Healthcare Town Hall

On Monday, we blogged about new analysis of a court decision to reverse medical malpractice damage caps in Illinois. Subsequent coverage offers more detail—and also some alternative perspectives.

First, perspective from AM Best’s, which gives the five-year view of Illinois tort reform:

The court found that portions of a 2005 statute that capped noneconomic damages at $500,000 against doctors and $1 million against hospitals violated the separation of powers between the Illinois General Assembly and the judiciary. The case, Lebron vs. Gottleib Memorial Hospital et al, was filed by Frances Lebron, the mother of baby Abigaile Lebron, who was born at Gottlieb with “numerous permanent injuries” allegedly sustained during a Caesarean procedure, the court noted. Lebron filed suit against the hospital and her medical team in 2006, and in 2007 the Cook County Circuit Court found the caps unconstitutional (BestWire, Nov. 13, 2007).

The Milliman study buttresses insurers’ argument that the cap is good for Illinois, said Jeffrey Junkas, a spokesman for the American Insurance Association. Moreover, the legislature is unlikely to act to rectify the ruling anytime soon, he said.

“There’s no appetite to address this issue again,” Junkas said. “We may have to get back to that crisis condition we had in ‘03 and ‘04.”

Without a cap from 1997 to 2005, Chicago physicians saw liability premiums jump an average of 10% to 12% a year. When the cap was reinstated in 2005, premiums for Chicago physicians stabilized and even began to shrink, according to the American Medical Association (BestWire, Feb. 4, 2010).

The top Illinois writers of medical professional liability coverage in 2008, according to BestLink, were: ISMIE Mutual Group, with 55.3% market share; APCapital Group, 5.2%; Berkshire Hathaway Insurance Group, 4.5%; American International Group, 3.8%; and ProAssurance Group, 3.2%. BestLink provides online access to A.M. Best’s Global Insurance & Banking Database.

Read more…

Medmal Chad Karls, Illinois, medical malpractice

Medical professional liability claims frequency has declined in recent years. But that may be changing. Here is an excerpt from a recent Best’s Week article:

Chad Karls, a principal and consulting actuary at Milliman who specializes in medical professional liability, said frequency in 2008 and 2009 is no longer falling and has even increased in some spots.

“That needs to be kept in perspective,” Karls said. “While it may be increasing, I don’t see it at the 2002-03 levels.”

Karls was referring to a tumultuous period for medical professional liability of nearly a decade ago. It arrived after the largest medical malpractice writer in the United States chose to forego the line and take a $900 million write-down. St. Paul Cos., which has since merged with Travelers, had written 9% of that sector’s direct premium in 2000 before pulling out, according to A.M. Best data.

What followed was a call for tort reform measures to mitigate jury awards and litigation costs, along with a heightened public awareness of the rising insurance costs that physicians faced. Karls said the medical community successfully framed that pushback effort as an access-to-care issue for patients at large.

Medmal Chad Karls, claims frequency, medical malpractice

Might new ideas find their way into a revised healthcare reform bill? The Wall Street Journal offers this perspective:

Malpractice is one area where Democrats could show more flexibility in any revamped legislation. Reducing unnecessary lawsuits is an area that resonates with voters, regardless of party affiliation, and Democratic leaders have already added some malpractice provisions into the current bills, though they remain largely symbolic.

Indeed, a number of innovative ideas could help improve the medical professional liability system in the United States. Find more details here.

Medmal Chad Karlsh, medical malpractice

What follows is excerpted from a recent healthcare reform briefing paper by Chad Karls, “Retooling Medical Professional Liability”: 

Clinical guidelines are not a new idea, but the idea of using them to shield doctors from malpractice lawsuits has gained some purchase of late. The idea is to establish a list of agreed-upon, evidence-based guidelines, which, if followed, would give physicians and other healthcare providers safe harbor from claims of malpractice. In addition, if physicians are in fact protected from medical negligence lawsuits provided they follow such guidelines, this could have an additional and significant benefit of reducing the level of defensive medicine that takes place.

Read more…

Evidence-based Requirements, Medmal, Reform Chad Karls, medical malpractice, Milliman Care Guidelines

The discussion over how to overhaul the medical professional liability environment continues to evolve, with the White House this week indicating it would consider some alternative to jury trials. The idea of medical or health courts is discussed in the recent paper by Chad Karls, Retooling Medical Professional Liability. Here is an excerpt.

The facts and testimony delivered at medical liability trials can become dense and arcane, difficult for lay juries to adequately evaluate. Some have proposed the establishment of special medical or health courts, which like family, bankruptcy, or landlord-tenant courts could be set up to hear only cases involving one type of legal conflict—in this case, medical liability claims.

Special medical liability courts could go a long way toward speeding up resolution and reducing the costs of adjudication and the idea is worth further discussion, but there are issues that would have to be addressed. Would cases be heard by special judges alone, or by a predetermined pool of experts in the medical specialty relevant to the claim? It seems unlikely that any one judge, even one with medical training, could be fully conversant with enough areas of medicine to deal with all of the complexities involved in different cases.

Regardless of whether claims are heard by medically trained judges alone or judges and expert juries of medical professionals, the plaintiffs’ bar is unlikely to agree to any system that appears to turn all of the decision-making power in the adjudication process over to the medical community. In February 2006, the House of Delegates of the American Bar Association passed a resolution specifically opposing the creation of health care tribunals.

See the full paper, including citations, here.

Medmal, Reform Chad Karls, medical malpractice

Based on a Milliman analysis of more than 30 years of medical professional liability (MPL) insurance industry data, as reported to state insurance departments in annual financial statements, the distribution of how premiums are spent in the current tort system of adjudicating claims breaks down as follows: 

• 27% is for the insurance industry’s claims management costs, which include:
  • 22% for defense counsel, expert witnesses, litigation, technology fees, and other court costs
  • 5% for insurance company oversight of claims
• 15% is spent on insurance company overhead and expenses (e.g., agent commissions, state premium taxes, etc.)
• 19% pays for the claimant’s (plaintiff’s) attorney
• That leaves 39% for final disbursement to the claimant when the entire adjudication process has finally reached its conclusion three and a half to five or more years after the original incident

See the new paper, “Retooling medical professional liability,” for more information.

Efficiency, Medmal Chad Karls, medical malpractice, waste

Like it or not, healthcare is an industry with various liabilities attached to it, some of which are unfunded or underfunded. While medical malpractice rates have been trending down, a soft market can raise concerns of irresponsible pricing on the part of insurers. Indeed, there are no holidays for liabilities.

Nor are tomorrow’s liabilities self-evident. Nano-technology has gotten a lot of attention as a possible enabler of future medical breakthroughs, but this reporter at least cautions about nano-technology as a source of liability (while citing Milliman research on asbestos as a way of putting things in perspective: an eventual $265 billion total price tag for asbestos certainly gets your attention).

Cautionary tales of nano-technology may or may not hold up to scrutiny–certainly there are a lot more immediate worries in healthcare–though hopefully we can learn enough from history to ward off future 12-figure product liabilities.

Cost, Liability asbestos, Chad Karls, medical malpractice, nano-technology, Richard Frese, Tony Bloemer