Just when you thought declining reimbursement and rising expenses had squeezed your practice dry, liability insurance premiums began to climb dramatically. Here’s what’s behind the increases.
Richard G. Roberts, MD, JD, FAAFP
Fam Pract Manag. 2002 Oct;9(9):47-51.
In certain areas of the country, skyrocketing medical liability insurance premiums are pushing physicians out of practice and denying patients access increased an average of 30 percent or more last year. Another 12 states saw average premiums increase 25 percent during the same period, and problems are emerging in several other states as well. (See the map.) The hot spots are states where insurers have either left the market or gone bankrupt, where awards are particularly high or where there is very active litigation in certain areas (e.g., pregnancy-related cases). Premium increases as high as 80 percent have been reported in some areas.1
The premium differences between these areas and those in other parts of the country are dramatic. In Wisconsin, a family doctor who delivers babies and performs cesarean sections pays about $14,000 a year for coverage that extends to infinity. Family physicians with far less coverage pay three to five times as much in some other states. Physicians in other specialties are suffering, too. In southern Florida, obstetricians spend $209,000 for $250,000 in coverage and, in effect, are essentially self-insured.
Dimensions of the problem
The most important factor in rising medical liability premiums appears to be the size of the awards, rather than the frequency of lawsuits. In Wisconsin, the number of claims filed actually decreased from 348 in 1990 to 249 in 2001.2 In 1995, the national median for jury awards was $500,000 and the median pretrial settlement amount was about $350,000. By 2000, the median jury award had risen to $1 million, with the median pretrial settlement award at $500,000. In 2000, defendant... [continues]
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