New York is a complicated market when it comes to medical malpractice insurance.
In addition to having some of the highest base rate premiums for medical malpractice insurance coverage in the nation, New York physicians have limited choices when it comes to which insurer they choose to do business with. The state’s physicians are—for the most part—insured by one of two companies. Medical Liability Mutual Insurance Company, or MLMIC, has the lion’s share of the market, insuring about 65 percent of all New York physicians as well as 69 hospitals, more than 4,200 dentists and thousands of other healthcare professionals. Physicians Reciprocal Insurance, or PRI, covers slightly more than 24 percent of the state’s healthcare force.
During the last several years, new malpractice coverage options have become available to New York physicians. Standard medical professional liability insurance companies—better known outside of New York—have founded risk retention groups (RRGs) with the intent of entering the state. An RRG is an alternative risk transfer mechanism permitted under the Federal Risk Retention Act of 1986 that provides insurance coverage for individuals participating in a similar business. Those companies are only subject to the insurance rules and regulations of the state in which they are domiciled, but can register and engage in the business of insurance in all states.
Traditionally, the downside of being covered by an RRG is that its insureds must make a large capital contribution to establish reserves and have no access to a state’s guarantee fund should the RRG be unable to meet its obligations. The new RRG options available in the state have been funded and reinsured by their parent company, eliminating some of the risks associated with RRGs.
A positive, recent development in New York is that its leadership appears willing to address its burdened healthcare system through tort reform. In addition to costly medical malpractice insurance rates, the state has the most expensive Medicaid program in the country, serving one in four New Yorkers and costing more than twice the national per capita average. In 2011, Gov. Andrew Cuomo commissioned a Medicaid Redesign Task Force with the directive of recommending ideas for decreasing the cost of healthcare in New York.
The Task Force made 79 recommendations, including a $250,000 cap on non-economic damages and the creation of an indemnity fund for neurologically damaged infants. While the non-economic damage cap failed to receive approval from the state assembly, the fact that a governor from the Democratic Party endorsed and lobbied for a cap shows that an increasing number of lawmakers understand New York’s need for change in its medical liability climate. According to Gov. Cuomo, the cap would improve predictability for medical malpractice insurance companies, allowing them to reduce rates and offer financial relief to physicians who treat Medicaid patients. This is especially prescient with the Patient Protection & Affordable Care Act (PPACA) expected to widen even more the number of Medicaid enrollees over the course of the next few years.
New York has also benefited from PPACA grants earmarked for creating medical malpractice pilot programs intended to reduce the number of medical errors as well as test special “health courts” employing specialized judges to mediate medical malpractice settlements before the go to trial. The program is still in its early stages, but early results have been promising.
If you are looking to purchase medical malpractice insurance in New York, we have several options to shop your coverage.
This write-up of New York was put together by Michael Matray, the Editor of the Medical Liability Monitor