When the St. Paul Insurance Company announced last December it would quit selling medical malpractice policies to improve profitability, it wasn't too long before states started to see the fallout.
St. Paul was the biggest medical malpractice insurer in the nation, covering tens of thousands of doctors. But few people could blame it for getting out of the business, which in 2001 caused a $940 million loss.
Malpractice coverage has become an expensive risk because disgruntled patients now regularly file multimillion dollars lawsuits. Jury awards increased 43 percent in one year, from a median of $700,000 in 1999 to $1 million in 2000, says Jury Verdict Research , a for-profit company that maintains a database of nearly 200,000 verdicts and settlements resulting from personal injury claims.
America's litigious atmosphere has driven up the cost of all insurance. Insuring a car costs an average of about $1,000 a year. But surgeons in Florida pay up to $126,599 for malpractice insurance, and Texas obstetricians may shell out $160,746, reports Medical Liability Monitor .
Nevada doctors saw premiums rise by 35 percent last year. Ohio and Kentucky saw 20 percent increases.
American Medical Association (AMA) officials say what's happening shows the tort reform system is broken and needs to be fixed. The AMA, the nation's largest doctors' lobbying group, says money-hungry lawyers are ruining things for doctors who want to practice medicine.
"The tort system is out of control and jury awards are escalating dramatically. Sympathy plays a role (in cases) regardless of whether or not there is a scientific basis and a breach of standard of care for that injury," says Donald Palmisano, a Louisiana surgeon and AMA secretary-treasurer.
The AMA says with insurers bailing out of the market, obstetricians are deciding not to deliver babies, and orthopedic surgeons have left some states including Arizona and Pennsylvania.
"We need national tort reform which protects states that do have reform (systems in place). We cannot continue with the system the way it is going," Palmisano says.
Many state lawmakers agree. "This country is so colossally over-lawyered. The recrudescence of frivolous suits was inevitable. In urban areas we are also over-doctored, so there are more targets and perhaps legitimate malpractice cases," says Michigan Senate President and Republican gubernatorial candidate John Schwarz.
Schwarz, who is also a head and neck surgeon, says Michigan hasn't been hit as hard as other states. "We put some safeguards and triggers in place ten years ago, creating an arbitration panel, and putting a $250,000 cap on non-economic damages. We're not perfect but we're infinitely better than other states," he says.
Trial lawyers say the AMA's claims are false. "Medical malpractice is very hard to prosecute. It costs a lot of money to bring a case to trial, and cases are done on a contingency fee so it's not worth it for lawyers to bring about frivolous suits," says attorney Steve Lewis, an associate with the Washington, D.C.-based law firm Aaron M. Levine & Associates, which specializes in medical practice law.
While doctors groups and lawyers hash out their differences, state lawmakers are trying to ensure that doctors have adequate insurance.
West Virginia was the first state to respond after St. Paul bailed out of the malpractice insurance market. More than 1,200 doctors, 400 nurses and 26 hospitals had malpractice insurance through that company, the Charleston Gazette reported.
West Virginia legislators crafted a state-run insurance plan that guarantees doctors will be covered. But early reports on the new system found very few physicians were signing up, and officials remain concerned doctors will leave the state to practice medicine elsewhere.
Pennsylvania and Nevada are among states that have followed suit. Malpractice is also on the agenda in Florida, Iowa, Illinois, Michigan, Minnesota, Missouri, Mississippi, New Jersey, Oregon, Texas and Virginia.
Most states are debating laws based on a California measure known as the Medical Injury Compensation Reform Act, or MICRA, which was crafted in the 1970s when the Golden State had a medical malpractice crisis similar to what is happening today in other states.
"Hospital units were closing because they couldn't afford coverage, obstetricians and neurologists stopped providing medical care and insurance companies ceased to write coverage. It's like dj vu watching (newspaper) clips from all over the country," says Danielle Walters, executive vice president of Californians Allied For Patient Protection , a nonprofit lobbying coalition designed to preserve medical malpractice reforms.
MICRA, signed into law by former Gov. Jerry Brown, cuts back on high-dollar malpractice awards by putting a $250,000 cap on non-economic, or "pain and suffering" awards and limiting attorneys' contingency fees.
The legislation also puts time limits on filing claims and requires that patients be compensated for medical bills, lost wages, future earnings and rehabilitation.
The measure, having withstood legal challenges winding all the way to the state supreme court, seems to be just what doctors ordered. Physicians in California are largely unaffected by increasing insurance rates elsewhere, the Los Angeles Times reported last month.
Walters agrees. "If you look at what physicians pay for medical malpractice insurance, California doctors pay one-half to one-third what providers elsewhere are paying," she says.
Walters' group, which has for years been on the defensive on medical malpractice reform, now serves as a resource for states across the country. Pennsylvania adopted some MICRA provisions, but officials couldn't enact some of the caps because of state constitution restraints.
"Many states we've talked to are looking at the California model. It remains to be seen whether they adopt it all in one fell swoop," she says.