By Debra Wood
Medical liability claims declined in 2007, and many insurers are offering lower rates, according to a report from the Florida Office of Insurance Regulation.
“We are seeing rates coming down fairly quickly,” said Matt Gracey, CEO of Danna-Gracey, an independent insurance agency in Delray Beach specializing in medical liability coverage. “The market is becoming more competitive and underwriting restrictions are loosening considerably.”
The average approved rate in the primary medical malpractice market for physicians and surgeons declined 8.6 percent, inclusive of those companies without rate changes. Some non-medical specialists, such as coverage for dentists and podiatrists, experienced an increase in rates.
Joshua Salman, chief operating officer of Healthcare Underwriters Group of Florida (HUG) in Dania, also noted a downward trend on rates, which he attributed to a softening market, with more competition.
The state report indicated the total medical malpractice insurance premiums for the state of Florida dropped in 2007 for the fourth consecutive year. The total gross medical malpractice insurance premium in Florida was $860 million in 2004; $850 million in 2005; $847 million in 2006 and $663 million last year. This represents a 21.7 percent decline in overall medical malpractice premiums.
“It’s across the state and across every specialty,” said Gracey, who expects the market will continue to become softer during the next two to three years. “We’re seeing a wholesale marking down of rates by almost every company out there.”
Despite the lower rates, Gracey reported only a trickle of formerly bare physicians signing up for coverage, theorizing that once that savings comes off their overhead, it’s hard for professionals to give it up. He said about 5,200 of Florida’s 32,000 to 34,000 practicing physicians opt to go without coverage.
Salman also has not seen a decline in the number of physicians going bare, even with lawyers now targeting bare doctors.
“I think they need coverage and wouldn’t practice without it,” said Stuart Grossman, a plaintiff attorney and partner at Grossman Roth in Miami, explaining that because injuries continue to occur, coverage is needed to avoid shifting the burden for future care to taxpayers.
Reviewing all claims closed from Jan. 1 to Dec. 31, 2007, the state found 3,553 claims closed in 2007, down from 3,811 in 2006. More than 46 percent of the 2007 injuries were sustained in hospital inpatient settings. The highest number of claims occurred in Miami-Dade (454), Broward (360) and Palm Beach (291) counties. Insurers paid $523 million in indemnities and $174 million in fees to defense counsel.
First Professionals Insurance Co. (FPIC) of Jacksonville continues to write the most policies, 23.9 percent of the market, followed by MAG Mutual Insurance at 11.6 percent. Not surprisingly, FPIC had the most closed claims, 592. Insurers profitability was down from 2006, according to the state report.
Salman said the $500,000 cap on noneconomic damages has helped to bring down claims, because lawyers are focusing on other cases, such as automobile or aviation injuries.
“The caps on non-economic damages in ’03 were a good thing and contributed greatly to the frequency of claims being down,” Gracey added.
But caps are not the only reason for declining claims. Gracey said other states without tort reform are experiencing fewer cases, indicating the doctors are practicing better and more defensive medicine.
“Medicine has gotten better, and technology has helped,” Salman agreed. He offered as an example that new equipment has decreased risks for anesthesiologists, making the specialty easier to insure.
HUG’s 2005 policy year claims history was so favorable, the reciprocal insurer returned $500,000 to its physician owners. HUG is the 11th largest medical liability insurer in the state, with $10.3 million in direct premiums written. Salman attributes the results to HUG’s selectivity in the doctors it will insure and the training it provides about risk management and patient safety.
While claims are down, severity remains high. Deaths represent 30 percent of all 2007 closed claims, 1,044 out of 3,553.
“The severity is actually up, and what that means is better cases are being filed,” Gracey said. “We are not seeing the enormous amount of frivolous cases that clogged the system. We still see some, and there are too many but not as many as there used to be. So we’re not seeing a tremendous amount of lawyers’ fees being paid on frivolous cases.”
Grossman said his firm always has been selective in the cases it took, but he suspects the decline in claims is related to a decrease in cases that had no business being brought. “With the additional steps you go through and the cost of doing business, deposing and retaining experts, you want to make sure the case has merit and significant damages,” Grossman said. “With the pre-suit methodology and sworn statements, it’s almost like two suits in one.”