetricians still pay some of the highest malpractice insurance bills in medicine; ProMutual, which insures 10,000 doctors, charges obstetricians $70,000 annually for the most common coverage. This year the company will increase its rates 20 percent. Bills for radiologists or family practice doctors will go up 33 percent.

Chairman of the ProMutual board Dr. Barry M. Manuel stated that failure to diagnose is now the largest category of loss the company is experiencing. Lawsuits against failure to diagnose cancer, particularly breast cancer is on the rise.

The Controlled Risk Insurance Co., which insures 8,500 Harvard Medical School doctors, did not raise its rates this year and has not set its fees for 2001. The company typically has far lower rates than ProMutual. This is partly due to the fact it’s a closed system that accepts only Harvard faculty who work at prestigious teaching hospitals.

In the past few years, many doctors have become extremely worried about potential litigation by breast cancer patients and their families. The problem is so serious, the Massachusetts Medical Society, which represents the state’s physicians, ordered up a special study to pin down the number of lawsuits and propose solutions. The results are to be released at the group’s annual meeting next week.

Douglas Scheff, a Boston attorney who represents victims of malpractice, claimed ProMutual is scaring doctors unnecessarily. He said civil lawsuits are actually on the decline and the insurance company is raising rates for a much more mundane reason that has nothing to do with juries: the decline in the stock market. Scheff stated that ProMutual’s portfolios are suffering.

Dr. Francis X. VanHouten, a Concord radiologist and a ProMutual board member, said 80 percent of the firm’s investments are in bonds. VanHouten did say that ProMutual, a physician-owned company, did try to hold down rates in recent years because of growing competition from small insurance companies trying to gain a foothold in Massachusetts. The company must now make up lost ground. VanHouten said ProMutual is projecting 14 percent average annual hikes for the next several years.

Boston attorney Leonard Simon said there might be some truth in both points of view. A recent study by the Board of Registration in Medicine found the number of malpractice insurance claims paid in Massachusetts during the 1990s has remained roughly the same, fluctuating between 250 and 320 a year. Insurance companies often settle claims before they ever reach trial or even a lawsuit.

Simon stated the average payment to patients and their families has increased about 5 percent a year and was $384,000 in 1999. Almost half of the 1,000 claims filed each year are still against obstetricians in cases where babies have died or been severely injured during delivery, Simon said.

Dr. Manuel said the solution lies outside the courts. He wants the Legislature to pass a law allowing health insurers to sell liability insurance that covers the medical bills and lost wages of patients who are injured by a doctor’s error.

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