Alarming rise in premiums highlighted in Medical Liability Monitor
The annual Medical Liability Monitor rate survey highlighted a rate increase, not seen in over a decade, and shed light on how the future of liability rates could begin sounding industry alarms.
The 2019 Medical Liability Monitor Annual Rate Survey, for the first time since 2006, found that more than 25 percent of medical professional liability (MPL) premium rates increased, while only five percent of rates went down. The overall rate increase year over year was approximately 0.8 percent.
The uptick led analysts to study whether or not the conditions exist for a repeat of the cost crisis that occurred in the mid-2000s, with annual rate increases averaging between 10 and 30 percent. Notably, rate increases for general surgery were found to be greater than the average increases.
Guest editors of the survey edition, Bill Burns and Alyssa Gittleman from the Insurance Research Department of the global investment management firm Conning, did a deeper dive into the results.
According to a press release issued by the Medical Liability Monitor, Gittleman and Burns “compared current market conditions to those which preceded the last hard market. They note similarities between the two in the MPL industry’s operating ratio, return on equity, declining loss reserve margins, use of schedule credits and declining competition, but also observe significant differences in policyholder surplus, exposures and ceded reinsurance.”
To learn more about the findings released in this year’s benchmark Medical Liability Monitor, click here.
Large liability verdicts hitting hospitals hard
While self-insured hospital liability claims remain stable as a whole, movement at the high end of judgments is impacting hospital costs – and could affect access to care.
An October report by Aon PLC and the American Society for Health Care Risk Management found the occurrence of hospital claims at the $2 million level to be flat. At the same time, claim severity and the cost of defending against a liability lawsuit is growing at two percent per year.
Most troubling to hospitals and patients was the finding that the frequency and average severity of losses greater than $5 million continue to increase.
The proportion of claims greater than $5 million settled in the 2015 to 2018 time period increased to almost two percent, the steepest increase since 2000.
“After an increasing number of large medical malpractice verdicts following years of premium decreases, all stakeholders in malpractice liability are under pressure,” the report said.
These findings result in a hard hit to hospitals with higher costs of insurance and the possibility that liability insurers could reduce capacity in health care systems served.
To read more about the recent report on hospital claim trends, click here.
California attorneys looking for loopholes to evade MICRA
An attempt by California personal injury lawyers to evade MICRA’s limits on noneconomic damages is one of many recent hybrid liability lawsuits undermining the state’s medical liability laws.
This hybrid approach uses the tactic of combining claims of professional negligence with medical battery. A recent ruling that resulted in a $9 million past and future noneconomic damage award did just that – skirting the existing $250,000 limits on “pain and suffering” damages.
The Litigation Center of the American Medical Association and State Medical Societies, together with the California Medical Association and others, has argued that the plaintiff’s claims were based on the same set of facts for a single act by a single surgeon—facts that align with MICRA’s definition of “professional negligence.”
“The result, when courts allow plaintiffs to characterize professional negligence as medical battery, is arbitrary decision-making by juries,” the AMA Litigation Center brief tells the court. “Juries occasionally are inflamed by the characterization of a surgical decision as ‘battery.’ Jury awards of noneconomic damages often have a punitive component. This case is an illustration.”
The plaintiff’s attorneys clearly stated their approach was designed to “send a message” instead of cover the damages suffered by the patient.
“The award is excessive, precisely because it was calculated to send a message,” said the AMA Litigation Center brief. “If the award had been calculated only to compensate [the patient] for his nonpecuniary loss, it would have been for far less.”
To read more about the ways in which personal injury attorneys are seeking new ways around longstanding liability laws, click here.