The Supreme Court of Missouri this month struck down the law that paced a $350,000 cap on malpractice awards as unconstitutional. Missouri now joins Illinois and Georgia as the states that in recent years have overturned past legislative efforts at malpractice reform.
This raises a few questions:
- Is this a trend?
- Has this trend affected pricing in the national insurance market for health care professional liability insurance?
Is There a Trend to Strike Down Malpractice Caps?
First things first: Is this a trend? Just three states (IL, GA, MO) in the last few years have seen their laws overturned through efforts led by the well-heeled plaintiffs bar. But four other states now have cases pending before their highest courts to determine constitutionality (FL, IN, NV, KS). A number of states have upheld challenges to reform laws (such as TX and others).
If you access the websites of many trial lawyers around the country you can almost hear a chorus of moaning and groaning about the unfairness of widely enacted malpractice reform laws over the last 10 years. And these laws have had their effect, no doubt, as witnessed by the dramatic drop in malpractice claim frequency across the country. The numbers are historically low and they are not budging much at all from year to year.
More importantly, the hefty numbers of states enacting or improving existing malpractice reform laws of varying types in recent years far outweighs the three states listed above as overturning reform, although some other states have overturned other portions of reform legislation, like certificates of merit (WA) and advance notice of intent to file a malpractice lawsuit (also WA). Some, like Oklahoma, Tennessee, and North Carolina in 2011, enacted new or lower caps on non-economic damages. Some, like New Hampshire and Massachusetts this summer, have improved laws related to malpractice reform. Massachusetts passed a “Disclosure, Apology and Offer” law to resolve malpractice cases. New Hampshire’s legislature overrode the governor’s veto and enacted a “first-of-its-kind” early offer program that provides incentives for defendants in cases to make offers to settle early in the litigation process. This provides benefits to both plaintiffs and defendants.
Pricing Increases for Health Care Professional Liability Insurance?
The overturning of malpractice reform laws has had no results on premiums in the national health care professional liability marketplace. It is still highly competitive, especially for physician and hospital buyers. There has been no evidence whatsoever of a return to the hard market. Any dramatic change is a number of years away and one wonders if there hasn’t been a permanent change in the attitudes of the general public to malpractice litigation as frequency remains so low.
So… despite Missouri… has there been a trend towards overturning malpractice reform laws nationally? Absolutely not, but hopefully the recent losses will not unfavorably influence other courts looking at these laws.
Have the changes in those three states had any impact on premiums across the country? None whatsoever in the hospital and physician segments of the health care professional liability insurance marketplace. But we must keep an eye on claims severity as the number of jumbo verdicts seems to be rising the past 18 months.