American doctors appear to face two seemingly conflicting trends.
On the one hand, the frequency of medical liability lawsuits is declining. On the other, liability insurance premiums are rising, a troubling sign, especially for many smaller practices throughout New England.
However, the real factor driving the rise in liability premiums is not the frequency of the lawsuits, but rather increasingly high jury awards. As these trends continue, the results will certainly be felt by Connecticut residents and critical medical systems, eroding access to healthcare as the unpredictability of high-cost litigation puts independent practices at risk.
The American Medical Association has found that, since 2019, medical liability premiums have been steadily rising at rates not seen since the early 2000s. Last year, nearly 40% of doctors and medical practices reported premium increases, compared to 13.7% in 2018.
This trend is particularly pronounced in fields such as obstetrics/gynecology and general surgery, practice areas that already face higher-than-average premiums.
Many were puzzled by this report, as it was released alongside a second AMA report that found that medical liability lawsuits were declining in frequency.
In 2024, the AMA found that 1.8% of physicians were sued in the previous year, a slight decrease from the 2.3% of physicians sued in 2016. Furthermore, in 2024, 28.7% of American physicians reported having been sued at least once, compared to 34% in 2016.
Some fields of medicine are at greater risk than others. Obstetrics, which is generally viewed as a field of greater risk of medical malpractice lawsuits, incurs among the highest insurance premiums, and 60% of OBGYNs report having been sued at least once.
Although malpractice claims have declined, medical liability premiums have risen. The reason is not the number of lawsuits, but the growing size of malpractice verdicts.
Jury awards in medical malpractice cases have been rising steadily. The Doctors Co., a California-based medical malpractice coverage firm, reported an astounding 67% increase in medical malpractice jury verdicts over $10 million between 2013 and 2023.
The rise in runaway verdicts can itself be attributed to various factors, including inflation and evolving jury perspectives. However, as jury awards have become oversized, defendants have shown little appetite to try and fight this trend through the appellate process at further expense and risk.
Rather, there is a growing reluctance to even try cases, with many providers and their insurers preferring to settle instead of risking an excessive verdict at the expense of protracted litigation.
This has led to a somewhat circular problem. As reluctance grows to try even winnable cases under the threat of massive jury awards, defensible cases are increasingly settled at greater expense, while nuclear verdicts continue to drive up settlement costs.
Insurers have little choice but to respond to this volatile legal cost environment with rates reflective of the added risk.
These issues will have significant downstream effects on the nation and the state of Connecticut. Small, independent medical practices will be forced to either close their doors for good or join a larger hospital system as insurance becomes more unaffordable.
Continued consolidation of the marketplace could be a cause of concern in some corners of the Nutmeg State, reducing patient access to care.
Earlier this year, Access Health CT, the state’s official health insurance marketplace, reported that about one in every 11 Connecticut neighborhoods is both a food and medical desert, where a “lack of medical facilities … undermine[s] healthy choices and health outcomes.”
This healthcare consolidation may also worsen the insurance outlook. Concentrating all the risk with one or a handful of community-based facilities simply means that fewer hospitals will have to absorb premiums for numerous practitioners under their umbrella. The more these practices are stretched, the more risk there is to worry about, potentially pulling focus from meeting the highest standard of patient care.
Tort reform has long been dead on arrival in Hartford and many other state capitals, but unless these compounding issues are addressed, the hardening insurance market will continue to add stress to our medical system until finally reaching a tipping point.