According to one of Floridas leading medical malpractice insurance experts, the malpractice crisis of the early part of this decade has abated considerably and the climate in 2008 is more positive for physicians and the medical liability insurance marketplace.
Matt Gracey, CEO of Danna-Gracey, says that the tide has finally turned on malpractice insurance rates, due in part to the decreased frequency of claims against physicians.
“There has been a dramatic drop in claims filed; in fact, they are at a 30-year low in Florida,” says Gracey. “While some in the industry attribute this to tort reform, I believe that there are many factors. The reality is that we dont know for certain why this is happening; its an industry conundrum. Tort reform doesnt explain the drop in claim frequency because claims are down even in states that havent had tort reform. I think the practice of defensive medicine has had the biggest impact. Defensive medicine works.”
Gracey explains that defensive medicine means that doctors are taking measures to limit their risk of liability and placing greater emphasis on risk management and patient safety. They may feel a need at times to order additional tests, consultations and referrals, in order to be better able to defend their management of a patients care, should a claim be filed against them.
Additional strategies that physicians are employing include reducing or dropping on-call responsibility; limiting or eliminating the care of complex patients with high-risk conditions; dropping mandatory emergency cases; and referring high-risk patients to hospitals that have sovereign immunity. Such strategies clearly help doctors avoid lawsuits and this has been of paramount importance in Florida, where doctors were paying some of the highest rates in the nation until recently. The malpractice crisis of the early 2000s made it difficult for physicians to afford, and in some cases, even find malpractice insurance coverage. Premium rates skyrocketed, lawsuits proliferated and juries awarded enormous sums to plaintiffs as the system seemed to balloon out of control. Some physicians were forced to restrict or even close their practices, relocate to other states or transfer to a lower risk medical specialty.
Fortunately, Gracey says, the drop in claim frequency means that malpractice insurance premium rates have finally fallen and underwriting guidelines have loosened. “In Florida, we are now into the third consecutive year of falling rates and are seeing increased competition in the malpractice insurance marketplace. With this free flow of competition, doctors and facilities are getting multiple bids and the climate is excellent.”
Sorting through the many offers of coverage is a new challenge and Gracey has a warning for physicians as they explore their options. “There are many small companies that have started up in this marketplace, offering lower rates than the older, established companies. But a claim may take 6 or 7 years to work its way through the legal system and these open cases will eventually come home to roost. A small company may look good initially but could run out of resources fairly quickly, and will have to raise rates to cover those claims. Reinsurance may be unaffordable. My advice to physicians is to beware the fragility of new, small companies; be careful of promises and ask the hard questions about the financial health of the company.”
For other professionals, the malpractice marketplace follows the market for physicians and hospitals. One notable exception is the advanced practice nurse who works with a “bare” physician one who has elected to forego malpractice insurance altogether. “In Florida, 15% of doctors have gone bare, and of those, 70% are in South Florida,” says Gracey. “They believe that going bare makes them less likely to be sued. Insurers dont want to insure a nurse practitioner or nurse-midwife working with an uninsured doctor. The challenge for those professionals is to find affordable coverage for themselves, in case of a claim against them and the doctor.”
Gracey identifies other industry trends, including increased resistance to nuisance cases from the courts and the insurance industry, resulting in decreased claim severity. Greater emphasis on risk management is also having an impact, as physicians recognize the need for systems improvement to reduce medical errors and prevent subsequent claims.
Danna-Gracey is an independent insurance agency dedicated to managing insurance coverage needs for Florida physicians. Danna-Gracey tailors their services to the specific needs of the individual physician and practice, negotiating the best rates for coverage with top insurance carriers. The agency offers programs for medical specialists, risk management education programs, workmans compensation plans for members of medical societies and numerous other products and advocacy services.
