Tag Archives: New York

Why Do I Need a Medical Malpractice Insurance Broker When Seeking Medical Director Insurance?

I recently had a lengthy discussion with a general surgeon from New Jersey, who was offered a medical directorship at a surgical center in Manhattan, N.Y. He explained that the surgical center would not provide his medical malpractice insurance and, therefore, would need to secure his own coverage. When he called his current insurer, they explained that they do not cover medical director exposures. Calling around to other medical malpractice insurance companies in New York, he received the same news. Frustrated, the doctor called me saying he couldn’t even get anyone to steer him in the right direction for acquiring medical director insurance.

This was my jumping off point for explaining the differences between the two predominate types of medical malpractice insurance companies and the value of working with a medical malpractice insurance broker. First, there are the “admitted” companies. These are the companies that focus their attention on traditional doctors and their practices. They do not provide coverage to physicians who have lost big verdicts or large number of malpractice claims, gaps in coverage or licensing issues. They also do not provide coverage to facilities and organizations, like locum’s tenens companies, medi spas, medical directors and other types of medical practices that are outside of a traditional physician practice. These admitted companies are licensed by the states in which they operate and file their rates and guidelines with those states’ Departments of Insurance. As such, these admitted insurance companies must be very strict in what they can and cannot cover because they must abide by their filed guidelines.

Physicians who — for whatever reason — cannot secure medical malpractice insurance on the admitted market, purchase their coverage from “surplus lines” insurance companies. These companies are not licensed by the state, so they are not required to file their rates and guidelines, which affords them more leeway in determining what and who they will and will not insure. These companies must be approved to do business within the state, but are designed with more latitude in order to offer coverage to physicians when the admitted companies cannot.

I explained that we would approach all of the companies who specialize in offering medical director insurance so that we could flush out the most competitive offers as well as the best policy terms.

After completing various, specific medical director insurance applications, we secured five different quotes for him. After another discussion about which company would be the best fit for him, we secured the policy of his choice. He not only continues to work at the surgical center, but has picked up two more medical directorships at separate locations — all covered under the medical director insurance policy we acquired together.

Without the knowledge, experience and access that comes from working with an experienced medical malpractice insurance broker, our general surgeon wouldn’t have been able to navigate the tricky world of medical malpractice insurance companies in New York to find his medical director insurance.

Are you looking for medical malpractice insurance in New Jersey, New York or any other state? Call me at 708-848-2300 to discuss your options.

MLMIC Completes Demutualization, Acquisition by Berkshire Hathaway

MLMIC Insurance Co. announced last month the completion of its conversion from a property-and-casualty mutual insurance company to a property-and-casualty stock insurance company and the finalization of its $2.5 billion acquisition by National Indemnity Co., a subsidiary of Berkshire Hathaway Inc.

The conversion and acquisition followed a September 6 approval by the Superintendent of the New York State Department of Financial Services and a September 14 vote of MLMIC policyholders with policies in effect on July 14, 2016. The cash consideration resulting from the conversion will be paid out to eligible policyholders — policyholders with policies in effect from July 15, 2013, through July 14, 2016 — or their designees as promptly as practicable, according to the company.

As a subsidiary of Berkshire Hathaway, MLMIC will have enhanced capacity and financial strength to continue serving New York State physicians, hospitals and dentists. MLMIC remains the largest underwriter of medical professional liability insurance in New York and continues to be a New York‐focused medical malpractice writer regulated by New York State. The same Board of Directors and staff that have served the market for several decades will operate it.

“No one will see any difference [in day-to-day operations],” said Berkshire Hathaway chief executive Warren Buffett, during a livestreamed conversation between himself and James Reed, MD, MLMIC chairman of the board, from Berkshire Hathaway’s Omaha, Neb., headquarters on October 17. “The one thing that we will do is manage [MLMIC’s] investments.”

Reed highlighted how Berkshire Hathaway’s deep resources position MLMIC to address the challenging risks of the New York market as well as the hyper-evolving American healthcare delivery system.

“The tremendous financial resources of Berkshire Hathaway [lets us] assure physicians in New York that if they’re insured with MLMIC, there’s nothing that could come at us that we wouldn’t have the resources to deal with,” he said. “And the resources will allow us to be much more innovative in the way we approach malpractice insurance in the future.”

Reed pointed to the consolidation within the healthcare delivery system as one of the particularly pressing challenges currently facing the medical professional liability insurance industry that MLMIC wants to proactively address.

“At MLMIC, we know we’re going to have to be innovative with the consolidation that’s occurring — physicians coming together to form larger groups, health systems coming together, large groups coming together with health systems,” Reed said. “We need to be more innovative on the medical malpractice insurance side, and that’s exactly what we want to do as part of Berkshire Hathaway with those resources. We have a number of innovative ideas [for working] with some of these larger groups [that] we just couldn’t do in the past.”

In addition to National Indemnity Co. and MLMIC, Berkshire Hathaway also owns MedPro Group, which provides medical professional liability coverage in New York through its subsidiary risk retention group, MedPro RRG. And both Buffett and Reed view the intra-company competition as a benefit.

“We like the competition,” Buffett said. “For example, in workers compensation insurance, we have three different [companies] that have somewhat different areas of expertise. We have totally independent organizations that are out there calling on the same firms, trying to get their worker’s compensation business. Competition is fine.”

“We’re also hoping to be able to collaborate [with other Berkshire Hathaway companies operating in medical liability] because one option to consolidation in healthcare is collaboration,” Reed said. “The difficulty in doing that is always a legal one, but by being part of a single company like Berkshire Hathaway, we think particularly in the areas of working on patient safety, analytics and so forth, we can collaborate some. While each company pursues its own direction, some of those things that are common across the malpractice insurers within Berkshire Hathaway, we will be able to bring together and leverage that kind of capability to improve patient safety and, therefore, better outcomes from the malpractice standpoint.”

This information provided by Michael Matray of the Medical Liability Monitor.

New York’s Medical Malpractice Market in the Spotlight

by Michael Matray, editor of Medical Liability Monitor

New York’s medical malpractice insurance market was the subject of two lengthy articles last month that examined the state’s shifting competitive landscape and the questionable finances of its second-largest insurer of medical liability, Physicians’ Reciprocal Insurers (PRI).

In an article dated April 9, Politico New York primarily concentrated on the influx of risk retention groups (RRGs) to the New York market and its effect on the state’s admitted medical professional liability insurance companies. RRGs are governed by the federal Liability Risk Retention Act of 1981, which allows persons engaged in similar activities to band together as a self insurer to cover each other’s risks. The entity is only governed by the laws of the state in which it is domiciled, but free to offer coverage in all other states. Admitted insurers have been approved by the state’s insurance department, must comply with all state regulations, and in the event of financial failure, the state’s medical malpractice guaranty fund will cover its losses. The guaranty fund is a safety net financed by the state’s other admitted insurers. If an admitted insurance company fails, the costs are passed to the state’s other admitted insurers.

The Politico New York article noted that New York has 63 medical malpractice RRGs, 16 of which have entered the market since 2012. Because these RRGs are not required to pay into the state’s guaranty fund, they are often able to offer premiums that fall well below the state’s admitted insurers.

The less-expensive rates many RRGs are offering have affected the net written premium of the state’s two largest admitted insurers of medical liability, Medical Liability Malpractice Insurance Co. (MLMIC) and PRI. According to the Politico New York article, MLMIC’s net written premium decreased $79 million between 2014 and 2015, while PRI’s net written premium fell by $90 million. MLMIC remains financially strong with $1.8 billion in surplus, but as Politico New York points out, PRI reported a net underwriting loss of $12 million in 2015 and a $25 million loss in 2014. PRI’s liabilities exceed its assets by more than $138 million.

Because the New York Department of Financial Services has no control over the capital reserve requirements of RRGs operating in the state, and RRGs have the option to exit the market whenever they see fit, some legislators and regulators have expressed concern with their growing influence over the New York medical malpractice insurance market. “I know [an RRG] is a lower-cost option but I would say it is a riskier option,” Politico New York quoted state Sen. James Seward, who chairs the chamber’s insurance committee, as saying.

In an article also dated April 9, the Albany Times Union focused exclusively on the concerning financials of PRI and the role of Anthony Bonomo, the chief executive officer of Administrators for the Professions (AFP), Inc., which manages administrative and claims services for PRI. The reciprocal insurer has no actual employees and is operated by AFP, which collects a $42 million management fee from PRI. The article also noted that PRI’s 2015 expense ratio was 19 percent, more than double that of MLMIC.

In addition to chronicling PRI’s underwriting losses and negative surplus, the Times Union article delved into Bonomo’s role in events underlying the 2015 corruption trial of ex-Senate majority leader Dean Skelos.

In 1985, the state legislature enacted a law that allows medical professional liability insurers to operate at a loss. The law’s continued renewal is critical to PRI’s ability to operate, and the reciprocal spends considerable lobbying dollars to ensure that it does. Prior to his arrest in May of last year, Skelos was influential in passing the law’s most recent renewal, good through 2019.

The U.S. Attorney’s Office charged Skelos with extorting those with business before New York State to make payments to his son Adam with the expectation that such payments would result in official action by Skelos. According to prosecutors, Skelos pressured PRI to hire his son in 2012 for what turned out to be a no-show job. Skelos and his son were convicted in December of eight federal bribery, extortion and conspiracy counts involving PRI and two other companies. Bonomo was a witness for the prosecution, testifying under a non-prosecution agreement.

The Department for Financial Services declined a Times Union open records request for its three most recent financial examinations of PRI, saying the exams were never formally adopted and filed, and therefore not public.

Both the Times Union and Politico New York articles mentioned the unconfirmed industry rumor that AFP has been in ongoing discussions with The Doctors Company to sell its assets to the California-headquartered insurer of medical liability. [Editor’s note: On May 2, Politico New York published an article that reports The Doctors Company has withdrawn its offer to purchase AFP.]

New York Med Mal Coverage

Today we are writing about New York med mal coverage and risk retention groups (RRGs). Whenever a physician asks us what are the best and worst states to practice in from a med mal coverage standpoint, we always have to mention New York as the later. Unfortunately for physicians and caregivers in New York, New York med mal coverage remains some of the most expensive and the choices remain limited.

So what are your New York med mal coverage options? As we stated, they are limited. As far as admitted carriers go, there are only two options: PRI and MLMIC. For physicians looking for price relief, or who are not being accepted by PRI or MLMIC, there are about 5 or 6 risk retention groups (RRGs) that provide excellent coverage and policy features.

Physicians Talking One of the first things that we have to do as New York med mal agents is to identify the doctor’s situation and where they are practicing. For instance, a doctor practicing in Manhattan or New York City with privileges at one of the major hospitals, usually only has a choice between PRI and MLMIC. If a physician needs to seek coverage from an RRG, many times we find ourselves calling a hospital’s credentialing or risk management department to make sure that they accept coverage from the companies we are seeking. It is impossible to underestimate the importance that the hospital accepts coverage from the RRGs, because most do not in Manhattan.

New companies entering New York as RRGs. Several years ago, now Governor Andrew Cuomo approached the various national medical malpractice insurance companies and asked them to consider entering the state to provide New York med mal coverage. While most companies declined to enter the state on an admitted basis, they were willing to come in structured as RRGs, and therefore, would not participate in the state’s Department of Financial Services guarantee fund. For instance, Medical Protective, the Berkshire Hathaway company, entered the state structured as an RRG and now offers coverage to doctors under an excellent, A-rated Med Pro policy.

If you take away on thing from this article, please note that while your options may be limited, the agents at MyMedicalMalpracticeInsurance.com have the expertise and reach to makes sure that all of your options are laid out in from of you. Don’t hesitate to contact us today.

Flashback: New York Malpractice Insurance Gets First Rate Increase After Two-Year Moratorium

side note: This article first appeared in the August 2010 issue of Medical Liability Monitor, the industry’s premier source for consistent, reliable coverage and fresh perspectives on medical professional liability insurance and risk management issues. To subscribe to the Monitor, please click here.

On July 6, 2010, Insurance Superintendent James J. Wrynn announced the approval of a five-percent average New York malpractice insurance rate increase for the state’s doctors. By New York law, Wrynn is charged with establishing the rates for medical malpractice insurance coverage. The increase, which took effect retroactively to July 1, followed a two-year moratorium on malpractice rate increases.

“I am pleased that we could keep the first medical malpractice rate increase in three years to an average of five percent,” Wrynn said. “This rate will help hold the line on costs for physicians while giving the insurance companies the resources to pay claims as they come due.”

Wrynn established new base rates resulting in five percent increases for Medical Liability Mutual Insurance Company (MLMIC), the largest medical malpractice insurer with almost 60 percent of the market, and Physicians’ Reciprocal Insurers (PRI), the second largest medical malpractice carrier with almost 30 percent of the market. Two smaller specialty carriers, Hospitals Insurance Company (HIC) and Academic Health Professionals Insurance Association (Academic), also received five-percent increases. While the average rate will increase by five percent, some doctors’ increases can be somewhat more or less depending on their specialty and location.

The Medical Malpractice Insurance Pool (MMIP) is the state’s insurer of last resort. MMIP provides insurance for doctors and others who are not able to get insurance in the voluntary market. For the fewer than 300 doctors covered by the pool, rates will rise an average of 9.9 percent. The Department of Insurance does not set rates for risk retention groups and captives.

“In the short term, this increase will relieve the pressures on both doctors and insurers,” Wrynn said. “But long term, the system is still in crisis and needs to be reformed. We cannot afford to lose doctors because of high medical malpractice insurance rates and we have to make sure patients are properly protected. We will keep working toward a longterm solution.”

Industry insiders have noted for years that New York has had a dwindling number of medical liability insurers because there exists the perception that the state does not allow them to charge sufficient rates. In addition, the MMIP, which is funded chiefly by the insurers licensed in the state, is running a deficit of almost $500 million.

“Ever since 2001, the severity of claims costs for all New York physicians has been increasing significantly; however, the rate increases set by the Superinten-dent of Insurance have not kept pace,” wrote Robert A. Menotti, MD, MLMIC president, in a letter to policyholders after last year’s continued rate freeze. “MLMIC has had to absorb this difference by a reduction in our surplus funds. Our company’s surplus is comprised of funds (held in excess of the reserves set aside to pay claims) which are maintained for unforeseen events, such as catastrophic losses.”

Earlier this year, Wrynn proposed the creation of an independent rate service organization to attract medical malpractice insurers to the New York market and all property/casualty insurers agreed to an assessment plan to reduce the $480 million deficit in New York’s Medical Malpractice Insurance Plan.

Recent Changes to the New York Med Mal Ins Market

Thermometer and PillsAlthough it’s one of the largest states from the med mal ins premium point of view, New York can be a very frustrating state when looking for med mal ins. Doctors have limited choices for New York med mal ins and the state needs to see some reform in order to have a more competitive environment. But, we are hopeful for the future for a couple of reasons that we will discuss later in this post.

The two main admitted carriers (See our Med Mal Ins Q & A page for our glossary of terms) in New York state are PRI and MLMIC. (Most states’ physicians will have access to 10 or more admitted carriers.) Because of the quirkiness of New York state overall, the only other type of med mal ins carriers are risk retention groups (RRGs). The RRGs play an important role in creating a competitive market and offering an alternative to physicians. Although the RRGs are not admitted, and considered a surplus, or non-admitted carrier, they still offer an excellent alternative and should not be dismissed or overlooked. It’s important to note that most major New York City-based hospitals do not accept coverage by RRGs. Before you shop for coverage with risk retention groups, you should contact your hospital’s risk management or credentialing groups to see if they accept risk retention group coverage.

But, there’s some good news. The outlook for the future is encouraging. For instance, Med Pro, from Berkshire Hathaway, has entered the state in the form of its own RRG. Because the Med Pro policies are written on Med Pro paper, this means that physicians have the backing of a company with over $60 billion in cash. Med Pro was unwilling to enter New York state as an admitted company but was willing to enter the state as an RRG. And, in the past week, we have learned that another major national med mal ins carrier, Coverys, is also in the process of setting up an RRG in New York state and we think that other major carriers are not far behind.

Because the market is always changing, if you are a New York physician, it’s always important to shop for coverage every year. Contact us today.

More than Half of All Medical Malpractice Indemnity Payments Were Made by Six States

A recently released study of all medical malpractice payments made in 2011 indicates that six states accounted for more than half of all medical malpractice indemnifications. The analyzed data came from the National Practitioner Data Bank

That is an astonishing statistic. Which six states accounted for more than half of all medical malpractice indemnity payments is not a surprise. The highest malpractice payout was New York, followed by Pennsylvania, Illinois, New Jersey, Florida and California.

Not coincidentally, the states with the highest medical malpractice indemnity payments also have some of the highest medical malpractice insurance premiums. In some parts of New York and Florida, an obstetrician can be paying in excess of $200,000 in annual base rate medical liability premium.

Looking at base rate premiums in California, one can see how tort reform can keep medical malpractice insurance premiums affordable. While California paid out the sixth largest dollar total in medical liability indemnity, its medical malpractice insurance rates are comparatively inexpensive. An obstetrician practicing in the state’s most expensive county (Los Angeles County) for medical malpractice insurance can pay as little as $38,050 in base rate premium. The most expensive annual base rate premium in Los Angeles County hovers around $80,000. Compared to New York and Florida, those numbers are a steal.

The California Medical Injury Compensation Reform Act (MICRA) has long been the gold standard in medical liability tort reform. Enacted in 1975, the law caps non-economic, pain-and-suffering damages at $250,000. The law also has other requirements that are intended to weed out frivolous lawsuits.

Other interesting statistics found in the study of 2011 medical malpractice payments include:

• The six states that make up the bottom of the malpractice indemnity payments (South Dakota, Vermont, Wyoming, North Dakota and Alaska) make up less than 1 percent of of total payouts.

• Slightly more than 36 percent of all medical malpractice indemnity payments are made to patients age 40 to 59 ($1.3 billion) , followed by patients age 20 to 30 ($786.3 million).

• In total, 58 percent of all medical malpractice indemnity payments were made to women; 42 percent of all indemnity payments were made to men.

• Medical malpractice indemnity payments have been declining since 2003.

• The total dollar amount of 2011 medical malpractice indemnity payments were slightly less than they were in 2010.

Insurance Reform Needed to Lower New York Doctors' Medical Malpractice Rates, California Consumer Watchdog Testifies

side note: California has long been on the cutting edge of medical liability tort reform. It was the first state in the nation to institute a cap on non-economic damages with the 1975 Medical Injury Compensation Reform Act (MICRA) of 1975. The cap helped California stabilize liability costs, particularly for specialty and high-risk services such as women’s healthcare, community clinics, health centers and rural providers who can least afford skyrocketing insurance costs.

MICRA was strengthened with the passage of Proposition 103 in 1988. Prop 103 mandated that every insurer reduce its rates by 20 percent, unless such rollback would lead to a company’s insolvency. It also mandated changes in property-and-casualty insurance (medical malpractice insurance) rates had to be approved by the insurance commissioner.

Prior to Prop 103, insurance companies were not required to file rates for approval except for health and life. Essentially, only competition regulated the marketplace, and many thought that the insurance companies were in collusion in their attempt to inflate rates. Due to Prop 103, Rate Filing Bureaus were created in the Rate Regulation Division to implement the following provisions of Proposition 103.

The following article details how one of the authors of Prop 103 recently testified in New York on how this form of rate regulation is crucial to getting a grip on the state’s out-of-control medical malpractice insurancepremiums.

NEW YORK, Oct. 27, 2011 /PRNewswire-USNewswire/ — The author of California’s insurance regulatory reform…… (continue reading)

New York Launches Medical Malpractice Court

side note: New York is one of the states using funds designated by the Patient Protection & Affordable Care Act to set-up alternative resolution models for medical malpractice cases. One of the more popular ideas — a specific court for medical malpractice cases — was launched in the state on Sept. 1. It will be years before we know what kind of deflating affect the malpractice court might have on medical malpractice insurance premiums, but professionals in New York are hopeful that the measure will succeed.

by Matt Gurta

Five veteran Buffalo judges have been designated to handle local medical malpractice cases under an innovative judicial approach first used in the Bronx. The goal is for early judicial intervention to help streamline timetables and reduce the high costs routinely associated with resolving those cases.


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New York Physicians Finding Things a Lot Better in Texas

Side Note: They say things are bigger and better in Texas and this is true for New York physicians who relocate to the Lone Star State. Due to tort reform legislation, known at Prop 12, that went into effect in 2003 in Texas, physicians are flocking to Texas. The article below provides some great statistics on just how true this is –especially with New Yorkers. The article details the exact number of NY physicians who have made the move to Texas since 2003 and the dramatic differences in the medical malpractice insurance rates between the states. Together, New York and Texas illustrate the broad spectrum of the state of medicine and how it can vary dramatically.

If you would like to compare the New York med mal policy rates with Texas med mal policy rates for yourself, they are available on our site. We have a list of medical liability insurance rates by state across various specialties and carriers going back the last 10 years, just for your reference.

If you are a New York physician, MyMedicalMalpracticeInsurance.com may be able to lower your New York med mal rates. If you are a Texas physician, we may be able to lower your Texas med mal rates, too. Contact us today and find out.

Thanks for the doctors, New York
From: NYPost.com
Last Updated: August 17, 2011

Former NY OB/GYN Happy Now in TexasDr. Jackelinne Pilar Villalobos was one of Brooklyn’s few female English and Spanish-speaking obstetricians. She loved the city and her patients, and never wanted to leave — but 18 months ago, she moved to Houston, where we’re delighted to have her.

Villalobos’ journey to Texas began in 2003, when our Legislature reformed Texas’ legal system — including sweeping medical-malpractice reforms. Back then, doctors in New York and Texas were paying about the same for medical-liability insurance. In Villalobos’ case, it was more than $100,000.

If you’d like, you can see original article here.