Malpractice Insurer Exit From Mass. Worries Physicians

June 8, 2004

  • June 9, 2004 at 12:32 pm
    pat murdo says:
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    if doctors keep leaving states over med-mal issues, to which states are they migrating?

  • June 9, 2004 at 1:00 am
    Bill Nagy says:
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    The plaintiff bar needs to transition from being part of the problem to part of the solution. It derives it’s income from mining medical claims. Bad outcomes don’t always equate to malpractice. Frivolous suits and exhorbitant awards are major contributors to this crisis. Aside from capping general damages and attorney contingent fees, every plaintiff attorney should be assessed a percentage of his/her contingency fee to subsidize the professional insurance it feeds off. Since they are co-beneficiaries of medical malpractice insurance, let them share the cost. People need to wake up and decide if they prefer the litigation lottery over quality and availability of healthcare. After they drive all the good medical professionals away, perhaps they’ll learn a lesson when they need treatment and can’t find it.

  • June 9, 2004 at 1:58 am
    Robert Broida, MD, FACEP says:
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    To states with lower premiums, less litigation or effective tort reforms (medical screening panels, caps on pain & suffering awards, no joint & several liability, etc.). Arizona, Indiana, Minnesota, Wisconsin are ones I’ve heard physicians are migrating to.

  • June 9, 2004 at 2:01 am
    Robert Broida, MD, FACEP says:
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    WHY did the Division of Insurance request MLMIC withdraw from the Massachusetts malpractice marketplace?

    The article doesn’t say.

  • June 9, 2004 at 2:48 am
    John says:
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    Doctors have used anecdotes to support their argument for caps on damages. But solid investigative research and in-depth scholarly analysis have shown that caps on non-economic damages bear no relation to lower malpractice insurance premiums. The following excerpts from investigative news articles, independent research projects, and government-sponsored studies found caps on economic damages to be an ineffective tool in reducing malpractice premiums.

    Business Week, “A Second Opinion on the Malpractice Plague,” By Lorraine Woellert (March 3, 2003)
    “…clear away the dubious studies, the exaggerated line charts, the hysterical press releases and look at the numbers, and the statistical case for caps is flimsy. Here’s what we found:

    “Cap States vs. Non Cap States: Taken as a whole, capped states saw premiums rise an average of 12.7% last year; states without them saw premiums rise 20.4%, according to data provided by the Medical Liability Monitor. And if you go back even further, the difference between states with caps and those without narrows even more. The bottom line: caps might moderate premium hikes but not to the extent that tort reformers claim.

    “On this and many other key points, proponents of caps simply aren’t coming up with the facts to make their case. Instead, they’re relying on scare stories–always a bad starting point for making serious policy decisions.”

    USA Today, “Hype outraces facts in malpractice debate,” By Peter Eisler (March 5, 2003)

    “A six week study by USA Today finds that while some doctors in particularly vulnerable specialties face severe problems, most physicians are minimally affected. Premiums are rising rapidly, but no more than other health care costs.

    “There’s little evidence that a $250,000 federal cap on pain and suffering awards will be a cure all for medical malpractice woes. That is because a big part of the increase in the cost of claims paid by insurers is due to growth in economic damages — medical bills, lost wages, and other tangible losses that would not be capped.”

    Weiss Ratings, Inc., “Medical Malpractice Caps: The Impact of Damage Caps on Physician Premiums” (Report, June 2, 2003)

    “Physicians continued to suffer a rapid increase in med mal premiums despite caps: In 19 states that implemented caps during the 12-year period, physicians suffered a 48.2 percent jump in median premiums, from $20,414 in 1991 to $30,246 in 2002. However, surprisingly, in 32 states without caps, the pace of increase was actually somewhat slower, as premiums rose by only 35.9 percent, from $22,118 to $30,056.

    “At the same time, among the 19 states with caps, only two of the states, or 10.5 percent, experienced flat or declining med mal premiums. In contrast, states without caps were actually better able to contain premium rate increases, with six, or 18.7 percent, experiencing stable or declining trends.

    “Tort reform has failed to address the problem of surging medical malpractice premiums, despite the fact that insurers have benefited from a slowdown in the growth of claims. The escalating medical malpractice crisis will not be resolved until the industry and regulators address the other, apparently more powerful, factors driving premiums higher.

  • June 11, 2004 at 1:20 am
    Robert Broida, MD, FACEP says:
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    Caps only address non-economic damages, not total jury verdicts, frivolous claims, joint & several liability, etc.

    There are plenty of articles supporting the opposite (from more reliable sources than USA Today):
    According to Jury Verdict Research(R)’s report, Current Award Trends in Personal Injury — 43rd Edition: After steadily climbing more than 100% from 1996 to 2000, the compensatory jury-award median for medical-malpractice cases has leveled off the last three years studied. The percentage of $1 million or more medical-malpractice verdicts remained the same from 1999 through 2002 at 52%.
    S&P: Loss Severity Hinders U.S. Medical Malpractice
    Friday June 6, 2003 10:12 am ET

    NEW YORK–(BUSINESS WIRE)–June 6, 2003–(Standard & Poor’s)–The U.S. medical malpractice industry in 2003 is likely to face a continued rise in loss severity, stemming from litigation, as it waits for meaningful tort reform, Standard & Poor’s Ratings Services notes in a report published today.

    The credit implications for rated companies have become somewhat less negative because of the companies’ ability to raise premium prices, and pricing adequacy alone offers no long-term positive implications.

    “There is so much volatility in the industry that the current financial strength of the industry will not hold,” said Standard & Poor’s credit analyst Shellie Stoddard, a specialist in the medical malpractice segment. “However, the ratings may stabilize this year due to pricing, because there are not many new entrants creating price competition.”

    To cope with rising severity, underwriters of medical malpractice are reducing policy limits and are becoming more selective about whom they insure. Tougher underwriting standards and reduced policy limits will improve the risk pool, lower severity trends, and create more predictability in reserve estimation, as well as pricing, according to the report. Risks that are seen as substandard are being written by excess and surplus writers for four and five times the standard rate.

    As a result, loss ratios are improving. The total medical malpractice industry’s loss ratio, defined as incurred loss and loss adjustment expenses divided by earned premium, has consistently improved since 1998.

    With the passage of effective tort reform, industry structure may improve and the typical medical malpractice company may actually earn an ROE commensurate with its risk level, according to Standard & Poor’s credit rating analysts. Insurers may be tempted to compete on price and policy design, similar to the 1990s market behavior.

    The full report, “Waiting for Tort Reform, U.S. Medical Malpractice Industry Battles Loss Severity,” is available on RatingsDirect, Standard & Poor’s Web-based credit analysis system, at Members of the media may obtain copies of the full report by contacting Marc Eiger at 212/438-1280 or by email at

    Copyright (c) 2003, Standard & Poor’s Ratings Services

    Weiss ‘Study’ of Tort Reform and Medical Liability Premiums Spreads Flawed Results Thursday June 5, 2003 4:31 pm ET

    ROCKVILLE, Md., June 5 /PRNewswire/ — Martin Weiss and his rating organization have engineered a report that is getting lots of media attention in spite of the fact that it is fatally flawed. Studying 19 states with caps on non-economic damages, Weiss says it found that from 1991 to 2002 the median malpractice payout rose 37.8% in states with caps, compared with a rise of 71.3% in states with no caps. While the use of median payment data shows that cap states fare better than others, it greatly understates the difference by ignoring the spiraling rise in total claim payments caused by a greater proportion of large payments. For example, Florida (one of Weiss’ non-cap states) saw total claim payments rise by 141% during the evaluation period, according to the National Practitioner Data Bank. In contrast, total claim payments have risen by “only” 47% in California, which passed a $250,000 cap on non-economic damages in 1975. It has been the PIAA’s belief all along that any type of cap on non-economic damages over the amount of $250,000 simply does not work, with West Virginia’s former $1,000,000 cap being a prime example. The Weiss report mistakenly assumes that all levels of caps are effective by including them all in the study.

    In addition to those significant flaws, the PIAA’s Larry Smarr says Weiss’ methodology actually inflates carriers’ premium increases by not weighting premiums according to market share. For example, when Weiss determined median rates in a state, he appeared to give the same weight to a carrier with the highest rate, which in all probability has the lowest market share, as he gave to the carrier with lower rates, which most likely has the highest market share. Also, Weiss did not account for discounts or returns of premium in the form of dividends that insurers routinely pass on to physicians. Finally, the PIAA also points out that insurers often wait to lower their rates after a cap has been passed because it could be struck down in the courts, as occurred in Illinois, Ohio, and several other states, and which resulted in a 10-year delay in the state of California. Finally, over half of the states in the report had not adopted their caps in the beginning year of Weiss’ analysis. The bottom line is that the Congressional Budget Office, the Joint Economic Committee, and the HHS have all issued well-researched studies that document the direct relationship between tort reforms, lower payouts, and over the long-term, lower premiums. The Weiss “study” is poorly done and simply out of its league.

    The PIAA is a trade association of over 50 physician- and dentist-owned and/or operated medical professional liability insurance companies and reinsurers. Collectively, PIAA members insure more than 242,000 physicians, 35,000 dentists, and 1,200 hospitals in the United States. For more information about programs and services of the PIAA, contact Lisa Cole, 301- 947-9000, visit our website at, or email
    Source: Physician Insurers Association of America
    NJHA Survey: Medical Malpractice Premiums Jump 50 Percent; Average Cost Tops $1.4 Million Per Hospital

    PRINCETON, N.J., Jan. 28 /PRNewswire/ — A new survey by the New Jersey Hospital Association shows that the average Garden State hospital experienced a 50 percent increase in medical malpractice insurance costs in 2002, bringing the average hospital annual premium to $1.4 million.

    The multi-year trend shows that the average hospital’s premium has skyrocketed by 207 percent since 1999.

    A full 100 percent of the hospitals responding said their rates had increased in 2002, despite the fact that 14 percent had reduced their coverage levels in an effort to rein in costs.

    The findings were based on a survey of all of New Jersey’s 119 hospitals conducted in December. The survey yielded a response rate of 46 percent of the state’s acute care hospitals.

    “This survey confirms our worries that the crisis is not only deepening but also reaching into every corner of the state,” said NJHA President and CEO Gary Carter. “Each and every hospital in New Jersey is struggling with this problem.”

    Carter cited one finding that he found particularly troubling: a growing reluctance by physicians to treat charity care patients. One-third of the hospitals said the medical malpractice crisis has made physicians think twice about treating charity care patients because it could make them more vulnerable to medical malpractice claims and rising rates.

    Like physicians, hospitals also must purchase medical malpractice insurance that covers their staff plus any physicians employed by the hospital. Hospitals report that the growing premiums are cutting into their operating budgets and threatening to drain money away from other areas of the hospital. The survey shows that hospital medical malpractice insurance premiums, as a portion of total hospital operating budgets, have nearly doubled in the last four years.

    “We’ve already seen the impact of this crisis in the physician community, with doctors closing their practices or dropping high-risk services,” said Carter. “Now it’s clear that hospitals are facing tough choices, including the possibility of eliminating services or cutting staff to cover the growing costs of insurance.”

    In fact, the survey revealed that one out of every 10 hospitals has been forced to lay off staff because of rising malpractice insurance rates.

    The survey also found that:

    — One out of every four hospitals — nearly 27 percent — has been forced
    to increase payments to find physicians willing to cover the Emergency Department. Physicians are increasingly reluctant to take on such
    assignments because of the greater liability exposure.

    — Hospitals report that more and more physician specialties are being hit
    by the crisis. While a previous NJHA survey in March 2002 found that
    OB/GYNs and surgeons were primarily affected, the new survey finds a
    deepening impact for neurologists/neurosurgeons, radiologists, orthopedists, general practitioners and emergency physicians.

    NJHA, based in Princeton, is a nonprofit trade organization committed to helping its members provide accessible, affordable and quality healthcare to their communities.

    SOURCE New Jersey Hospital Association
    CO: New Jersey Hospital Association
    ST: New Jersey
    01/28/2003 11:37 EST

    U.S. Tort Costs Climbed To $205 Billion In 2001, According to Tillinghast Study; Tort Costs Jumped 14.3%: Highest Percentage Increase Since 1986

    NEW YORK–(BUSINESS WIRE)–Feb. 11, 2003–The U.S. tort system cost $205 billion in 2001, or $721 per U.S. citizen, representing a 14.3% increase in tort costs since the year 2000.

    At current levels, U.S. tort costs are equivalent to a 5% tax on wages. These findings were reported by Tillinghast – Towers Perrin (Tillinghast) in U.S. Tort Costs: 2002 Update — the only study that tracks the cost of the U.S. tort system from 1950 to 2001 and compares the growth of tort costs with increases in various U.S. economic indicators.

    Key findings from the study revealed that:

    — When viewed as a method of compensating injured parties, the U.S. tort system is highly inefficient, returning less than 50 cents on the dollar to people it is designed to help and returning only 22 cents to compensate for actual economic loss.

    — As of 2001, U.S. tort costs accounted for slightly more than 2% of GDP, signaling the end of a 13-year decline in the ratio of tort costs to GDP.

    — While the cost of the U.S. tort system has increased one hundred fold over the last 50 years, GDP has grown by a factor of only 34.

    — Medical malpractice costs have risen an average of 11.6% a year since 1975 in contrast to an average annual increase of 9.4% for overall tort costs.

    — The largest single factor in the rise of tort costs in 2001 was a significant reassessment of liabilities tied to asbestos claims. This accounted for $6 billion of the $26 billion increase over 2000 levels. Other contributing factors include: class action lawsuits and large claim awards; an increase in the number and size of shareholder lawsuits against Boards of Directors; an increase in medical cost inflation leading to higher costs of personal injury claims; and medical
    malpractice lawsuits.

    “These trends continued and became even more pronounced in 2002, with large charges for upward revisions of asbestos liability and a jump in the number of directors’ and officers’ (D&O) liability lawsuits,” says Russ Sutter, survey leader and Tillinghast principal. “Additionally, we believe 2002 data will begin to show the impact of 9/11-related lawsuits and will also show mold beginning to emerge as an important liability issue. Absent sweeping tort reform measures, we expect most of these trends to continue in 2003 and beyond.”

    Future Implications

    While it is almost impossible to accurately predict future increases in tort costs, Tillinghast estimates annual increases will be in the 7% to 11% range for the next several years. At this rate of increase, tort costs could equal $1000 per citizen by 2005.

    “When the first Tort Costs Study was published in 1985, we attributed the rapid escalation in tort costs to an overall societal attitude of entitlement,” says Jeanne Hollister, a Tillinghast consulting actuary. “But this sense of entitlement has now been coupled with rising anger toward and mistrust of U.S. corporations that can only serve to exacerbate tort costs.”

    Tillinghast expects the insurance industry to react to rising tort costs by placing further limits in policies as it did in the mid-1980s with the elimination of pollution coverage. The firm anticipates some insurers will withdraw completely from certain lines of business and markets, as is happening now in the medical malpractice market.

    “We believe corporations will continue to shift toward self-insurance as they attempt to gain more control over costs and as insurance prices continue to rise,” says Eric Speer, Tillinghast Region Manager for the Americas. “Rising tort costs, combined with the right congressional environment, will likely create more pressure for tort reform — particularly asbestos reform.”

    About the Study

    U.S. Tort Costs: 2002 Update is an update of previous studies published by Tillinghast in 1985, 1992, 1995 and February 2002. For copies of the report, please contact Robyn Hennessy at

    SOURCE: Tillinghast
    02/11/2003 07:01 EASTERN
    and the US Dept of HHS:


  • June 14, 2004 at 7:12 am
    Brenda says:
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    Dr. Broida asked a good question in his post Why was MLMIC asked to leave the state of MA?
    A- Their current AM Best Rating has dropped to B

    They also withdrew from CT

    Has anyone heard what GE/Med Protective will be doing with their rates? ProMutual announced their rates will increase.

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