-NEWS FROM THE FLORIDA OFFICE OF INSURANCE REGULATION-
FOR IMMEDIATE RELEASE: Oct. 7, 2009                                                                                       
Contact:  Jack McDermott                  Tom Zutell
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Florida’s 2009 Medical Malpractice Report
Shows Positive Trends for the Industry


TALLAHASSEE, Fla. – The Florida Office of Insurance Regulation (Office) released its 2009 annual report on the medical malpractice insurance market in Florida. Pursuant to Florida law, the Office is required to annually issue a summary and analysis of the state of the medical malpractice insurance industry.

The report showed a continuing trend of recovery for the medical malpractice industry that experienced double-digit rate increases and lack of availability prior to the 2003 legislative reforms. In fact, the report showed a net decline in medical malpractice rates for the primary market, which includes physicians and surgeons. The net decrease of all approved rates in force in Florida was 10 percent for 2008. 

“This report also shows the total medical malpractice insurance premium for the state of Florida dropped in 2008 for the fifth consecutive year,” remarked Commissioner Kevin McCarty. “This is very encouraging news for doctors and hospitals.”

The annual report compared Florida’s medical malpractice industry’s financial data to data from nine other states: California, Illinois, New York, Texas, New Jersey, Ohio, Georgia, Massachusetts and Pennsylvania. The report showed that Florida’s loss experience and defense cost and containment expenses are now competitive with states in this peer group. 

The report also showed that seven new medical malpractice carriers entered the market in 2008. An analysis of the closed claims data submitted to the Office’s Professional Liability Closed Claims Reporting system reported 3,336 closed claims in 2008, which paid an estimated $700 million; $519.1 million in damages paid, and the remainder in loss adjustment expense.

Following the 2003 reforms, the Office developed a “presumed savings factor” of 7.8 percent. The initial reduction was based on the premise that this factor would be revisited at a future date to determine the full impact of the new legislation.

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: MED MAL RATES DROPPED IN FLA IN 2008

By DAVID ROYSE
THE NEWS SERVICE OF FLORIDA

THE CAPITAL, TALLAHASSEE, Oct. 7, 2009......Medical malpractice insurance rates in Florida were down 10 percent last year, insurance regulators reported Wednesday.

The Office of Insurance Regulation's 2009 annual report on the medical malpractice insurance market in the state found lowering insurance rates for doctors and surgeons, and a fifth straight year of lower malpractice premiums.

Data submitted to the office showed 3,336 closed medical malpractice claims in 2008, which paid an estimated $700 million. Most of that – about $520 million – went for actual damages, while the rest was for “loss adjustment expense,” or the cost of investigating and adjusting claims.

“This is very encouraging news for doctors and hospitals,” Florida Insurance Commissioner Kevin McCarty said in a statement accompanying the release of the report.

OIR acknowledged that while the average approved rate was down 7.1 percent for physicians some carriers didn't file for any change, which skewed the average. Including carriers that didn't file, the average effect on the primary market was still negative, OIR said.

The premiums paid for malpractice insurance have long been one of the biggest and most contentious issues in health care policy. And after years at the center of the debate over lawsuit rules in Florida and in the country as a whole, the issue has re-entered the public debate as the country studies possible health care reform.

President Obama recently told a gathering of doctors that he understood that “defensive medicine” to avoid being sued was part of the nation's health care cost problem.

But just what the actual burden of medical malrpractice insurance has been hasn't been a straightforward issue in Florida – or elsewhere. Doctors and plaintiffs lawyers argued vehemently in Florida over medical malpractice laws in the early 2000s – and lawmakers spent most of the summer of 2003 in a series of special sessions trying to revamp the malrpractice lawsuit laws.

But part of the reason that debate was so protracted was a lack of agreement about the basic facts underlying the debate. Advocates for patients and those representing doctors and insurance companies often couldn't – and sometimes still can't – agree on the degree to which malpractice rates have gone up or down. At one point in 2003, as proponents of making it harder to sue argued high premiums were forcing doctors to quit practicing or to leave the state, there was actually a debate over whether doctors were really leaving or not – and the numbers were never really agreed on.

So the annual report on malpractice premiums is issued in a context of skepticism and mistrust from many in the debate.

The report released Wednesday compared the Florida medical malpractice industry’s financial data to that from nine other states: California, Illinois, New York, Texas, New Jersey, Ohio, Georgia, Massachusetts and Pennsylvania, and said Florida’s loss experience and defense cost and containment expenses are “now competitive with states in this peer group.” 
 
The report also showed that seven new medical malpractice carriers entered the Florida market in 2008.

Not all the news is good. Some specialties saw premium increases last year. Dentists, for example, saw an average rate increase of 4.6 percent, while chiropractors saw a 3.6 percent increase. Nurses, though, saw their rates go down 12 percent, on average.

In 2003, Florida passed, and then-Gov. Jeb Bush signed into law, a cap limiting noneconomic damages in medical malpractice cases after that summer-long debate of the issue. Texas passed similar damages caps that same year. Supporters argued that limiting damages would reduce total payouts and bring down premiums. At least one large insurance company effecitively promised a rate reduction if damages were limited at certain levels.

At the time, regulators also created a “presumed factor,” for how much rates were presumed to go down under damage limits – with the expectation that that companies would have to meet that reduction or give OIR a good reason why they didn't.

The factor – which was set at 7.8 percent – was a net number, though, meaning if an insurance company could show that it had already needed to raise rates by 7.8 percent that its rates would stay the same, with the presumed reduction factor offsetting increases. And rates didn't drop right away, leading some to say that the damage caps had no effect.

For years after the change, both sides in the malpractice debate have watched the annual reports to see whether one side of the argument or the other was vindicated.

OIR noted that the 2003 legislative changes appear to be a factor in the lower rates, noting that even rate increases of a few percentage points for some specialties compare favorably to the earlier situation.

“Prior to the 2003 legislative changes, aimed at reducing costs associated with medical malrpractice insurance, the market was experiencing double-digit rate increases, an availability crisis, and experienced one of the highest defense cost and containment expense ratios in the country,” the annual report said.

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10/7/2009