[NPInfo] A risk management/claims study on NPs - so called Tort Reform re Medical Negligence claims - CA MICRA of 1975 has done little except to enrich insurers

[Stephanie Walker]

Why are you citing data from 15-20 years (and it some cases 30) years  
ago? It has no relevance for today.

New York does not have any tort reform law on the books, in the  
contemporary sense, which is usually a ceiling on non-economic  
damages of $250,000. The "restrictions" referred to in the case of NY  
(your 4th paragraph below) amount to a decrease in the statute of  
limitations for medical malpractice lawsuits from 2-1/2 to 2 years (a  
law which was passed in either 1976 or 1977--a whole different era).

In fact, there is a recent study which is available somewhere on a NY  
state website--don't ask me where--in which 2 health economists from  
George Mason University examined average jury awards and compared  
them to average malpractice premiums over a lengthy time period. They  
found that big increases in jury awards always preceded big increases  
in malpractice premiums. Malpractice premiums never increased unless  
there was a significant increase in payouts by insurance companies in  
the period just prior.

So the statistics you read come to different conclusions, depending  
on their source. Trial attorney groups always try to prove that  
insurance companies are at fault, because it takes the attention away  
from the runaway jury awards (and the higher the jury award, the more  
money the trial attorney makes). Not to mention all the settlements,  
which far outnumber the jury awards, since only a small percentage of  
cases go to trial.

Stephanie Walker, FNP

On Oct 1, 2007, at 12:27 AM, np at c-zone.net wrote:

> MICRA did not lower insurance premiums in California During the  
> insurance
> crisis of the 1980s, California's 1975 law restricting the right of
> injured patients to sue doctors, hospitals and HMOs for medical  
> mistakes
> and negligence was touted by the insurance industry and medical  
> industry
> as a model "tort reform" for the nation. Doctors were told that the
> skyrocketing premiums they must pay to purchase malpractice insurance
> coverage would be reduced if MICRA-type laws were enacted.
>
> Studies conducted during and after the 1980s "crisis" told a different
> story. The U.S. General Accounting Office, published a study of six  
> states
> that had enacted many different forms of tort law restrictions  
> during the
> "crisis" of the mid-1970s, including caps on compensation. The GAO  
> report
> showed that the price of medical malpractice liability insurance in
> California had increased dramatically since the passage of MICRA.  
> In fact,
> "premiums for physicians increased from 16 to 337 percent in southern
> California ... between 1980 and 1986." 1 The GAO study concluded:
>
> While it is not possible to assess the extent to which the act  
> [MICRA] has
> had an impact on the state's malpractice situation, our analysis of  
> key
> indicators indicated that the problem is continuing to worsen in
> California. 2
>
> According to the GAO, four states (Arkansas, Florida, New York and  
> North
> Carolina) reported that the restrictions had had "little effect" on
> insurance premiums. 3
>
> A later, comprehensive review of insurance industry data spanning the
> period from 1976, when MICRA took effect, through 1991,  
> demonstrated that
> its restrictions did nothing to ease the cost of malpractice insurance
> premiums. The average malpractice premium per California physician was
> higher than the national average in most years after MICRA's  
> passage. The
> total cost of malpractice liability insurance premiums paid as a
> percentage of total health care costs was higher in California than  
> in the
> nation. Moreover, the price of malpractice coverage increased in
> California after the passage of the law. Premiums grew 191 percent  
> through
> 1988, when they began to fall, dropping 20 percent by 1991. The same
> pattern emerged in the nation: premiums grew 331 percent through 1989,
> then fell 5 percent by 1991. 4
>
> That study concluded that MICRA was not responsible for the  
> reversal in
> premium growth; tougher insurance regulation imposed in California  
> in 1988
> -- Proposition 103 -- probably accounted for the greater reduction in
> premiums witnessed in recent years. 5 But insurers still charged  
> too much
> for malpractice liability insurance in California, according to the
> report; MICRA's chief effect was to enrich the insurance industry. 6
>
> Higher profits for insurers, fewer rights for malpractice victims:
>
> Investigations of the insurance industry's financial operations  
> confirm
> that insurers took advantage of the crises they concocted to engage in
> profiteering. According to the National Insurance Consumer  
> Organization
> (NICO), medical malpractice insurers earned a 12.6 percent return  
> on net
> worth in 1987, when their complaints about the litigation explosion  
> were
> at a fever pitch. 7 This rate of return is twice that of most other
> industries. Moreover, between 1975 and 1984, the entire property/ 
> casualty
> insurance industry made a record-breaking profit of $75 billion,  
> yet, due
> to preferential treatment under federal tax laws, paid no federal  
> income
> tax, according to the U.S. General Accounting Office. 8
>
> In 1991, insurers writing medical malpractice insurance in the United
> States earned a return of $1.4 billion, or 15.9 percent of net  
> worth. But
> this immodest figure still underestimates the insurers'  
> profitability. It
> reflects the industry's decision to retain much more capital than is
> necessary or reasonable to cover the risks they underwrite,  
> according to
> NICO. Had insurers not retained so much previous profit, the return  
> on net
> worth for America's medical malpractice insurers would have been even
> higher -- 29.2 percent. This is an excessively high rate of return,  
> one
> that is more than double the profit required to reward the risk of
> underwriting this insurance. 9
>
> The 1993 study of medical malpractice insurance in California  
> showed that
> MICRA had done little more than enrich California malpractice insurers
> with excessive profits, at the expense of malpractice victims. One  
> measure
> of the insurers' greed is revealed by their "loss ratios," which is  
> the
> amount estimated to be paid for malpractice claims, shown as a  
> percentage
> of premiums sold. Carriers which sell medical malpractice policies in
> California had an average loss ratio of 36 percent in 1990 -- an
> astounding figure for an industry which usually relies on investment
> income, rather than underwriting, for most of its profits. 10
>
> Put another way, malpractice insurance companies operating in  
> California
> paid out only 36 cents for every one dollar in premiums they took  
> in from
> physicians, hospitals and other health facilities. 11 The industry's
> legendary inefficiency and bloated bureaucracy, along with excessive
> profits, soak up 64 percent of premiums. And nationally, malpractice
> insurance companies' profits are even more excessive. 12
>
> Given the insurance industry's role in the "insurance crisis" of the
> 1970s, its behavior in the mid-1980s was predictable, and should have
> elicited a stringent response from law enforcement, insurance  
> regulators
> and elected officials. But few paid attention to the conclusions of  
> those
> investigators who took the time to sift through the evidence of the  
> chaos
> that swept the insurance marketplace in the mid-1980s. A 1986 report
> prepared by six state attorneys general concluded:
>
> The facts do not bear out the allegations of an 'explosion' in  
> litigation
> or in claim size, nor do they bear out the allegations of a financial
> disaster suffered by property/casualty insurers today. They finally  
> do not
> support any correlation between the current crisis in availability and
> affordability of insurance and such a litigation 'explosion.'  
> Instead, the
> available data indicate that the causes of, and therefore the  
> solutions
> to, the current crisis lie with the insurance industry itself. 13
>
> By early 1987, most of the states in the nation had enacted laws  
> limiting
> the rights of injured consumers, premiums had stabilized at sharply  
> higher
> levels, and the insurers' profits were skyrocketing. The "crisis"  
> was over
> -- for everyone except the victims.
>
> ------------------------
> Footnotes
> U.S. General Accounting Office, Medical Malpractice: Six State Case
> Studies Show Claims and Insurance Costs Still Rise Despite Reforms
> (Washington, D.C.: U.S. Government Printing Office, 1986), p. 25.
> Ibid., p. 26.
> Ibid., pp. 2-3.
> Harvey Rosenfield, California's MICRA: Profile of A Failed  
> Experiment in
> Tort Law Restrictions (Los Angeles, Ca. June 1993), pp. 11-16.
> Ibid., pp. ii - iii.
> Ibid. p. 15-16.
> National Insurance Consumer Organization, Medical Malpractice  
> Insurance:
> 1985-1991 Calendar Year Experience (Alexandria, Va.: National  
> Insurance
> Consumer Organization, March, 1993), Exhibit 3, Sheet 1.
> Statement of William J. Anderson, Director, General Government  
> Division,
> U.S. General Accounting Office, on "Profitability of the Property/ 
> Casualty
> Insurance Industry," before the Subcommittee on Oversight,  
> Committee on
> Ways and Means, U.S. House of Representatives, March 13, 1986, p. 4.
> National Insurance Consumer Organization, Medical Malpractice  
> Insurance:
> 1985-1991 Calendar Year Experience (Alexandria, Va.: National  
> Insurance
> Consumer Organization, March 1993), pp. 8-9.
> Harvey Rosenfield, California's MICRA: Profile of A Failed  
> Experiment in
> Tort Law Restrictions (Los Angeles, Ca.: Voter Revolt, June 1993),  
> p. 15.
> (See note 112 for instructions on how to obtain a copy of the report).
> Ibid. Note that 1991's unusually low losses allowed California  
> malpractice
> insurers to achieve a nine percent loss ratio. Ibid., p. 15,  
> footnote 25.
> Ibid., pp. 13 - 16.
> Francis X. Bellotti, Attorney General of Massachusetts, et al.,  
> Analysis
> of The Causes of The Current Crisis of Unavailability and  
> Unaffordability
> of Liability Insurance (Ad Hoc Insurance Committee of the National
> Association of Attorneys General, May 1986), p. 45. For a  
> comprehensive
> critique of the "litigation crisis" by consumer advocate Ralph  
> Nader read,
> "The Corporate Drive to Restrict Their Victims' Rights," Gonzaga Law
> Review, Vol. 22, No. 1 (1986-1987), p. 15.
> "Insuring Health Clinics," Modesto Bee, February 19, 1987, p. A16.
>
> From: Harvey Rosenfield, Silent Violence, Silent Death: The Hidden
> Epidemic of Medical Malpractice (Essential Books, 1994).
>
> Copyright ©2007 American Medical Student Association
> (800) 767-2266 • amsa at amsa.org
>
>
>> Very interesting risk managment/claims study on NPs.  (January 1,  
>> 1994
>> and
>> December 31, 2004).  Even shows claims made to CNA/NSO by state.    
>> Not
>> surprising, as mentioned on this listserv, Florida tops them all.
>>
>> Go to site and click on Nurse Practitioner Claims Study.
>> _http://www.cna.com/eportal/site/cna/ 
>> menuitem.d90f185a736d7daf63fa2a66a86631a0
>> /?vgnextoid=9f22fe4db7c19010VgnVCM1000005566130aRCRD_
>> (http://www.cna.com/eportal/site/cna/ 
>> menuitem.d90f185a736d7daf63fa2a66a86631a0/?vgnextoid=9f22fe4db7c1
>> 9010VgnVCM1000005566130aRCRD)
>>
>> Greta
>
>
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