Insurance Companies Should Be Reined in from Charging Excessive Medical Malpractice Insurance Rates December 16, 2011.

Finally, someone is thinking outside the box about medical malpractice insurance. It is the companies that are gouging doctors, not the number of lawsuits filed.

This is quite welcome news to medical malpractice lawyers – that regulating insurance rates is crucial to preventing medical malpractice insurance companies from taking thousands of dollars from doctors and allowing patients better access to health care. This observation comes from the author of California’s insurance regulatory reform law.

There is a bit of history involved here, and that is referring to Proposition 103, enacted as insurance reform in 1988. That law mandates prior approval for various requested hikes in insurance, meaning that insurance companies must justify and get an approval from state regulators before any new rates could be introduced.

What is interesting about this, is that in the first three years after the reform was introduced, California medical malpractice premiums dropped by 20 percent, then stabilized. This happened despite premiums across the nation fluctuating wildly. The national average showed an increase in medical malpractice premiums of 127 percent across the nation. California doctors were only paying 24 percent between 1988 and 2009. Quite the difference.

What do these numbers mean for every state and every doctor in the U.S.? They mean that California’s medical malpractice insurance industry was slamming doctors with high rates because they could, so they could make obscene profits for themselves, while blaming rising premiums on injured patients. In other words, the only reason why California held the line on reasonably priced medical malpractice insurance was because of Proposition 103. Do other states need a similar Proposition? It would seem so, or doctors in other states may not see any savings from malpractice insurers without something like it.

Another interesting provision in Proposition 103 created a process where interested groups, or the general public, could ask for intervenor status to challenge excessive rate hikes. Thanks to that group, they were able to stop a $66 million rate hike for doctors and other medical professionals. Sounds just like what the doctor ordered. Stop the bleeding where it begins, with insurance companies gouging doctors to make as much money as they can.

The number of serious medical malpractice cases across the country is not high enough to justify the outrageous prices insurance companies charge medical professionals for coverage. Having said that, by no means should a doctor guilty of medical malpractice not be held accountable for their negligence. What is going on in the insurance industry is a mindset being stoked by the lust for more and more money to feed their bottom line.

Medical malpractice insurance is not about settling up with an injured patient and making things right. It is not about admitting that a doctor made an error and is willing to pay for it. It is about dismissing, denying or diminishing a claim to avoid paying out too much money. In other words, medical malpractice victims are at the mercy of the negligent doctor and an insensitive insurance company, who is far more interested in not paying on claims than in doing what is right.

If something like this were introduced in the state of Ohio, or any other state for that matter, it would be a welcome relief for patients, victims, doctors and medical malpractice attorneys. Perhaps this would get rid of medical malpractice caps, which only benefit the insurance companies, not the victims.