LEGISLATION; MALPRACTICE; MEDICAL MALPRACTICE INSURANCE;

INSURANCE - MALPRACTICE;

OLR Research Report


October 7, 2003

 

2003-R-0665

MEDICAL MALPRACTICE—CONNECTICUT AND CALIFORNIA

By: George Coppolo, Chief Attorney

LPRIC STUDY

• It is difficult to convey the magnitude of price changes in premiums because the data do not fully capture how many doctors are affected in particular specialties. For example, the highest rate quoted in 2003 in Connecticut for OB/GYN malpractice insurance is more than $ 120,000, but that company insures fewer than 20 OB/GYNs. On the other hand, one of the largest OB/GYN group practices in Connecticut, with about 150 doctors, has experienced a rate increase of about 73 percent – from about $ 55,000 per physician in 2002 to about $ 95,000 in 2003. In addition, the survey does not include doctors insured by captives or alternative providers. (We describe these on page 11 of this report).

PRI staff reviewed the MLM survey data and in combination with data available at the insurance department, despite its limitations, found the information provides an indication of the trend that has occurred in the traditional medical malpractice insurance market.

Figure V-1 presents the percentage increase in the base premium of the largest medical malpractice insurers in Connecticut for the years 1998 through 2003 for three specialties and provides a comparison to the consumer price index (CPI) and the index for medical costs (Med CPI). LPRIC noted in summary, the figure depicts that:

1. In five out of the seven years from 1993 through 1999, CMIC submitted either no increase or a decrease in the average rate. In 1994, the average increase was 6. 5 percent and in 1996, it was 5 percent.

This apparently large number of insurers is misleading and some qualifications are necessary. As discussed further below, the majority of providers comprise a very small percentage of total market share. In addition, some insurers have restrictive underwriting guidelines, including not offering coverage to new clients. As discussed earlier, several medical professions other than traditional (osteopathic) physicians are required to maintain malpractice insurance, such as chiropractors, naturopaths, podiatrists, and dental hygienists, and some insurers solely or primarily provide coverage to a particular specialty. Thus, the actual range of choices for any particular physician may be quite small. Currently, the Insurance Department states that five companies are actively writing malpractice insurance (that is accepting new clients) for physicians in Connecticut (Connecticut Medical Insurance Company, ProSelect, The Doctor’s Company, Medical Protective, and Truck Insurance).

Table I-1. Top Five Med Mal Insurance Companies and % Market Share in Connecticut

1992

%

1994

%

1996

%

1998

%

2000

%

2002

%

CMIC

37

CMIC

36

CMIC

34

CMIC

39

CMIC

34

CMIC

41

St. Paul

26

St. Paul

26

St. Paul

28

St. Paul

16

St. Paul

24

St. Paul

18

Cont. Cas.

25

Cont. Cas.

23

St. Paul

20

MIXX

10

Amer. Health

17

Docs Co

7

TIG

3

Cont. Ins

4

Cont. Ins.

2

Cont. Cas.

6

Truck

5

Med. Protect

6

Nat. Union

3

Nat. Union

2

Amer. Cont.

2

Truck

9

ProSelect

3

Exec. Risk

6

Top 5

93

 

91

 

87

 

71

 

75

 

79

In Connecticut, many hospitals have been using alternatives to traditional insurance for some years. According to the Connecticut Hospital Association (CHA), of the 31 acute care hospitals in Connecticut, 13 self-insure or are part of a risk retention group, 12 are part of a captive, and six maintain commercial insurance. In addition, 13 members of CHA are exploring the feasibility of creating or joining a captive.

LPRIC staff intends to explore the experience of medical-based captive and risk retention groups in the staff findings and recommendations report.

2003 LEGISLATIVE CHANGES

Caps on Noneconomic Damages

State

Damages Provisions

Colorado

H. B. 1007

Extends pre-existing $ 250,000 cap on noneconomic damages for medical malpractice to cases of physical impairment and disfigurement.

Florida

S. B. 2-D

Noneconomic damages for medical negligence capped at $ 500,000 for physicians and $ 750,000 for hospitals. In emergency room cases, the limit is $ 150,000 each. For nonemergencies, the cap is $ 500,000 for each physician, with an aggregate cap of $ 1 million for all claimants. For hospitals, HMOs, hospice providers, and other nonphysician providers, the cap is $ 750,000 per claimant, with $ 1. 5 million aggregate cap for all claimants. A cap may be raised in nonemergency situations to the equivalent aggregate amount for death, permanent vegetative state, or other catastrophic injury where a judge determines it would be unjust not to exceed the cap.

Idaho

H. B. 92

Caps noneconomic damages awards in civil cases at $ 250,000 (down from previous limit of $ 400,000), adjustable each year in accordance with rise or fall of state “average annual wage. ”

Ohio

S. 281

Noneconomic damages capped at $ 250,000 or 3 times economic loss to a maximum of $ 350,000/plaintiff or $ 500,000/occurrence; exceptions to noneconomic caps are permanent and substantial physical deformity, loss of limb or bodily function, permanent physical functional injury limiting activities of daily living; exceptions allow awards up to $ 500,000 plaintiff or $ 1,000,000/occurrence.

Oklahoma

S. B. 629

Noneconomic damages capped at $ 300,000 in cases involving pregnancy.

Texas

H. B. 4

Comprehensive tort reform legislation established a tree-tiered system for awarding noneconomic damages in medical malpractice cases. A $ 250,000 cap applies to all doctors involved in a case, with a $ 250,000 cap against any single institution and a $ 500,000 cap on all health-care institutions combined.

West Virginia

H. B. 2122

Maximum award for noneconomic loss of $ 250,000 per occurrence; $ 500,000 per occurrence for wrongful death, permanent and substantial deformity, loss of limb or bodily function; after January 1, 2004, will increase to account for inflation up to 50 percent, the maximum thereafter with be $ 1 million.

In addition to its cap on noneconomic damages (see Table 1), Florida’s comprehensive medical malpractice bill, contains a variety of other reform measures. These include:

New Hampshire

subsidizing these discounts and the longer-term phase-out of the state-administered excess coverage layer with funds from its Auto Catastrophic Loss Fund (“Auto CAT Fund”). This fund is financed from speeding tickets and other traffic violations. The total subsidy, over 10 years, is estimated at $ 400 million.

Nevada