Op/Ed: With Malpractice Claims Declining, Insurers Should be Held Accountable

By Joanne Doroshow, Executive Director, Center for Justice & Democracy
In 1997, Kentucky resident Bill Rogers, then 52-years-old and married to his wife Lela, went to the hospital for a treatable infection on this thigh. Doctors began treating him alright — unfortunately, with the wrong antibiotics. The infection got worse and spread. Within a month, doctors had to amputate Bill’s penis.
In the heated debate over medical malpractice insurance for doctors, there is typically little discussion of cases like Bill Rogers. Indeed, each year up to 98,000 people die from medical errors in hospitals. Hundreds of thousands more are injured, many in catastrophic and life-altering ways like Bill.
Rather than helping to reduce errors and weeding out the small number of doctors responsible for most malpractice payments, the insurance industry has focused its efforts on blaming patients.
They said that patients who file legitimate medical malpractice lawsuits, like Bill Rogers, are forcing them to raise doctors’ insurance rates. At least that’s what they tell lawmakers and the public.
What they tell Wall Street, however, is a different story. As revealed in a new report by former Missouri Insurance Commissioner Jay Angoff, the CEO of APAC, one of Kentucky’s four medical malpractice insurance companies, had what Angoff called two ebullient conversations with Wall Street analysts last year.
The executive told these analysts that because of how little the company had been paying out in malpractice claims, its claims managers now had little to do. In response to a stock analyst’s comment that “the golf games of those claims managers must be pretty good,” the CEO responded, “we’re trying to turn them into the Maytag repairman.” He also said that malpractice claims have decreased to such an extent that there is not enough work for malpractice defense lawyers.
Indeed, based on data from medical malpractice insurance carriers’ Annual Statements filed under oath each year, Angoff found that all four of the leading Kentucky malpractice insurers have been paying out substantially less in claims than they initially estimated they would pay out. Doctors have been overcharged for several years as insurance industry surpluses have ballooned to excessive levels.
Clearly, this study raises continuing concerns about the accuracy of the data submitted by insurance carriers to regulators, and the legitimacy of the industry’s statements about why doctors have been price-gouged. It seems clear that lawmakers have been misled about the medical malpractice insurance industry’s financial condition and the reasons behind the unfair increases in insurance premiums for doctors. Incredibly, under current state law, the Kentucky insurance commissioner has no authority to order refunds to doctors who have paid excessive rates.
Yet despite unfair price-gouging, Kentucky is still attracting plenty of physicians. According to American Medical Association data, the overall doctor pool in Kentucky has increased every year over the last decade, an total increase of 2,302 doctors.
Nobody denies that doctors’ insurance rates sometimes reach burdensome and unfair levels. But time after time, the data teaches us the same lesson: weak regulatory laws and insurance industry mismanagement are the culprits. And while the vast majority of doctors are devoted and competent professionals, a small minority commit egregious malpractice that destroy innocent patients’ lives, like Bill Rogers. Let’s not blame patients for insurance problems they did not create.