Four years ago the Florida Legislature capped certain types of pain and suffering damages in medical malpractice suits, yet Florida doctors still pay the highest malpractice insurance rates in the country. Now, the high premiums for doctors mean ultimatums given to patients – sign away rights to sue over possible medical mistakes or maybe give up your doctor.
Gov. Charlie Crist has asked the Office of Insurance Regulation Commissioner Kevin McCarty to recommend the next course of action. “If in fact the rates are shown not to go down, even though we have a (lawsuit damages) cap, it has to make you wonder what’s going on,” Crist said recently. “That was the whole point and purpose, as I understood it.”
In 2003, insurance rates for doctors and claim numbers had skyrocketed and driven all but four malpractice insurers out of the state. Doctors were dropping their policies or eliminating high-risk procedures. Thousands of doctors marched on Tallahassee, demanding relief and some in Tampa Bay protested by delaying surgeries.
The Legislature met in three contentious special sessions before agreeing on a $500,000 cap, reasoning that cap would reduce malpractice claims and thus insurance rates.
As predicted, malpractice claims have gone down. Payouts on claims and legal expenses dropped in Florida about 43 percent between 2003 and 2005, the most recent data available. In 2003, Florida companies paid over $989-million and by 2005 that figure was $557-million, according to National Association of Insurance Commissioners records.
Yet, malpractice premiums haven’t reflected the reduced risk. The 2003 legislative reforms required malpractice premiums be cut by 8 percent, but with rate hikes already in the pipeline the legislation did little more than slow the pace of rising rates.
In the meantime, some of the state’s largest malpractice insurers are profiting on the difference between current premium rates and the lower claims. FPIC Insurance Group Inc., the publicly traded parent of Florida’s largest malpractice insurer, reported a 47 percent increase in profits in 2006 compared to 2005, according to federal filings. Its subsidiary, First Professionals Insurance Co., insures more than a third of Florida doctors, hospitals and clinics, according to the state.
There are several explanations as to why premiums haven’t come down, but one offered by consumer advocates is the lack of competition. In fact, 78 percent of all Florida’s doctors, hospitals and clinics were insured by five companies in 2005, according to state market share report. The Florida Medical Association, the lobbying group that represents doctors, has been strikingly silent on the lack of reduction. It has a business relationship with First Professionals, offering minor discounts in coverage to its members.
In spite of the result obtained in Florida, the same ill-proved logic is being argued in Hawaii. The 1,300-member Hawaii Medical Association is lobbying for a bill that would cap the noneconomic damages in a malpractice suit at $500,000. Currently there is no cap on noneconomic damages. A House bill has passed the health and consumer protection committees and is scheduled for a final hearing today in the House Judiciary Committee. It is the last committee the bill must pass before it can cross over to the Senate.
The threat of malpractice suits and rising insurance premiums is just part of the reason doctors say they are closing their Hawaii practices, particularly in rural areas. For years, they have complained about decreasing reimbursements from government and private insurance carriers as well as increased pressures of the job.
While not all doctors pay high malpractice insurance premiums, rates for specialists such as general surgeons, neurosurgeons, orthopedics and obstetrician-gynecologists have increased by 58 percent in Hawaii since 2001 to an average $52,604 last year, according to the Medical Insurance Exchange of California, Hawaii’s largest malpractice carrier covering 1,100 local doctors.
While the amount paid out for malpractice suits has risen in recent years, the number of malpractice claims has steadily dropped since 2001, when 173 claims were filed, compared to 115 claims filed last year, according to a report by the Medical Claims Conciliation Panel, a third-party panel created by the state in 1976 to screen out frivolous lawsuits.
Colorado was one of the first states in which tort reform arguments gained support in the state legislature. Caps on medical malpractice damages were put in place as early as 1986, and amended as recently as 2005. Currently, the Health Care Availability Act places a $300,000 cap on non-economic damages, which includes damages for physical impairment or disfigurement. The Colorado statute also provides that “the total amount recoverable for all damages for a course of care for all defendants in any civil action for damages in tort brought against a health care professional, as defined in §13-64-202, or a health care institution, as defined in §13-64-202, or as a result of binding arbitration, whether past damages, future damages, or a combination of both, shall not exceed one million dollars…” The limitations placed on Colorado victims of medical mistakes make the Florida and Hawaii caps look a little less onerous.