Malpractice Carrier To Cut Cost: Only One Insurer Will Cut Rates — By An Average Of 11 Percent. Doctors And Lawyers Are At Odds Over What It Means.
A leading Pennsylvania malpractice insurance carrier says it plans to lower its rates by an average of 11 percent next year.
The Pennsylvania Trial Lawyers Association says the news proves the “so-called crisis” involving doctors and medical malpractice insurance rates is abating. Doctors, on the other hand, say reports of this problem’s demise are greatly exaggerated.
“The truth is that Pennsylvania is a great place to practice medicine, with a favorable insurance climate for doctors and a legal system that is fair to everyone,” said Tim Riley, president of the trial lawyers association.
Podiatrist Jack Gordon, of the Bux-Mont Foot & Ankle Care Center in Warminster, said, “Everything helps, but we’re really in a deep hole here.”
For years, Pennsylvania doctors have been fighting for relief from the high cost of medical malpractice insurance. Physicians say the annual premiums, which can reach six figures, have made it hard for those in what are considered high-risk specialties — including neurosurgery, obstetrics, gynecology and podiatry — to carry the insurance they need to perform surgery. They believe it has also led physicians to flee the state.
The state initiated a series of reforms that, among other things, required an attorney filing a malpractice lawsuit to have the case reviewed and certified by a medical expert first.
Attorneys were also required to file medical malpractice actions in the county where the alleged malpractice occurred. This change was made because doctors complained that attorneys often moved cases to Philadelphia, where they say juries have earned a reputation for high awards.
“We did an analysis in June and we saw improvement such that we thought it appropriate to reduce rates,” said Anna Lavertue, spokeswoman for the Pennsylvania Medical Society Liability Insurance Co.
Last year, that insurer accepted $88.4 million in insurance premiums from Pennsylvania doctors, an amount second only to Indiana-based-Medical Protective Co.’s $96.5 million. Together, the two companies accounted for almost 25 percent of the total amount paid in malpractice premiums in Pennsylvania last year.
(More than 100 other companies handled the remaining 75 percent, but none of their individual market shares exceeded 6.5 percent, according to data compiled by the state Insurance Department.)
“We looked at the number of cases filed and the amount we paid out per claim,” Lavertue said about his company’s decision to lower premiums. “We looked at the data and saw some positive developments … principally, a drop in the number of claims filed.”
That’s why the liability insurance company, which was formed by the Pennsylvania Medical Society in 1978, has asked the insurance department for an overall 11 percent rate reduction, effective Jan. 1, Lavertue said.
The reduction won’t impact each physician equally. Lavertue said premiums are based on the physician’s specialty, the practice’s location and the history of the physician’s claims.
“Our philosophy is to charge [each physician] an appropriate rate,” said Lavertue.
Before the reforms kicked in, the insurer raised its rates an average of 40 percent in 2002 and 54 percent in 2003, according to the state. “I think this [reduction] shows that the reforms instituted are working,” said Riley of the trial lawyers association.
John Anastasi can be reached at (215) 949-4170 and at janastasi@phillyBurbs.com.
He added that the improving market has also helped malpractice insurance companies, which invest the premiums they collect until money is needed to pay malpractice awards. He said insurance companies paid dearly for those stock market investments following the terrorist attacks of Sept. 11, 2001.
“They had the double whammy of the investment market not giving the sort of return they were used to and the number of claims going up,” Riley said. “They turned to the policyholders to keep afloat.”
Now the medical malpractice insurance companies are turning larger profits, he said, citing a recently released study of the nation’s 15 largest carriers’ 2006 financial statements.
The study — paid for by an organization representing America’s trial lawyers — reported that the carriers’ incurred losses declined from $2.6 billion in 2003 to $1.3 billion in 2006. What they collected in premiums grew from $3.7 billion in 2003 to $4.2 billion in 2006.
Although the medical society liability insurance company plans to reduce its premiums, which will make it easier for its doctors to afford the insurance, Riley admitted he had no idea whether other companies serving Pennsylvania would follow. A call to a Medical Protective Co. spokeswoman was not returned.
Gorman said competition between the insurance companies is less likely to drive down premiums since the carriers often insure some specialties but not others.
“If you can get that insurance, it’ll help,” he said. “It’s always nice to get some relief, but not everyone’s getting it.”
He said it is still simply too expensive for some doctors to afford insurance and, with a growing population of elderly adults, the problem is likely here to stay.
“It’s not as bad as it was, but it’s certainly not a good situation,” said Gorman.
It is also one that could make it harder for some doctors to make sure their treatment decisions are based solely on what is best for the patient, he admitted.
“Most (doctors) I talk to try to avoid doing surgery with a passion,” said Gorman, who added many prefer to have other doctors perform the procedures. “Sometimes, they over-order tests to make sure they cover everything.”