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Last insurance 'fix' hasn't slashed rates

By JENNIFER LIBERTO
Published March 1, 2007

TALLAHASSEE - Before patients ever see a doctor with Tampa Bay Women's Care, they sign a two-page waiver giving up their right to file a lawsuit. Disputes about care must go to an arbitration panel.

The office with 67 doctors recently began insisting on the waivers to help keep malpractice claims out of court.

"We think that (the waivers) will ultimately bring premiums for malpractice insurance down," said Dr. Robert Yelverton, medical director for Tampa Bay Women's Care.

While most Floridians are fretting over the latest insurance crisis - property coverage - it's clear that the last insurance crisis - medical malpractice - never was resolved.

Four years after the Legislature capped certain types of pain and suffering damages, Florida doctors still pay the highest malpractice insurance rates in the country.

For Florida consumers, the high premiums for doctors mean ultimatum-type choices: sign away rights to sue over possible medical foulups or maybe give up your doctor.

Both Gov. Charlie Crist and Chief Financial Officer Alex Sink say they are concerned that medical malpractice rates haven't dropped and they've asked the Office of Insurance Regulation Commissioner Kevin McCarty to recommend the next course of action.

"If in fact the rates are shown not to go down, even though we have a (lawsuit damages) cap, it has to make you wonder what's going on," Crist said recently. "That was the whole point and purpose, as I understood it.

"If the industry hasn't recognized it's a new day and doctors should get a break on their premiums too, that would be very disconcerting to me."

While the issue of high malpractice insurance rates is hardly new, 2003 marked a point of crisis. Rates and claim numbers had skyrocketed and driven all but four malpractice insurers out of the state.

Doctors were dropping their policies or eliminating high-risk procedures. Thousands of doctors marched on Tallahassee, demanding relief and some in Tampa Bay protested by delaying surgeries.

The Legislature met in three contentious special sessions before agreeing on a $500,000 cap that many predicted wouldn't cut down on malpractice claims or rates.

In fact, malpractice claims have gone down. Payouts on claims and legal expenses dropped in Florida about 43 percent between 2003 and 2005, the most recent data available. In 2003, Florida companies paid over $989-million and by 2005 that figure was $557-million, according to National Association of Insurance Commissioners records.

Yet, malpractice premiums haven't fallen much. Right now Tampa Bay Women's Care doctors pay $67,000 each in annual premiums for $250,000 worth of coverage.

The 2003 legislative reforms required malpractice premiums be cut by 8 percent, but with rate hikes already in the pipeline the legislation did little more than slow the pace of rising rates.

In the meantime, some of the state's largest malpractice insurers are profiting on the difference between current premium rates and the lower claims. FPIC Insurance Group Inc., the publicly traded parent of Florida's largest malpractice insurer, reported a 47 percent increase in profits in 2006 compared to 2005, according to federal filings.

Its subsidiary, First Professionals Insurance Co., insures more than a third of Florida doctors, hospitals and clinics, according to the state.

Malpractice insurers say profits and claims are cyclical, and argue that recent profits are only making up for losses suffered during the crisis years.

"Our rates did continue to go up after tort reform," acknowledged Robert White, president of Florida's largest malpractice insurer, First Professionals Insurance Co., based in Jacksonville. "We do give up responsiveness (in rates) in order to maintain stability."

Last month, the state insurance consumer advocate called a hearing asking state regulators to review medical malpractice rates because of the discrepancy between falling claims and rising profits.

During the hearing, the state's consumer advocate at the time, Steve Burgess, asked regulators to roll back premiums by 40 percent, because "we are seeing far greater reduction of costs than are being passed on."

Doctors not outraged

Doctors, however, have been strangely silent on the matter.

The Florida Medical Association, the lobbying group that represents doctors, has taken a measured tone in the discussion. It has a business relationship with First Professionals, offering minor discounts in coverage to its members.

The group's lobbyist, Jeff Scott, said FMA viewed the 40 percent roll back proposal with "some skepticism."

"We're not going to engage in a public lynching without the facts," Scott said. "To come forward with an arbitrary slash, what kind of sense would that make?"

Some doctors say they're just grateful premium increases have slowed down, while others say they aren't convinced the 2003 cap on damages was broad enough to have caused the drop in claims.

Tallahassee orthopedic surgeon Andrew Borom said he believes a 2004 constitutional amendment that restricted attorney's fees caused the decline in complaint numbers, not the 2003 Legislative special sessions.

"What the Legislature passed was so heavily influenced by the trial lawyers it was not likely to cause rate reductions," said Borom, who also buys insurance with First Professionals Insurance Co. "It's so riddled with loopholes."

The trial lawyers disagree. Debra Henley with the Florida Justice Association says the 2003 cap means lawyers decline to pursue legitimate malpractices cases out of "basic business economics."

Reasons for rates

The precise reasons why premiums haven't come down are the subject of much debate.

Former consumer advocate Burgess said the lack of competition is a factor.

Malpractice insurers say competition is booming in Florida. Eight new medical malpractice insurers have started selling in Florida in the past year.

Yet, 78 percent of all Florida's doctors, hospitals and clinics were insured by five companies in 2005, according to state market share report. White, who runs First Professionals Insurance Co., said Florida's market share situation is similar to other states.

Also part of the equation: premium calculations are made using data on claims taken over seven- to 10-years. That means Florida's worst years for claims in the early 2000s continue to be a factor in today's premiums.

The state's consumer advocates want insurance companies to shorten the historical time frame so new trends are better represented in premium rates, but the industry is resistant.

Several malpractice insurers note that the number of claims is down nationwide, not just in Florida. They point to a "mysterious, unknown" as the cause and don't want to slash their rates in the face of uncertainty.

While the debate continues, one lawmaker doesn't want to wait for lower rates to filter through the system. Sen. Durrell "Doc" Peaden, a Crestview Republican and retired doctor, has filed a bill that would mandate insurers roll back malpractice rates by 25 percent.

[Last modified March 1, 2007, 01:01:29]