T Nation

Malpractice and Insurance Premiums

Can anyone elaborate on correlation between the increasing amount of medical malpractice lawsuits and the rise in insurance premiums for both patient and physican? Just trying to gain some perspective.

[quote]jimmyjames66 wrote:
Can anyone elaborate on correlation between the increasing amount of medical malpractice lawsuits and the rise in insurance premiums for both patient and physican? Just trying to gain some perspective. [/quote]

Pretty simple really. Insurance is a cost of doing business. If cost goes up and profit must remain the same, price goes up. Loser pays would put an to ridiculous MP and other cases.

I also wonder why hospitals and doctors don’t make us sign a contract agreeing to arbitration. This would certainly reduce the cost of disagreements. I guess it is just easier to charge insurance companies more.

Doctors are assessed a “risk modifier” based on their area of practice, prior conduct, the jurisdiction in which they practice, and other factors. The risk modifier determines their premiums. OB-GYN’s for instance, have very high premiums, mostly because the statute of limitations for their particular patients don’t begin to run until the child reaches the age of majority - usually 18.

Psychologists, on the other hand, have lower premiums because it is exceedingly difficult to prove negligence and damages if the treatment was non-physical in nature. It is roughly the same system the auto insurers use to determine your premiums using your driving record, age, type of car, etc. The actuaries just use different factors.

If your doctor has a bad risk modifier, he or she will have a higher malpractice premium. This will, in turn, drive up the amount of costs they charge individuals. Ever had a Tylenol in the hospital? The one pill might have cost you more than an entire bottle of it at Walgreens. This is one of the things that drives up your health insurance premiums.

Arbitration is a good idea for simple issues. But, doctors do better in Court than in arbitration. In Court, the cases are usually very complicated and very difficult and expensive to prove. A decent expert can cost up to $750 per hour. A lot of malpractice claims “die on the vine” because they become too expensive for the Plaintiffs to prosecute to trial. Doctors won’t force patients to arbitration because they want to have the option of litigation.

Most states have an alternative dispute system (arbitration, mediation) set up if the parties want to use it because it disposes of cases where the outcome is obvious. Nebraska demands that a “medical review panel” takes a look at the case before it is ever filed in court. Kansas allows either party or the judge to submit the matter to arbitration on a motion once it is filed in Court. Iowa has no rules.

Court is also attractive for doctors because, in a lot of jurisdictions, there is a cap on damages. This means that even if a surgeon had a BAC of .25 when he or she operated on someone, and that surgeon completely fucks the surgery up and kills the patient, the damages are capped. If the jury gives the Plaintiff $20,000,000 that amount is reduced to whatever the cap is.

I hope this answers your question.