Weiss: Award Caps Don’t Stop Med Mal Hikes

NU Online News Service, June 2, 3:58 p.m. EDT? Caps on jury awards for non-economic damages in medical malpractice lawsuits do not slow the pace of increasing insurance rates, according to a white paper released by a rating firm.

Across the nation many state physician groups have asked legislators to enact non-economic damage limits, but Weiss Ratings Inc., Palm Beach Gardens, Fla., said its study found that while such caps slowed the payouts by insurance companies, it did not translate into smaller premiums for doctors.

Its findings were based on examining premiums paid by doctors in high-risk specialties and insurers’ claim-payout levels between 1991 and 2002, Weiss said.

Weiss’ paper pointed out that in 19 states that have implemented caps during this 12-year period, doctors saw a 48.2 percent jump in median premiums, from $20,414 in 1991 to $30,246 in 2002.

But in states without caps, the pace of increase during that time period was actually lower, as premiums jumped by 35.9 percent, from $22,118 to $30,056.

Additionally, among the 19 states with caps, only two of them, slightly more than 10 percent, experienced flat or falling medical malpractice premiums. But among states without caps, six states, or some 19 percent, experienced stable or declining trends, Weiss said.

Martin D. Weiss, chairman at Weiss, said tort reform has “failed to address” the problem of rising medical malpractice premiums, even as insurers have benefited from slowing growth in claims.

“The escalating medical malpractice crisis,” Mr. Weiss said, “will not be resolved until the industry and regulators address the other, apparently more powerful factors driving premiums higher.”

Weiss listed a number of other factors that are contributing to the rising insurance rates. They include the insurance business cycle, in which insurers are now tightening underwriting standards and raising premiums to catch up from the “soft” period through 1999.

The company also cited the under-reserving problem of medical malpractice insurers, prompting companies to continue to increase premiums; a decline in investment income; soaring overall medical costs; and a falling number of medical malpractice insurers, shrinking supplies of medical insurance and driving up costs.