Medical malpractice insurance costs drop along with claims

Medical malpractice insurance has become a soft market that benefits Florida doctors seeking lower rates.
Rates in the primary medical malpractice insurance market fell 8.6 percent in 2007, according to a study released in late October by the Florida Office of Insurance Regulation. That’s a welcome relief from the early part of the decade, when rates shot up by double digits in consecutive years.
A big factor is the declining numbers of closed medical malpractice claims.
Statewide, 3,553 medical malpractice claims were closed in 2007, down from 3,811 in 2006. The 2007 claims led to $523.6 million in indemnity payments and $174.7 million in insurance company fees to defense counsel. The indemnity payments declined 1.4 percent, while defense attorneys collected 5.2 percent more in fees.
The frequency of medical malpractice claims for the number of doctors in Florida is at a historic low, said Matt Gracey, CEO of Delray Beach-based Danna-Gracey, which helps doctors find medical malpractice insurance.
“That’s a reason rates are dropping fairly quickly,” he said of the declining number of claims. “We’ve been in a soft market for 18 months, and it should continue to be softer for the next two to three years.”
Claims are down because doctors are practicing better medicine, said Josh Salman, chief operating officer of Dania Beach-based Healthcare Underwriters Group, the 11th-largest medical malpractice insurer in Florida, with $10.3 million in 2007 premiums. He said tort reform in medical malpractice cases also played a role.
But medical malpractice plaintiff attorney Stuart Grossman, a partner at Grossman Roth in Miami, said the drastic drop in claims over one year is too big to realistically attribute to better medicine. He said the $500,000 cap on non-economic damages instituted by the Florida Legislature in 2003 was the real reason fewer claims are ­being filed.
“There are plenty of cases, but lawyers are more selective,” Grossman said. “They limited the amount you can collect on, and costs to prepare cases are the same or rising. Sometimes, you can recover no more than a few hundred thousand [dollars], no matter how good the case is.”
Salman said Healthcare Underwriters Group is getting more aggressive in defending cases, rather than settling. That, and the threat of an uninsured doctor losing a multimillion-dollar lawsuit, has driven more doctors to purchase insurance, he said.
Lower medical malpractice insurance rates will help recruit more doctors to Florida, which has a mounting physician shortage as older doctors approach retirement age, Gracey said. But, it will be hard to get doctors in Florida who dropped coverage to pick it back up because it can be such a huge expense.
Even with the rate declines in 2007, Florida has some of the highest rates in the nation, he noted.
By the numbersStatewide, 3,553 medical malpractice claims were closed in 2007, down from 3,811 in 2006. The 2007 claims led to $523.6 million in indemnity payments and $174.7 million in insurance company fees to defense counsel.Source: Florida Office of Insurance Regulation
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