Florida Malpractice Insurance Rates Down 4 Years after Limits

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Four years ago, many Florida doctors threatened to quit their practices because their malpractice insurance premiums were spiraling out of control.

Some doctors retired early, some moved out of state. A few briefly walked off the job. Others dropped their insurance and hoped for the best.

“The rates were going up just really huge, by leaps and bounds,” said Dr. Mark Weintraub, a Bradenton urologist. “If things kept raising as they were, would I have been forced to leave? If it kept going up as fast as it did, and rates were double or triple, maybe I would have.”

After a contentious fight between doctors and lawyers groups, the Legislature responded by limiting the amounts malpractice victims can win in lawsuits – about $500,000 per doctor in most cases. Voters changed the state constitution to cap how much victims lawyers can get paid in contingency fees: 30 percent of the first $250,000 won (that’s a maximum of $75,000) and 10 percent above that.

And while some contend that unfairly penalized victims and made it more difficult for them to find attorneys, the measures seem to have helped stabilize and even reduce the malpractice premiums paid by the state’s doctors. Rates dropped 3 percent on average last year, the state Office of Insurance Regulation reported.

And the measures appear to have helped decrease insurers’ losses, which have fallen from more than $700 million statewide in 2003 to just over $300 million last year, according to the National Association of Insurance Commissioners.

In a report in August, Florida’s Office of Insurance Regulation noted the dropping losses and concluded that award caps are at least part of the reason.

“This report shows that the Florida Legislature’s efforts to control these costs have been effective,” said Insurance Commissioner Kevin McCarty.

But many doctors say their rates haven’t really dropped that much. An 8 percent decrease, when rates doubled over a couple years in the early 2000s, is barely noticeable, many say.

The Florida Medical Association is pushing for even larger drops.

“The rates have gone down a little bit,” said Jeff Scott, the association’s director of government affairs. But they’re still among the highest in the nation, he argues.

“We need massive decreases,” Scott said. “It’s still a problem as far as affordability.”

Lawyers who represent malpractice victims also question whether doctors really have gotten much relief.

“The insurance companies have been making minimal decreases, and most of what you’re seeing is part of the typical insurance cycle,” said Debra Henley, deputy executive director of the trial bar group the Florida Justice Association. “The insurance companies are the only winners. The patients have had significant restrictions on their rights; the doctors haven’t seen the savings.”

But some have. Doctors covered by First Professionals Insurance Corp., the state’s largest malpractice insurer, saw their rates go down about 8 percent last year. In some riskier specialties, such as anesthesiology and pediatrics, the reduction was nearly 20 percent. The company is now asking regulators for another reduction, more than 10 percent for most physicians.

That can be significant on policies that can cost tens of thousands of dollars a year. Some specialists, such as obstetricians, can pay well over $100,000 a year depending on where they work.

The company, which insures about 13,000 Florida doctors, says there’s a simple reason: it’s paying fewer claims. Last year, FPIC had 1,641 liability claims or incidents, down 13 percent from the year before and down 25 percent from 2004.

“We’re certainly headed in the right direction,” said Angie Nykamp, First Professional’s vice president of marketing. “If the claims trends continue we certainly hope this won’t be the last rate decrease that we file.”

Some experts say it takes years for medical malpractice cases to get to trial, so it’s too early to conclude that the reduction in claims is due to the damage caps.

Lawyers who represent malpractice victims argue, however, that the caps are contributing to fewer claims, but as part of a bigger pattern. They say claims have been going down for years also because of increasing barriers to trying malpractice cases, including more difficult rules on expert witness testimony and onerous pre-suit requirements.

First Professionals President Bob White said the cap on attorneys fees allowed his company to reduce rates. Many lawyers dispute that, though, and say they don’t reject cases just because of fee limits.

Industry observers say it’s not really clear. Jay Wolfson, a University of South Florida professor of public health and medicine, said there isn’t enough data.

Complicating the issue further is that other states’ malpractice rates have also gone down, although many states have also made it harder for plaintiffs to win malpractice lawsuits.

A national report released in May by the insurance credit rating organization A.M Best found that malpractice insurers nationally in 2006 had their best year since the mid-1990s. The report also said that the frequency of claims in several states, including Florida, has gone down, seemingly because of lawsuit rules changes, while the severity of claims has continued to rise.