A Connecticut House bill designed to improve availability for medical liability insurance fails to provide meaningful tort reform, will not remove costs from the system, and could actually add costs for insurers and consumers, insurers claim.
“This bill includes only incremental reform with many adverse provisions,” said Richard Stokes, regional manager and counsel for the Property Casualty Insurers Association of America (PCI).
In a letter to Connecticut Governor John G. Rowland requesting a veto, Stokes pointed out several concerns about the bill, the most problematic of which was its failure to limit noneconomic damages. “PCI believes this is one of the most critical components of meaningful tort reform needed to help stabilize medical liability rates,” Stokes wrote. “Limits on noneconomic damages reduce the uncertainty of awards and provide more stability to underwriters, while discouraging litigation and promoting a more uniform and fair environment for pain and suffering awards.”
According to U.S. studies, the one reform consistently shown to reduce malpractice cost indicators is caps on damages. States that have established caps of $250,000 to $300,000 on noneconomic damages have seen premium increases of 12 percent to 15 percent, compared with 44 percent in states without caps.
According to PCI, H.B. 5669’s other primary problem area is the addition of regulatory requirements including prior rate approval, public hearings, and expansive reporting on closed claims to the Department of Insurance, which will add costs to the system without adding any further accountability.
“Insurers are already required to report basically the same closed claim information to the National Practitioner Data Base,” Stokes said. “Since the Department does not regulate doctors, we believe this reporting requirement is unnecessary.”
Insurers are concerned that these changes will increase costs to insurers and destabilize the marketplace by increasing reliance on captive insurers, which will not have to live up to the high standards of other insurers.
“If Connecticut truly desires affordable and available medical liability insurance, the legislature will need to reopen this issue during the next session or a special session,” Stokes wrote to the governor. “A veto message stating that you would like to see legislation that fosters a competitive and healthy insurance market would seem both reasonable and compelling to the legislature.”
Gov. Rowland has vowed he would veto the bill because it lacked caps on awards but he has yet to do so.
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