Keeping Med-Mal Premiums Low; MICRA in the Courts?; More

To Keep Premiums Low, Be Proactive

The nation's doctors and hospitals may be experiencing "relatively low medical malpractice costs," but that could change if providers don't follow more "proactive organizations" and "adopt strategies for dealing with hidden problem areas," advises a recent story in Claims Journal.^[1]

The story is based on a 2014 report by Aon Risk Solutions, a global risk management company, in conjunction with the American Society for Healthcare Risk Management (ASHRM).

The following two findings in particular could prove helpful to physicians in the future:

Happy patients = fewer claims. For the first time, Aon researchers probed the correlation between claims frequency and patient satisfaction. What they found confirms what many have suspected: Facilities that score high in patient satisfaction "tended to have significantly lower frequency of medical malpractice claims." For risk managers, this finding is significant, because consistently low patient satisfaction scores may not only serve as key "markers" for potential liability but as a guide for "remediating areas in need of improvement."

Some mistakes are more costly than others. Researchers have been able to use certain data-mining techniques—that is, computational methods for discovering patterns and other knowledge from large amounts of data—in order to establish links between, say, malpractice claims frequency and specific causes of loss: misdiagnosis or delayed diagnosis, childbirth injuries, medication errors, anesthesia mistakes, surgery errors, and so forth. For providers, the ability to identify and manage potentially costly risks can be crucial in their effort to keep premiums from escalating.

The Aon/ASHRM report also looked at projected losses in individual states. Florida topped the list of 27 states examined, with an estimated cost per claim in 2015 of $7920. And where were the lowest projected losses for next year? Indiana and Minnesota, with costs of $800 and $770 per claim, respectively.

New Attack on Medical Injury Compensation Reform Act

Close on the heels of the defeat of Proposition 46—the Medical Malpractice Lawsuits Cap and Drug Testing of Doctors Initiative, which among other things would have updated California's 39-year-old cap on medical malpractice damages—the advocacy group Consumer Watchdog has joined plaintiffs who have petitioned the state's high court to rule on the constitutionality of the cap, as the group announced last month in a news release.^[2]

The case in question involves plaintiff Trent Hughes, who was injured in November 2003 while driving an all-terrain vehicle. In his original suit, Hughes claimed that his injury was made more permanent and more painful after Christopher Pham, a neurosurgeon, failed to treat him in a timely manner. A trial jury sided with Hughes, finding Dr Pham negligent and awarding the plaintiff $2.75 million in noneconomic damages for his permanent disability, among other things. But on the basis of the long-standing California law, the trial court reduced that award to $250,000, the maximum allowable amount in such cases.

Citing a Los Angeles Times editorial, Consumer Watchdog argues that reductions of this kind in light of "the dwindling real value of the cap has made it progressively harder to find lawyers willing to go to court for victims with large intangible losses but small economic ones—typically, victims who are children or nonworking spouses or elderly."

The group also points out that the cap never achieved its original purpose of lowering malpractice premiums. By 1988, 13 years after the Medical Injury Compensation Reform Act (MICRA) was passed, med-mal premiums had reached an all-time high. As Consumer Watchdog noted in a letter to the California Supreme Court, "It wasn't until voters took matters into their hands by adopting [in 1988] Proposition 103 and its strict regulation of insurance rates...that Californians began to see relief from excessive premiums."

If the California Supreme Court agrees to review MICRA's constitutionality, proponents of an updated or overturned cap will have their day in court. For now, though, Golden State voters have spoken, and MICRA remains squarely on the books.

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