Fla. below national average in amount of paid medical malpractice claims

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A state-by-state examination of medical malpractice claims paid in 2006 shows that Florida’s average payout was lower than the national average, resurrecting the debate about the merits and pitfalls of tort reform that is expected to change the malpractice climate in the state.

As in the past, trial attorneys, the medical community and the insurance industry are far apart as to how injured patients and their families will fare from medical malpractice reforms in 2003 and 2004.

Florida’s average claim payout, whether by settlement or jury verdict, was $241,800 last year while the national average was $308,600, according to the Kaiser Family Foundation.Thirty-three states had higher averages than Florida’s; Illinois was at the top with an average claim paid of $629,100, according to Kaiser, a nonprofit health-policy research institute in California and Washington, D.C.

Kaiser didn’t conduct an analysis of the findings; it simply put the numbers together for public education, said David Rousseau, who works with Kaiser.

The data comes from the National Practitioner Data Bank, a federal registry of medical malpractice claims paid on behalf of physicians and other health-care providers.

Insurance companies paid a total of $198.7 million arising from 822 paid claims in Florida last year, according to Kaiser. That’s 14.7 claims paid for every 1,000 physicians in the state.

The state with the lowest average malpractice payout was Michigan at $132,380 with 389 claims paid in 2006.

The numbers for Florida come as no surprise to Orlando trial attorney Scott McMillen, who points to a $500,000 cap on noneconomic damages approved by the state Legislature in 2003 after pressure by then-Gov. Jeb Bush.

“The Legislature in Florida has been steadily chipping away the rights of Florida consumers,” he said. “It is resulting in smaller settlements and more cases going to trial because the defendants have no fear. The insurance companies know the worst it will be is $500,000 — so why settle.”

Bob White, president of First Professional Insurance Co., which insures 7,000 physicians in the state, the most of any medical malpractice insurer in the state, counters that Florida cannot be compared to other states.

“The average doctor (nationwide) carries a $1 million policy and in Florida the majority only carry a $250,000 policy. So if the maximum is $250,000, that compresses the average claim,” White said. “Only 17 percent of doctors in Florida have million-dollar policy limits. In low-policy states, you just can’t draw comparisons.”

Doctors don’t carry more coverage because of the expense, White said, acknowledging that malpractice insurance is more expensive in Florida than in other states. He blames that on more medical malpractice claims being filed and more payouts from settlements or damages from jury verdicts.

“We pay claims more frequently in Florida,” White said, adding that 49 percent of claims closed last year in the state resulted in a payout.

Nationally, 26 percent of claims closed last year resulted in payouts, he said.

The issue of high premiums even when a physician hasn’t faced any prior lawsuits or settlements led to a bitter fight for reform five years ago, where the medical community lobbied for a $250,000 cap on noneconomic damages, or pain and suffering.

The compromise passed by the Legislature in 2003 was the $500,000 cap. Doctors said that was no compromise and wouldn’t reduce their premiums because in the event a patient dies, the cap on noneconomic damages increases to $1 million.

The medical community and trial attorneys sparred again in 2004, which led to three constitutional amendments on the November ballot that addressed other medical malpractice issues.

Voters approved limiting contingency fees of plaintiffs’ attorneys, opening up hospital records of adverse incidents, and revoking the licenses of physicians with three malpractice judgments.

Regarding the limit on contingency fees, attorneys began circumventing the limit by having clients sign waivers, the legality of which was upheld by the Florida Supreme Court in September 2006.

Stuart Ratzan, a trial attorney in Miami and member of the Florida Justice Association, the lobbying arm of trial attorneys, said the impact of the 2003 law capping noneconomic damages cannot be felt yet.

“It’s highly unlikely that payouts in Florida would be affected yet by the legislation passed in 2003 because cases don’t get through the system that quickly,” he said, adding that he expects cases going to trial this year will be the first to be affected.

He attributes Florida’s average claims payout being below the national average to a conservative attitude among juries, which he says tend to side with physicians.

“The white-coat effect still exists,” Ratzan said. “Doctors do better than injured patients.”

White, president of First Professional Insurance, contends Florida judges and juries are liberal and willing to award large verdicts beyond policy limits. The state’s warm climate has attracted top-notch trial attorneys and that has led to larger awards, he said.

Bill Bell, general counsel for the Florida Hospital Association, said the average payout in Florida last year was to be expected, given that the majority of physicians carry only $250,000 in coverage. However, it is too early to see consequences of the limit on noneconomic damages awards passed by the Legislature in 2003.

“It takes four or five years to get a final verdict under that new law,” Bell said. “The law has had an impact on settlements but not jury verdicts.”

The number of claims filed is declining due to the noneconomic damages cap and that was to be expected, Bell said.

A long-standing position within the medical community is that medical malpractice lawsuits are often frivolous and that insurance companies are quick to settle cases, marring the reputation of physicians, rather than going to trial to defend their physician clients.

“There’s never been a doctor who will say, ‘I’ve been sued today and it’s a good case,’” McMillen, the Orlando trial attorney, said.

At the same time, Florida law requires a plaintiff’s attorney to sign an affidavit that he or she has done a reasonable investigation into the merits of the case and has obtained an affidavit from an expert witness that malpractice occurred.

The counter argument from doctors that plaintiffs’ attorneys hire doctors who will say anything a lawyer wants as an expert witness doesn’t stand up against an insurance industry able to spend more on its own expert witnesses, he said.

“I have spent over $200,000 on a single case to get to trial,” he said. “That comes out of our pockets and we are not willing to advance that with crummy expert witnesses at trial and the insurance industry counters with their own expert witnesses.”

Florida law allows insurance carriers to have sole discretion to make the decision about settling or going to trial, regardless of what a physician wants, pitting doctors against their insurance carrier, which evaluates how to proceed with a lawsuit from the standpoint of financial risk.

Ratzan, the trial attorney from Miami, said most cases settle because they have merit but he contends insurance carriers are more willing nowadays to let cases go to trial.

“In recent years the insurance industry is more willing to try a case. They are more comfortable with the idea the jury will stand on the side of the doctor,” he said.

A study released last month by researchers at the University of Missouri-Columbia found that tends to be the case, at least in New Jersey, Michigan and North Carolina, the three states where the researchers examined jury verdicts from 1986 to 2006.

Juries are more sympathetic with physicians for a variety of reasons, including the social standing of physicians, attitudes that the injured are trying to profit, that insurance companies have greater resources to spend at trial and lastly, that juries are willing to give doctors the benefit of the doubt when the issue of negligence is conflicting, according to the Missouri study.

Bell, with the state hospital association, agrees trial outcomes tend to favor the doctors.

“Most cases that go to trial are won by the defense and that is probably typical across the United States,” he said. “If the defense is willing to bring a case all the way to a jury, they must feel pretty good about it. If there is pretty clear negligence and liability, then cases settle but if there’s only $250,000 in coverage, that physician settles for that amount or less.”

The other gamble for the insurance industry is questionable liability on the part of the doctor or hospital but the patient sustained damages, Bell said.

“There’s the concern the jury may feel sorry for the family,” he said. “All kinds of different strategies factor in making a decision about letting a case go all the way.”
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