Fear Factor

Legal reforms have brightened the medical malpractice horizon, but physicians are still wary of lawsuits — and still angry at high insurance premiums. More than 2,000 now choose to go without insurance.

by Amy Keller

After years of warfare, the smoke is clearing on Florida’s medical-malpractice front.

Some changes — a $500,000 cap on pain and suffering damages passed by the Legislature in 2003, for example, and a constitutional limit on lawyers’ fees in malpractice cases that voters approved in 2004 — appear to be taking hold, with a recent decline in the number of med-mal claims, according to state insurance regulators.

Other evidence: In 2005, the 15 medical-malpractice insurance companies in Florida that provide coverage for 80% of the market had to pay out 40.2% of premiums to cover losses — a favorable percentage compared with other populous states such as New York, Illinois and Pennsylvania.

Those 15 companies also made more than $800 million in profits. The market is now attractive enough that between October 2005 and October 2006, eight new companies, most of them risk-retention groups structured like mutual insurers, started selling med-mal insurance in the state.

In the wake of the reforms, some physicians already are paying less for their med-mal insurance. And last December, Jacksonville-based First Professional Insurance Co. (FPIC), the state’s largest writer of medical-malpractice insurance policies, filed for a rate decrease that will reduce premiums an average of 8%.

The course of the med-mal wars also has put the lie to some of the more egregious claims about the impact of lawsuits. A 2003 General Accounting Office report found that oft-cited claims of physician departures in Florida were “anecdotal, not extensive” and sometimes “inaccurate.” Despite claims by provider groups that malpractice pressures were making it hard to retain and recruit physicians, the GAO found that the number of new medical licenses in Florida had actually increased and the number of physicians per capita was unchanged.

For all the good news in the wake of the reforms, however, the med-mal atmosphere remains cloudy and complex. Few physicians are celebrating.

What’s going on?

For one, med-mal insurance rates are still uncomfortably high for many physicians. “The good news is that medical-malpractice insurance premium rates are stabilizing in Florida. The bad news is that med-malpractice premium rates are stabilizing in Florida at somewhat astronomical levels,” says Dr. Robert Brooks, associate dean for health affairs at Florida State University.

Brooks’ research suggests that while med-mal insurance rates aren’t pushing physicians out of the profession, they’re forcing physicians to stop providing “some of the higher risk services which patients need.”

Brooks says that more than half of about 1,300 physicians surveyed in 2004 reported that they had stopped providing certain services or provided them less often. The most commonly eliminated services included nursing-home care, vaginal childbirth, emergency department practice and mental health services. In the Florida Keys, for instance, the decision by many OB/GYNs to not perform vaginal deliveries means women who want to try to avoid cesarean “have to drive to Homestead or Miami,” Brooks says.

Med-mal insurance losses in Florida dropped 43.6% from $989 million in 2003 to $557.5 million in 2005.

Another gauge of doctors’ continuing unhappiness with med-mal rates is the number choosing to drop medical-malpractice insurance altogether — “going bare.” Since 2003, the number of Florida doctors going bare has increased more than a third to 2,039.

Florida is one of the few states that allow doctors to go bare, on the condition that they post a bond, establish an escrow account or obtain an irrevocable letter of credit to cover malpractice verdicts up to $250,000 and hang a sign in their waiting room informing their patients that they practice without insurance. Many choosing to go bare practice in Miami-Dade, Broward and Palm Beach counties, where medical-malpractice premiums are the highest. Among the specialists more likely to go bare are OB/GYNs, neurosurgeons, general, cardiovascular, orthopedic and thoracic surgeons, radiologists, trauma specialists, pulmonologists, gastroenterologists and nursing-home doctors. A 2006 survey by the American College of Obstetricians and Gynecologists found that 35.6% of Florida OB/GYNs aren’t covered by liability insurance.

Scare tactics

Meanwhile, doctors still receive steady reminders from insurers and others cautioning them about the continuing risk of lawsuits.

“Good doctors get sued,” attorney Mark Morgan — who’s also a doctor — tells a crowd of doctors attending at a January 2006 asset protection seminar in Orlando. Morgan is a partner at Morgan, Padgett Law Group in Tampa, which provides legal services to Physicians Advantage, a Jacksonville-based company that sells a range of financial and legal advice to physicians to insulate them from litigation. Endorsed by the FMA, Physicians Advantage has more than 300 doctor clients. “The fact that you practice good medicine is not enough to stop you from being sued,” he tells the doctors. “All specialties are really subject to significant malpractice judgments — what I call extinction-level events. I define those as being $1 million or more.”

An OB/GYN in Atlanta pays on average $69,550 for $1 million in liability coverage. In Hillsborough County, the average is $141,271 for the same coverage. In Miami-Dade County, the premium runs $275,478.

Med-mal insurers also encourage a range of risk-management strategies by their physician customers. With FPIC’s blessing, Tampa Bay Women’s Care, a 67-physician OB/GYN practice, requires its patients to sign an arbitration agreement waiving their right to a jury trial if a dispute over their medical care ever arises.

Patients are shown a seven-minute DVD clip that echoes the mantra repeated in support of tort reform — that med-mal insurance rates are forcing some doctors to leave the state, others to leave the medical profession and some to practice with no insurance at all. The waiver is necessary, according to the DVD, so the practice can keep providing care.

Interestingly, however, requiring the waiver isn’t bringing the practice any reduction in its insurance rates from FPIC, its insurer. FPIC President Bob White says the program may save physicians the stress of a trial and could produce savings down the road if the effort leads to a decrease in the number of lawsuits filed each year.

By the Numbers
# 491 — Average number of days between the occurrence of an incident and the filing of a claim
# 855 — Average number of days between when a claim is filed
and closed
# 1,955 — Number of claims filed by women in 2005
# 1,798 — Number of claims filed by men in 2005
# 1,176 — Number of claims resolved in 2005 that involved a death
# 201 — Number of claims resolved in 2005 that were classified as having caused only “emotional” distress such as fright
# 49.3% — Percentage of claims where injury location was listed as an inpatient facility such as a hospital
# $448,269,730 — Amount paid to plaintiffs in 2005 that constituted economic damages
# $203,589,745 — Amount paid to plaintiffs in 2005 that constituted non-economic damages
# $803,037,165 — Profits earned in 2005 by the 15 companies that comprise 80% of Florida’s medical malpractice insurance market
Source: Florida Office of Insurance Regulation

Battle of the waivers

Dr. Robert W. Yelverton, a retired obstetrician-gynecologist who runs Tampa Bay Women’s Care, defends the waiver requirement, saying he has to do everything he can to minimize the chances that the 67 physicians who work for him will end up in court. Yelverton says he is still scarred by the one lawsuit he experienced during his 30-year career in medicine. Even though he eventually won the case, “I can’t tell you how miserable I was for four years.” He says he has never quite looked at his patients the same way, cautiously assessing their behavior for clues as to how likely they may be to sue him.

With malpractice premiums for OB/GYNs costing more than $100,000 a year for about $1 million in coverage, requiring waivers “is what we have to do to have affordable insurance,” says Yelverton. “This is a more legitimate way to deal with medical-malpractice claims.” Patients who refuse to sign, he says, will have to find a new doctor.

The Florida Medical Association, meanwhile, is encouraging its physician members to get patients to sign a waiver agreeing to limit non-economic damages in the event of a lawsuit to $250,000 — the amount that tort reform advocates wanted the Legislature to enact. Whether such agreements will withstand judicial scrutiny remains to be seen, but FPIC has said it will help doctors enforce the agreements.

Not surprisingly, Florida trial lawyers are aghast. Orlando lawyer Scott McMillen says he’d advise any patient presented with such a request to run for the door. Steven C. Marks, an attorney with the Miami-based law firm Podhurst Orseck, calls the idea “offensive. What a sad state of healthcare, and what does that say about the people coming out of our medical schools today? Those doctors ought to be ashamed of themselves.”

Arbitration programs are common out West, however. In California, CAP-MPT, a popular insurance company, requires all OB/GYNs and neurosurgeons it insures to offer arbitration agreements to patients. In Utah, the widespread use of arbitration agreements by doctors in risk-prone specialties like neurosurgery and OB/GYN over the past several years has helped stabilize malpractice premiums, the Utah Medical Association says.

And, of course, the trial attorneys have their own waivers, routinely asking clients to waive their rights to the limits on contingency fees imposed by Amendment 3. FMA even plans to use the Florida Supreme Court ruling that approved the attorneys’ waiver as a model for the waiver it wants physicians to get from their patients.

However the waivers pan out, doctors haven’t found much of a way around two other reform measures passed by voters in 2004. Amendment 7, the so-called “Patients Right To Know About Adverse Medical Incidents Act,” requires full access to all healthcare provider records related to adverse medical events. Amendment 8, also known as the “three strikes” amendment, requires the Board of Medicine to revoke the license of a physician found guilty of at least three instances of medical malpractice.

Doctors say both measures have only increased their fears of legal exposure. Physicians complain that Amendment 7 discourages valuable exchanges of information, thereby limiting the effectiveness of peer review, while Amendment 8 simply encourages premature settlements in order to avoid a judgment that could put a physician’s license at risk.

Where’s the price break?

Steve Burgess, until recently the state’s insurance consumer advocate, is among those who think that the post-reform trends should have pushed premiums lower than they are. In January, at Burgess’ request, Florida Insurance Commissioner Kevin McCarty held a hearing to ask major medical-malpractice companies that do business in the state why they haven’t cut rates further. The insurance companies, Burgess says, “stated in their bill … the whole purpose was to get savings to the medical community and the patients. We’ve got 40% decreases in their costs, and we’re seeing much more modest decreases being passed on to the doctors.”

FPIC’s White says everyone needs to be patient and not rush price cuts that can’t be sustained. White says it takes so long to resolve a typical medical-malpractice case that it will take several more years to see what real effect tort reforms have produced. “About 70% of the cases closed in 2005 were already reported to us
before tort reform became enacted, and an even higher percentage, 85%, occurred before tort reform became effective.”

Handing out even larger rate reductions would be downright “dangerous,” White says, since the courts haven’t gotten ahold of them yet. “That’s the problem we have when people start talking about giving prospective credit for reforms. We know it will be years before we know those reforms are constitutional.”
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