SOURCE: Hartford Business Journal
Medical-malpractice insurance payouts on behalf of Connecticut hospitals, physicians and other healthcare providers in 2018 hit their highest total since the state’s been tracking the data.
In all, malpractice insurers, including self-insurance entities like “captives,” paid out $262.6 million to patients alleging errors, misdiagnoses and other medical missteps.
That was a 33 percent, or $65.7 million, increase over 2017, and the total bested a prior record of $229.8 million in malpractice payouts set back in 2006, the year after the state began tracking and reporting the data.
The average payment also hit a record level in 2018 — $935,000 — after staying below $700,000 for the prior five years, according to the Connecticut Insurance Department, whose data includes legal settlements and judgments.
Some hospitals and doctors worry that the uptick could signal coming increases in their malpractice premiums.
That would fit with a broader trend, as premiums have been rising across the country in recent years, after more than a decade of stability, according to the Medical Liability Monitor, an Illinois-based news service that tracks malpractice issues.
Rising malpractice claims and liability insurance costs are significant because they increase healthcare costs for everyone, including individuals and employers.
Dr. Mary Cooper, vice president and chief quality officer at the Connecticut Hospital Association, said it’s tough to draw conclusions from one year’s worth of Connecticut malpractice data.
“I don’t know if this is a blip or if this is a trend,” Cooper said, noting that the number of malpractice claims that have resulted in payments has been trending downward in recent years.
Ken Ferrucci, senior vice president of government affairs for the Connecticut State Medical Society, which represents more than 7,000 doctors in the state, was less equivocal.
“When you see the average payment go up by more than $300,000 that’s why we’re probably going to start seeing increases in liability rates,” Ferrucci said.
Medical-malpractice insurers notified state insurance regulators of six rate increases in 2018, which is higher than normal in recent years.
The Medical Liability Monitor’s latest annual survey released earlier this month found that more than 25 percent of U.S. insurers increased rates for 2019, the highest percentage since 2006.
While malpractice-insurance prices have spiked during several crisis cycles between the 1970s and early 2000s, the last decade or so has been pretty stable for hospitals, doctors and other providers in Connecticut and across the country.
The Medical Liability Monitor survey identifies several culprits causing upward pressure on med-mal premiums: A higher frequency of high-severity, big-dollar claims and “a record number of large verdicts in excess of $10 million and $25 million.”
In Connecticut, it’s difficult to tell which hospitals or providers were responsible for the 2018 increase in malpractice-insurance payouts.
The Insurance Department, which reports annually on closed malpractice claims processed by insurers licensed to write business in the state, doesn’t disclose specific judgements or payouts by provider.
However, the report does make it clear that hospitals bear the largest malpractice burden, with insurers making $576 million in payments on their behalf between 2014 and 2018, more than half of the $1 billion in total payments for all care providers during that period.
Ultimately, those costs increase the price of health care.
A 2010 Harvard School of Public Health study pegged the national cost of medical malpractice — including attorney fees and providing potentially unneeded “defensive-medicine” procedures to avoid lawsuits — at nearly $56 billion a year, or 2.4 percent of overall U.S. healthcare spending.
That’s a lot of money, but less than certain other health cost drivers, such as prescription drugs, which made up 17 percent of healthcare expenditures in 2016.
Wethersfield ophthalmologist Dr. David Emmel has been a solo practitioner in Connecticut for three decades.
During the last 10 years, his malpractice premiums have been stable, which experts attribute to a competitive market, some tort reforms, heightened efforts by doctors and nurses to avoid medical errors, and a variety of other factors.
Experts say being in a buyer’s market has been good for medical providers, which in turn has been good for patients and taxpayers, since it means a lower cost of health care to some extent.
The relative stability Emmel has enjoyed changed this year, when he was hit with a 10-percent increase in malpractice-insurance premiums, even though he’s never been sued, he said.
He suspects he’s simply having to pay his share for rising malpractice payouts overall.
“We are beginning to see a trend upward,” Emmel said.
Emmel is active in the legislative committees of the state medical society and the Hartford County Medical Association, where he’s advocated for changes to Connecticut’s tort laws regarding malpractice.
The medical society and its allies secured a tort-reform victory in 2005, when lawmakers stipulated that plaintiffs suing a medical provider for malpractice would need a supporting opinion from a third-party doctor.
That law, credited for reducing the number of lawsuits in the years that followed, has also been criticized for discouraging some patients from pursuing their rightful claims. Providers continue to push lawmakers for more changes.
For example, Emmel and Ferrucci both back the creation of specialized courts for malpractice lawsuits, akin to a housing or divorce court. Ferrucci said the state should split malpractice proceedings, similar to criminal trials, into two parts — dividing up the decision of whether a defendant is guilty or not, and the decision of what the penalty will be.
With large jury verdicts becoming more common, Emmel said doctors worry about who might be seated on a jury.
What if a few anti-vaxxers — who insist, despite scientific consensus, that vaccines are dangerous — are seated on a medical-malpractice jury?
“They can react emotionally,” Emmel said. “One of the things we’re seeing that is worrisome to me is the loss of respect for science and scientific knowledge and experts.”
It’s all the more reason that doctors and their insurers often choose to settle lawsuits rather than fight them in years-long litigation.
Hartford HealthCare (HHC), which has seven hospitals and a vast footprint of outpatient facilities, has self-insured its medical-malpractice risks for about 25 years.
Though he wouldn’t detail specific annual costs, Dr. Rocco Orlando, HHC’s senior vice president and chief medical officer, said claims severity has been on the rise, mirroring the national trend.
Despite that, HHC has managed to keep its premiums level for the past three or four years, thanks to its efforts to reduce adverse events and the overall number of medical-malpractice payouts, he said.
A strong stock market has also helped ease premium pressures, as HHC’s captive insurance company has bolstered its reserves through investment income.
While it insures its own risks, HHC isn’t immune from trends in the broader market.
“When the trend spikes, our reinsurers will pressure us … for more money or changes to the policy that are unfavorable,” Orlando said.
Costs remain level for HHC, but Orlando said he’s watching the trend.
In the meantime, he said the health system has shifted its approach to malpractice claims by apologizing to aggrieved patients up front and keeping communication open, including a discussion about how similar mistakes can be avoided in the future.
Some research has found that such communication-resolution efforts can reduce lawsuits.
“When we make an error, and there is a poor outcome, we are fully prepared to recognize that,” Orlando said. “We’re prepared to have an early conversation about how we keep this from happening again.”