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August 2002
Volume 66 |
Number 8
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STATE BEAT
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| Medical Liability
Insurance: The Crisis Continues |
PS. Diane Turpin, J.D., Assistant Director
Office of Governmental Affairs (State)
It's déjá vu all over again and the medical liability
insurance crisis from the late 1950s, the late 1960s, the mid-1970s
and the mid-to-late 1980s has surfaced again, at least in some
parts of the country. According to the American Medical Association
(AMA), crisis situations are occurring in Florida, Mississippi,
Nevada, New Jersey, New York, Ohio, Oregon, Pennsylvania, Texas,
Washington and West Virginia. Other states such as Alabama, Arizona,
Illinois, North Carolina, South Carolina and Tennessee appear
to be on the brink. The states that appear to be avoiding problems
include California, Colorado, Hawaii, Indiana, Louisiana, New
Mexico and Wisconsin.
According to 2001 Jury Verdict Research data, jury awards in
medical liability cases increased 43 percent between 1999 and
2000 alone, from $700,000 to $1 million. The percentage of jury
awards exceeding $1 million increased from 34 percent in 1996
to 52 percent in 2000, with the average jury award at about $3.5
million. Medical liability insurance premiums are soaring at the
highest rate since the mid-1980s. According to data gathered by
AMA, some of the biggest insurers are raising rates in many states
by more than 30 percent. A 14-percent increase in 2000 was the
largest since 1994, and rates have continued to escalate.
Jury Verdict Research reports that the median verdict for Pennsylvania
medical liability cases between 1994 and 1999 was $650,000, compared
to California's $350,000. In California, with the passage of the
Medical Injury Compensation Reform Act (MICRA) in the mid-1970s,
physicians' liability premiums dropped to almost half that of
other states for general surgery, neurosurgery and obstetric services.
Pennsylvania Governor Mark Schweiker (R) signed legislation into
law to abolish joint and several liability for defendants that
are found liable for less than 60 percent of the dollar amount
of damages awarded to an injured plaintiff. Under the doctrine
of joint and several liability, if more than one defendant is
held liable for damages, the plaintiff can recover the full amount
of the damage award from any one of the defendants if the other
defendants are unable to pay. With the new law, each defendant
(found liable for less than 60 percent of the damages awarded)
will be responsible for paying only its proportionate share of
the total dollar amount awarded as damages. Pennsylvania joins
35 other states that have limited joint and several liability.
The law came at a time when five of the commercial carriers that
insure more than half the state's hospitals and health care systems
left the market or declined to renew malpractice insurance policies.
The law applies to causes of action that accrue after its effective
date.
In New Jersey, legislation is pending that would establish a
commission to determine whether liability insurance is sufficiently
available and affordable in the state. Meanwhile, New Jersey physicians,
joined by patients, have taken to the state capital to answer
that question. In New Jersey, the insurance market is shrinking,
and physicians are experiencing difficulties in obtaining and
maintaining coverage while rates are soaring. A new physician-supported
insurance company, MIIX Advantage Insurance Company, replaces
MIIX Insurance Company, which was placed into voluntary solvent
runoff. MIIX had announced in early May that it would not renew
policies in New Jersey and other states. PHICO insurance filed
for reorganization under bankruptcy laws in 2002, and both St.
Paul Companies, Inc., and Zurich North America exited the medical
malpractice market in New Jersey and nationwide.
Nevada ranks fifth among states with the highest physician liability
premiums, but 47th among states in the number of physicians for
its population, according to the American College of Obstetricians
and Gynecologists. Nevada physicians are seeking legislation similar
to California's MICRA. The Nevada Society of Anesthesiologists
issued a press release calling for the governor to hold a special
legislative session to address the crisis. Nevada anesthesiologists
are experiencing liability premium increases between 40 and 75
percent. In some cases, insurance companies are choosing not to
write new policies or are not renewing longtime existing policies.
Nevada Governor Kenny Guinn (R) has taken some action, limiting
recovery for pain and suffering to $250,000 and offering temporary
insurance coverage through the state-run insurance company. However,
the problems surrounding the availability and affordability of
insurance, exacerbated by a shortage of physicians practicing
in Nevada, require a more extensive response. The governor has
called a special legislative session to address the issue.
Legislation has been introduced in several states, but the bills
have yet to pass. For example, Mississippi failed to pass legislation
before the end of the legislative session but will convene a special
legislative session in the fall. Legislation addressing contingency
fee arrangements in Colorado failed to pass. Bills were introduced
in Arizona, California, Florida, Kentucky, Minnesota and New Jersey
without much attention. The Ohio Senate passed legislation that
would modify the joint and several liability rule so that defendants
found to be 50 percent or less at fault would be liable only for
their proportionate share of fault. Defendants more than 50 percent
at fault would continue to be held jointly and severally liable
but only for economic damages. The bill is currently pending in
the House.
Legislation is pending in the U.S. House of Representatives as
H.R. 4600, the "Help Efficient, Accessible, Low-cost, Timely
Healthcare (HEALTH) Act of 2002." The legislation would award
injured patients unlimited economic damages, up to $250,000 for
noneconomic damages, punitive damages of up to two times economic
damages or $250,000, whichever is greater; allocate damage awards
fairly and in proportion to a party's degree of fault and establish
a sliding-scale for attorneys' contingent fees. The major provisions
of HEALTH are based on California's MICRA. A companion bill has
yet to be introduced in the U.S. Senate.
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