Missouri Department of Insurance Director Scott B. Lakin announced that he will hold a public hearing on Oct. 30 to examine why medical malpractice insurance rates for the state’s doctors are rising sharply despite market indicators to the contrary.
The latest annual medical malpractice report from the MDI, released yesterday, indicated that new claims against Missouri doctors dropped sharply in 2001, as did the percentage of premiums that insurers expect to pay to victims. “Nevertheless, many doctors are facing premiums that often have doubled, particularly for riskier specialties, if they can find coverage at all,” said the bulletin.
Lakin said that Governor Bob Holden had asked him to investigate the premium increases, “particularly when claims and relative losses are dropping.” The hearing is scheduled from 1 to 4 p.m. Oct. 30 in Room 492, Truman State Office Building, Jefferson City. Lakin is inviting insurers, physicians, plaintiffs’ attorneys and trade groups to testify on medical malpractice issues.
At the hearing the MDI staff will report on a comprehensive survey of insurers aimed at providing more information on the industry’s evaluation of the medical malpractice market and likely future trends.
Highlights from the MDI’s annual medical malpractice insurance report include the following:
– For 2001 claims against Missouri doctors, losses paid or incurred for future payments fell to 60.9 cents for each premium dollar, or the lowest level since 1995. Hospitals last year, however, experienced a spike in losses, with payouts reaching $1.60 for each dollar of premium – compared to 8.7 cents the year before. Such wide swings have been common in the hospital market, but hospitals have not experienced the sizable cost increases faced by doctors.
– Claims against doctors fell by a substantial 37 percent, from 907 to 569, last year. Claims against hospitals declined 4 percent – from 273 to 262.
– The number of companies writing coverage for doctors rose from 27 to 32 in 2001, which runs counter to the notion that the Missouri medical malpractice market is troubled. In the past month, medical malpractice insurance companies controlled by state doctors’ associations in Wisconsin and Minnesota – both of which have considerable financial capacity to expand in Missouri – have applied for licenses to do business here, and MDI is expediting their applications.
– The average payout on successful claims against doctors fell from $222,495 in 2000 to $202,358 last year. That amount plummeted for claims against hospitals, falling from $230,244 to $143,990. These figures – and most other findings on closed claims – related to incidents several years ago; the average successful medical malpractice claim continues to take almost four years to close with payment.
– Of 191 claims closed with payment against doctors in 2001, the cases of 145 persons – or 76 percent – involved permanent injury or death.
– Of claims closed against doctors in 2001, economic-damage awards averaged $118,441, or a drop of more than 8 percent from 129,195 the previous year. Missouri limited non-economic damages – often called “pain and suffering” awards – to a maximum of $540,000 by law in 2001, but the actual awards averaged $83,917. Non-economic damages actually fell by more than 10 percent from the average of $93,300 in 2000.
Missouri allows companies to calculate rates on a national basis. Therefore the MDI will also consider the loss experiences of companies writing med-mal coverage in the state nationwide. The bulletin acknowledged that the companies have experienced greater losses in other states.
It pointed out that “in states like New Mexico, Pennsylvania, Illinois, Ohio, Mississippi, Arkansas, Georgia, Oregon, Connecticut, Maine, Washington and others” insurers “paid or expect to pay out all the premiums they collected in 2001 for claims.” A complete listing also showed that in some states “projected claims payments far exceeded premiums.”
The announcement indicated that, “despite the brighter picture in Missouri, most leading insurers here for physicians and surgeons have filed major rate increases, more than doubling in one case, in the past two years.” It added, however, that, “The Insurance Services Office (ISO), which advises smaller companies on rate setting, has recommended reductions in rates for Missouri doctors four of the past five years, with no change in the remaining year.”
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