Here is what just happened in Texas. The insurance companies got the
Republican legislature to amend the Constitution to cap damages at
$250,000 in order to prevent an insurance "crisis". Guess what? The
insurance companies are stalling, and rates are still going up!!!
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Austin American-Statesman
Sunday, January 25, 2004
Malpractice insurance rates slow to fall
Insurers say raft of last-minute lawsuits prevented quick rate cuts.
By David Pasztor
AMERICAN-STATESMAN STAFF
More than four months after voters narrowly approved a controversial
change in Texas law that is supposed to lower medical malpractice
insurance costs for doctors, most of the state's physicians have not
seen their insurance rates go down, and some may face increases.
The state's largest malpractice insurer, the Texas Medical Liability
Trust, has lowered rates 12 percent for about 11,000 of the state's
38,000 doctors. Other companies are either holding rates steady or
have requested rate increases as high as 35 percent from the state
Department of Insurance.
Supporters of Proposition 12, a constitutional amendment that placed a
$250,000 cap on noneconomic damage awards such as pain and suffering
in medical lawsuits, say it's still far too early for the law's full
effect to play out.
Perhaps so, but the early signs are not encouraging, said Dan Lambe,
executive director of the nonprofit consumer group Texas Watch, which
spearheaded opposition to the amendment.
"Promises were made, legal rights were sacrificed, the Texas
Constitution was rewritten to appease the insurance industry . . . and
someone has to answer why we're not seeing relief," Lambe said.
Blaming frivolous lawsuits for rapid increases in malpractice
insurance premiums, Gov. Rick Perry, other Republican leaders and the
Texas Medical Association threw their political weight behind the
amendment. It passed in September with 51.13 percent of the vote.
Rising malpractice rates were driving doctors out of Texas and
limiting the availability of medical care, supporters argued. The cap
on damages would cut down on lawsuits and enable insurance companies
to lower rates, they said, by eliminating the fear of
multimillion-dollar jury awards for such damages as mental anguish and
disfigurement.
The caps do not apply to economic damages, such as lost wages and
medical costs.
The Medical Liability Trust, a nonprofit insurer that last year
promised it would lower rates if the amendment passed, did so on Jan.
1, said spokeswoman Dana Leidig.
But other companies have not followed suit, in part blaming a surge of
lawsuits filed before the law took effect.
The Joint Underwriting Association, a state-run pool that serves as a
safety net for doctors who can't find affordable insurance elsewhere,
asked state regulators for a 35 percent rate increase after the
amendment passed.
The cap on damages would not affect its rates, the association said in
its filing, because most of its policies are for less than the cap.
The state Insurance Department turned down the request, and the
association, which insures about 2,500 doctors, is trying to determine
what it will do next, said General Manager Joe Chilton.
Whether there will be a rate increase "remains to be seen. Our actuary
thinks (there) should be," Chilton said.
GE Medical Protective Services, which insures about 6,700 doctors, has
asked regulators for a 19 percent rate increase, saying that the cap
on damages will actually save it very little money. That application
remains pending.
Two other major carriers, the Doctors Co. and American Physician
Insurance Exchange, have not lowered rates or requested increases.
"We're eager to show that we're responding to the (new laws), but we
have a fiduciary responsibility to the company to make sure our rates
are well thought out," Insurance Exchange President Maury Magids said.
If the new caps seem to be working, Magids said, his company may start
lowering rates this summer.
Although official statistics are not available, the law's supporters
say malpractice claims increased by as much as 300 percent in the
months before Proposition 12 passed as lawyers worked to get cases
into court under the old rules.
"It's going to take a while for the dust to settle and for us to see
the world through this new reality," said Jim Hurley, spokesman for
the Insurance Department.
In the meantime, Hurley said, new companies have contacted the
department to inquire about selling malpractice insurance in Texas,
raising the possibility of more players and greater competition later
this year.
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