Rising malpractice coverage rekindles reform push

Los Angeles Business Journal
Monday, June 10, 2002

As medical malpractice rates have soared elsewhere in the nation, California doctors have been protected by the state’s groundbreaking law putting a $250,000 cap on damages for pain and suffering - at least that’s been the prevailing wisdom.

But a study done on behalf of the Santa Monica-based Foundation for Taxpayer and Consumer Rights has concluded that the Medical Injury Compensation Reform Act, viewed as a model nationwide, has actually done little.

And it’s prompting a call for state legislators to look at amending the law, which has been on the books since 1975.

The study concludes that the average medical malpractice premium in California was $7,200 in 2000, compared with the national average of $7,843.


“We are not at all surprised by this. Our own more comprehensive study of insurance rates of every state in the country of all types of insurance shows there is absolutely no correlation between tort reform and insurance rates,” said Joanne Doroshow, executive director of the Center for Justice and Democracy, a national public interest group.

“Premium increases are driven not by the legal system but by the economic cycle of the insurance industry. Insurance companies make money off of investment incomes. At times of high interest rates they engage in price wars just to get premium to invest, so there is severe underpricing that is well recognized by the industry. Then when interest rates drop and the stock markets plummet they will raise rates dramatically.”

For a copy of the complete article, contact CJ&D.

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