The consulting and actuarial firm, Milliman, reports that the Illinois Supreme Court’s overturn of caps on non-economic damages in medical liability cases will increase claim costs in that state. It’s thought that higher insurance premiums may result as well.
State insurance regulators, however, are urging insurers to maintain the status quo and not abandon recent improvements in the medical malpractice line of insurance. The Illinois Department of Insurance said there has been increased competition and a 10 percent decrease in premium paid in the line since reforms were enacted in 2005.
The state Supreme Court in early February ruled unconstitutional the 2005 Illinois law that limited awards for a plaintiff’s pain and suffering to $500,000 against doctors and $1 million against hospitals.
Milliman expects the change in the tort law to cause indemnity claim severities to increase by approximately 23 percent and the average cost that insurers expend defending claims to increase by 10 percent, relative to what these costs would have been had the cap held.
The impact of the court decision on medical professional liability rates is not as clear. Insurer groups have said the decision will add to rising health care costs and stymie the economic climate in the state.
The Illinois Department of Insurance pointed out that the state Supreme Court in its Feb. 4 ruling emphasized that because the 2005 Reform Laws “are deemed invalid solely on inseverability grounds, the legislature remains free to reenact any provisions it deems appropriate.”
The 2005 Reform Laws imposed changes to the Illinois Insurance Code that improved insurer reporting and transparency requirements and enhanced the department’s rate oversight authority.
The department reported that premium paid to medical malpractice insurers in the state declined from $606,355,892 in 2005 to $541,278,548 in 2008. In addition, the number of companies offering insurance coverage to physicians and surgeons increased to 19 in 2008, up from 14 in 2005.
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