| U.S.
News And World Report Article Dispells Notion That Verdicts
and Lawyers Are Causing Physician Malpractice Premiums to Rise
In
its June 30-July 7 issue, U.S. News and World Report
discusses physician and insurers' claims that malpractice awards
are driving up the cost of physician malpractice premiums. According
to this pestigious business magazine, "their diagnosis
may be wrong."
The article, written by author Christopher Schmitt, reports
that there is "no explosion of cases that might drive
up legal costs. The number filed each year has remained fairly
steady during the past decade." Moreover, the article
correctly notes that two thirds of the cases that are filed,
are dropped before ever making it to a jury. Of those that
are tried, only a small fraction are in favor of the patient.
0.9 percent of 5,500 cases surveyed in the year 2002 were
decided in favor of the patient or plaintiff. The overwhelming
majority were decided in favor of the health care provider.
According to the Physicians Insurers Association of America,
the trade group for malpractice insurers which accounts for
about 60% of the market, the 0.9 percent is down by half since
the year 2000. Within that 0.9%, the article reports that
the number of payments that doctors' insurers make following
jury verdicts has held steady in recent years, at around 400
annually.
The article also reports that doctors and insurers also complain
about the size of medical malpractice awards. However, U.S.
News found that in 2002, the median jury award was approximately
$295,000, far below the $1million number that the American
Medical Association and others often cite.
U.S. News also reports that in the 19 states that have medical
malpractice caps, the premiums actually grew faster than in
the nearly three dozen states without caps. Although it is
not clear what is driving the costs of insurance higher, U.S.
News reports that chief among the forces driving those costs
is the usual business cycle of insurance. "Early in
the cycle, competition or a desire to expand encourages low
premiums. Later, losses clash with cheap rates, forcing premiums
up. In addition, the number of malpractice insurers has declined,
so there is less competition to keep rates low."
Standard & Poors, a financial services industry research
firm says malpractice insurers' loss ratio has been improving
since 1998, and the industry should soon return to profitability
and strengthening reserves. According to U.S. News, J. Robert
Hunter, insurance director of the Consumer Federation of America
has explained: "Doctors and insurance companies are
all saying it's the dastardly lawyers, [but] nobody who really
studies it seriously thinks it's a bunch of million-dollar
verdicts exploding that's causing this."
U.S. News points out that 17 years ago, during an earlier
malpractice crisis, florida legislators enacted rules like
those being pushed today.One malpractice insurer, St. Paul
Fire and Marine Insurance Company, told regulators that the
changes would mean no savings in payouts and hence no rollback
of premiums.
U.S. News quotes J. Robert Hunter "Caps don't work
to cut costs, and if they do, the money just goes to insurance
company profits."
The Cochran Firm - Dallas, L.L.P.
Turtle Creek Centre, Suite 1400
3811 Turtle Creek Boulevard
Dallas, Texas
75219
phone:
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| fax: 214.651.4261
Edward H. Moore is Board Certified, Personal Injury Trial Law. Unless otherwise noted, not certified by the Texas Board of Legal Specialization.
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