Texas Med-Mal Insurer Cuts Rates Again

The largest Texas medical liability insurer said civil litigation reform measures enacted since 2003 will allow the company to put through a fifth-successive rate cut.

Physicians' carrier Texas Medical Liability Trust (TMLT) said effective tort reform has reduced claims intake and associated legal expenses, allowing its board to approve a 6.5 percent rate reduction for all medical specialties and classes, effective Jan. 1, 2008.

Policyholders will also see an “unprecedented” third-straight dividend, which the board has approved, the company said.

Improved earnings have strengthened TMLT's financial position, making these rate reductions and dividends possible, the carrier explained. The Austin, Texas-based company noted that it was making its announcement on the anniversary of lawsuit reform.

All current TMLT policyholders renewing their policies in 2008 will receive a dividend equal to 22 percent of their expiring premium. The total dividend declared is approximately $35 million. The dividend will be applied at policy renewal.

TMLT said it has reduced rates five-consecutive years since the passage of House Bill 4 and Proposition 12 in 2003: 12 percent in 2004; 5 percent in 2005; 5 percent in 2006; 7.5 percent in 2007; and 6.5 percent in 2008.

The net effect of these cumulative rate reductions, TMLT said, amounts to a 31 percent reduction from 2003 rates and approximately $200 million of premium savings.

By the end of 2008, renewing TMLT policyholders will have received dividends in the past three years amounting to approximately $75 million.

Since the passage of Proposition 12 and medical liability reform of 2003, TMLT policyholders will have realized cumulative savings of approximately $275 million from rate reductions and dividends, the company reported.

The insurer cautioned, however, that there is no guarantee an ever-changing business climate will ensure future rate reductions or dividend.

TMLT said it continues to work diligently to protect 2003 tort reforms in an effort to keep premiums as low as possible. Rate changes and dividend considerations are determined annually by the TMLT board, executive management and financial consultants to the Trust.

Proposition 12 implemented the major reforms of House Bill 4, which became law on June 11, 2004, but was challenged in court by trial attorneys.

The reforms included a cap on non-economic damages for pain and suffering of $750,000 (($250,000 for physicians, $250,000 for the first hospital or health care facility, and $250,000 for any additional facilities).

It also allowed for periodic payments for awards greater than $100,000, protections for emergency room care providers and instituted expert witness reforms aimed at curbing frivolous suits.