Many Texas hospitals have seen a sharp drop in malpractice lawsuits and insurance premiums since voters last year allowed limits on medical malpractice damages, according to a recent survey by the Texas Hospital Association.
Hospitals that answered the survey averaged 160 lawsuits a month from mid-2002 to mid-2003, the THA said. In the 10 months after the caps went into effect last Sept. 1, they averaged 54 lawsuits a month, the trade group said.
Malpractice liability premiums fell an average 8 % for fiscal 2004 and 17 % for fiscal 2005, the association said.
The Legislature last year approved limits on noneconomic damages such as pain and suffering in medical-malpractice lawsuits. The caps took effect Sept. 1 of last year.
Two weeks after the limits went into effect, voters narrowly approved Proposition 12, which changed the state constitution to give the Legislature power to set the caps. Supporters said the ballot measure was needed to protect the caps from legal challenges.
The limits haven't yet reduced premiums for many doctors, even though plaintiffs' lawyers say they can no longer afford to take injured patients' cases, but the caps have been a boon for hospitals, the Dallas Morning News reported in today's editions.
Christus Health System, a Catholic not-for-profit system, expects to save $21 million on liability insurance this year in the 48 Texas hospitals and facilities it owns or manages.
"The primary factor in that is tort reform," said Randy Finley, Christus' director of risk management. "It's not the only factor, but it's the primary factor."
The limits apply to intangibles such as damages for mental anguish, pain and suffering or loss of companionship. The maximum is $250,000 for any single person or facility, although an award can go as high as $750,000 in some cases.
Major players -- primarily hospitals that self-insure for the first $10 million or more in liability losses, then use "excess insurance carriers" for larger losses -- are reporting big savings.
Hospital giant HCA projects that its liability costs will be down $28 million annually, and it's cutting the liability insurance premiums it charges its 35 Texas hospitals and 23 surgery centers by 20%.
Baylor Health Care System says its liability will decline "in seven figures" and doctors in its Health Texas group will see their malpractice insurance premiums decline by more than 10%.
Even Texas hospitals that don't self-insure -- and haven't seen huge savings so far -- are feeling beneficial effects of the damage caps as rates stabilize, said Charles Bailey, general counsel for the Texas Hospital Association.
"Some of the smaller hospitals, instead of a decrease, are seeing no increase, which is positive as well," Bailey said.