"When the largest malpractice
insurer in the nation tells a regulator that caps on damages don't work, every
legislator, regulator and voter in the nation should listen," said FTCR's
Executive Director Douglas Heller. "Medical Protective's rate increase and this
smoking gun document prove that the insurance industry cannot be trusted on the
issue of malpractice caps."
Medical Protective and other
supporters of medical malpractice caps have repeatedly argued that damage awards
are the primary reason for skyrocketing medical malpractice premiums. For
example, in a March 2004 report, GE Medical Protective stated that capping
non-economic damages is a "critical element [of reform] because in recent years
we have seen non-economic damages spiraling out of control." [from Health Care
Crisis: Causes and Solutions]
The Texas rate increase and the
actuarial data submitted by the company contradicting the oft-stated importance
of caps should lead policymakers to look to insurance regulation, rather than
malpractice caps, as a solution to high premiums, according to FTCR.
"While medical malpractice caps
limit the rights of injured patients, they do not lower doctors' premiums. If
lawmakers and physicians want to reduce costs, they should start fighting to
reform insurance companies rather than restrict patients' rights," said Heller.
The nonpartisan FTCR pointed to the
success of regulatory intervention in California in fighting planned medical
malpractice rate hikes. Since 2003, the California Department of Insurance and
FTCR have stopped $50 million in rate hikes proposed by the largest medical
malpractice insurers, using Proposition 103, the state's insurance regulation
law enacted by voters in 1988.
As in Texas, California has a
$250,000 cap on damages (California's limits, however, have been in place since
1975). And, as in Texas, large California insurers have proposed major rate
hikes on doctors in recent years despite the caps.
GE Medical Protective sought a 29.2%
rate hike in California. However, because of California's
system of insurance regulation, FTCR was able to challenge the hike resulting in
the company reducing its rate proposed increase by 60%. Unlike California's
system, the Texas Insurance Commissioner, who disputed the need for Medical
Protective's increase in that state, does not have the regulatory authority to
block inappropriate insurance increases.
"In California, Texas and throughout
the country, malpractice insurers like Medical Protective continue to push for
higher premiums for doctors, regardless of whether or not the state has caps on
damages. Insurance regulation, not caps, has been the only successful weapon in
the battle against skyrocketing premiums," said Heller.
Not the First Industry Admission
That Caps Fail
In 1986, after insurers and doctors
lobbied for, and Florida lawmakers enacted, a cap on non-economic damages for
medical malpractice claims, insurers Aetna and St. Paul increased doctors'
premiums. The companies argued that, despite earlier promises, malpractice caps
do not actually lead to savings for doctors, much in the manner of Medical
Protective in its recent Texas filing.
According to a St. Paul Insurance
company study provided to the Florida Department of Insurance at the time: "The conclusion of the study is that
the noneconomic cap of $450,000, joint and several liability on the noneconomic
damages, and mandatory structured settlements on losses above $250,000 will
produce little or no savings to the tort system as it pertains to medical
"Time after time insurers present
caps as the panacea for high insurance rates only to argue that caps actually
have a negligible impact when it comes time to send doctors the bill," concluded