After an average increase of 20% in malpractice premiums nationwide this year, increases next year are expected to be just as steep, says Richard Anderson, M.D., CEO of the Doctors Co., based in Napa, Calif., and the fifth largest malpractice insurer in the nation. "There is nothing to suggest that the trend is moderating," he says. "I see nothing to stop rate increases if we don't get effective tort reform."
But the push for Congress and state legislatures to pass a $250,000 cap on payouts for noneconomic damages, which Anderson and others say would be the best reform, has been met with stiff opposition, and Doctors and other carriers have become targets.
Trial attorneys and many patients' groups say the real problem is not rising payouts, but greedy carriers who should be more tightly regulated.
The critics have unleashed volleys of statistics to prove their point, putting the malpractice insurance industry on the defensive.
But Anderson says all the opposition's studies have serious flaws, and he is exasperated and exhausted picking out the mistakes, which involves explaining a complex business to the media and lawmakers.
"These studies are garbage in, garbage out," Anderson says. "If a study said malpractice cases occur because of sunspots, I wouldn't set up a radio telescope to check out the data."
Anderson says malpractice insurers are already tightly regulated. He admits that the industry has been raising premiums faster than payouts, but he says that's because premiums always have to keep ahead of payouts.
He notes that payouts have doubled since 1997 and are still rising.
Anderson disagrees with those who say the solution to the malpractice crisis is reducing doctors' medical mistakes.
"There is an utter and complete disconnect between medical malpractice and patient safety," he asserts.
Eighty percent of malpractice filings at his company, he says, are found to have no merit. He adds that doctors who are not at fault often lose cases because a jury wants to compensate a victim for a bad outcome.
"Physicians who have malpractice suits are not necessarily bad physicians," he says. "They can be some of the best physicians."
Even when a malpractice case is thrown out, Anderson says the company often has to raise the defendant's premiums--not to punish him, but to cover its expenses. He says a typical frivolous case costs the company $25,000 in legal fees.
To those who say that private carriers are overcharging, Anderson points to state-operated insurers of last resort, called joint underwriting agreements, which charge much more than the commercial carriers and can have even steeper rate hikes.