Sticker Shock Rising malpractice premiums

by Shellie Pruden, DCMS director of medical practice relations

After a hiatus of several years, claim frequency and severity have spiked, resulting in panic among malpractice insurers. Physicians are feeling the sticker shock of premiums doubling or increasing by half, while the coverage decreased by half. Any attempt to change medical malpractice laws takes place on three levels. Here’s how DCMS and TMA work on your behalf.

Judicial. Lower court and Supreme Court activities can extend or limit a physician’s legal duty to a patient. Medicine can best influence the judicial system at the grass-roots level through physician support or opposition to state, district, or appellate judges. TMA submits amicus briefs in appellate cases, coordinates slate card distribution, and organizes related political activities that target judges who have displayed a consistent pattern of antagonism, political favoritism, or refusal to follow legislative intent of the tort laws in question.

Legislative. Tort legislation is a push/pull relationship, and TMA and DCMS push or pull as necessary. Every time the Legislature attempts to limit a plaintiff’s rights, a counteroffer results, limiting the defendant’s rights or a related offset regarding patient safety. Because the Legislature meets only every other year, a cycle begins to develop that plays out over the course of a six- to eight-year term.

In the early 1990s, exponential premium increases brought about significant tort reform in the 1995 legislative session. The tort reform package included requirements for cost bonds, expert reports, and caps on punitive damages, and began to lay the groundwork to reduce frivolous lawsuits. The result of this package was a 40 percent decrease in malpractice cases over 1996–1997 as the laws took effect.

As the cycle continues and malpractice claims and premiums are on the upswing, TMA is pursuing legislation to create a bad faith cause of action that permits physicians to recover damages from a malicious prosecution, and strengthen the expert witness/cost bond provision of the current law. Legislative initiatives are somewhat problematic, because the median time to resolve a malpractice claim in Texas is roughly four years. That means that the impact of any legislation enacted in 2001 can be assessed on half of the cases that arose in 2001 during the 2005 session. Two thirds of claims are settled without indemnity, making it more difficult to assess a law’s efficacy.

Insurance. Physicians don’t easily overlook how malpractice insurers price their perceived risk once that risk is presumably limited by statute. TMA recently asked Texas Department of Insurance Commissioner José Montemayor to investigate complaints of excessive premiums and predatory underwriting. TDI will conduct a closed claims review over the next few months to evaluate the basis for the recent premium increases.

Physicians can’t afford further increasing premiums. It’s likely significant tort reform will be on the agenda again for the next legislative session and the Legislature may have to consider some kind of damage limitation model.

A special thanks to Kim Ross, TMA vice president for public policy, for assistance with this article.