Rahm on Malpractice Reform

A Chicago magazine article focused on Rahm Emanuel and health care reform highlights that he told his older brother to “shut the f*** up” when he mentioned medical malpractice reform on a national level.

Rahm, one of the original architects of the PPACA, highlights the national landscape and reasons why malpractice reform does not appear to be on the national agenda. It also gives insight into his overall views. As Mayor of Chicago he holds great influence over state politics and is one of the few politicians in the state that is both well known and generally liked.

The best hope for Malpractice reform in Illinois appears to be Bruce Rauner’s winning on the Republican Primary for Governor yesterday. The State Supreme Court and Legislature have a history of fighting any meaningful changes and any proposed bill will have an uphill multi-year battle to have any effect on reducing malpractice costs in Illinois.

Contact InsurePhysicians.com today to discuss better protecting your practice against rising malpractice costs.

Indiana Raises Patient Compensation Fund Surcharge

Indiana has announced that effective April 1st, 2014 it is increasing the surcharge to medical providers in the Patient Compensation Fund (PCF). Doctors will face a 13% increase while hospitals will see a 21.2% uptick. The patient compensation fund provides $1,000,000 in coverage excess of $250,000 in commercial malpractice insurance. The state also has an absolute cap on damages of $1,250,000 for those that participate in the fund.

The increase appears to be due almost entirely to the exploits of Dr. Mark Weinberger, who’s run from the law got him on Americas Most Wanted and cost the PCF fund $112.5M. The compensation fund balance stood at $198M in the summer of 2010 but had shrunk to $75M at the beginning of 2014.

The increase comes as a bit of a shock to many physicians, who seeing premium decreases of 5-10% from commercial carriers. The lowest physician surcharge rises to $2,100 and the highest is $23,400, depending on specialty. Not pocket change but still a fraction of what many of their peers pay across the border in Illinois.

InsurePhysicians.com specializes in assisting physicians and surgeons in long term financial planning and insurance strategies, contact an expert broker today to discuss ways to lessen the malpractice burden on the bottom line of your practice.

Market Update

The market for medical malpractice insurance in Chicago and Illinois remains extremely competitive with a continuing influx of carriers offering terms, especially for larger and more complex groups. Our neighbors in Missouri are (so far unsuccessfully) trying to reinstate a cap on non-economic damages that was deemed unconstitutional while several physicians in Indiana have brought a class action lawsuit against the state compensation fund in an attempt to recover an alleged surplus in the program.

The local biggest event recently was the ceasing of operations at Bentley Insurance Group in April. Bentley Insurance Group was founded in late 2007 by now embattled Sacred Heart CEO Ed Novak. The program was set up to write low priced malpractice insurance for low risk physicians. Many insureds had privileges at Sacred Heart or were recruited with their ads offering “The Best Coverage for the Best Doctors” and challenging physicians to “step up, you’ve earned it!”.

The withdraw of Bentley from the market has not had a meaningful effect as there are still a bountiful supply of ready insurers. However, older physicians close to retirement are finding it difficult to find a new carrier willing to give them a coveted free retirement tail unless they work for 3-5 more years.

On the surface the program seems straightforward but the actual workings were considerably more complex. The first layer is a Risk Purchasing Group (RPG) – a structure that allows the pooling of small risks and exempts the purchasers from many state laws. Insurers are heavily regulated and legally skirting state laws is often an advantage, assuming insureds fully understand the potential ramifications.

Running an insurance company is extremely expensive and capital intensive – Bentley, like many small programs, used a “front” to issue policies. Their first front was First Professionals Insurance Company, Inc. (FPIC), an AM Best A- Rated Florida Malpractice Insurer. After FPIC was purchased by the Doctors Company the front moved to Torus Insurance.

A fronting carrier does not normally take underwriting risk, only credit risk. In this case physicians are issued a policy from a licensed and rated carrier (FPIC or Torus) but claims are paid from money held by Bentley. If Bentley doesn’t or can’t pay, the commercial carrier is on the hook.

The reason many of these types of programs are unsuccessful are costs – the more mouths to feed the higher the expenses. Higher expenses mean less money to pay out in claims. Many startup insurance programs claim to underwrite better than their competitors – something that is extremely difficult to do in practice.

Here’s the standard flow of premiums for an insurance company:


And here is how most fronted programs look:

fronted insurance

Minimally capitalized programs can work – but the odds are stacked against them. For physicians considering new and alternative markets make sure that if they stop writing or are deemed insolvent they will be around to pay claims already reported and that your future plans will allow you to secure tail insurance from another insurer. The market is hardening and historically insurance companies have heavily punished new insureds looking to move from unrated or liquidated insurance companies.

Contact InsurePhysicians.com today to discuss better protecting your practice in a changing environment.

Early Retirement Plans

A recent survey of physicians by Deloitte showed that over half of physicians believed that they would have colleagues retire early in the next three years.

The survey cited problematic Medicaid/Medicare reimbursements, increased physician/hospital integration and IT driven evidence-based practices as the most emerging issues.

Contact InsurePhysicians.com today to discuss your future plans and structuring your malpractice program as efficiently as possible.

Cost of Private Practice vs Hospital Employment

This info-graphic lays out the reasons so many physicians are moving to hospital employment from private practice.

Cost of Running a Private Practice – An infographic by the team at CompHealth Physician

Contact InsurePhysicians.com to discuss any potential future move to hospital employment and how to structure your medical malpractice insurance program to lower the costs of doing so.

Full Disclosure on Mistakes

The subject of disclosure of mistakes and errors has been discussed for years. A Boston Globe article recently discussed the issues physicians have with the idea. Another series of articles have examined the success the University of Illinois Medical Center in Chicago has had with their disclosure program.

Contact InsurePhysicians.com today to discuss your policies and how to tell your story to save money on malpractice costs.

Minnesota Supreme Court Rules in Defamation Suit

A ruling by the Minnesota Supreme Court has dismissed a defamation lawsuit by a by Dr. David McKee, a Minnesota neurologist, against the son of a former patient. The budding author had posted a scathing online review of the physician including the comment that an unnamed nurse called Dr. McKee “a real tool”.  The final ruling was based on evidence that the postings were based on opinions and not statements of facts.  This matter gained a lot of media attention as websites followed and reported on the case.

The online review came after Dr. David McKee treated an elderly Veteran.  The Veteran’s son was disappointed in McKee’s lack of bedside manner.  The review pointed out that McKee lacked concern and care for his father both in actions and words.  The defendant posted these comments on a website designed for reviewing physicians and said he was simply exercising his right to free speech.  The court agreed that these comments were not defamation, but simply protected speech.

Dr. McKee was reported as spending over $61,000 in legal bills against the child of his patient and on services to remove the mention of this event from websites.  When asked about this, McKee said it was money well spent and in five years he wouldn’t even remember spending that much.

Many doctors are faced with online criticism.  It is up to the individual physician to decide how to handle it.  Some may turn to hiring third parties and asking family members to scour the internet in order to intimidate others to remove the mention of a public legal matter.  Others may handle it more graciously.  It is our opinion that a physician should either ignore the matter completely or change their behavior to avoid criticism.  Doctors usually have many reviews placed about them – both favorable and vitriolic.  Paying undue attention to the unfavorable comments or being obsessed with their removal may just backfire, causing others to think that the physician actually does have something to hide.

Contact InsurePhysicians.com today to discuss better protecting your practice and insuring against the costs of litigation and public relations.

New Michigan Tort Reform

The Patients First Reform Package, consisting of Senate Bills 1115 and 1118, has been signed into law in Michigan.

The laws are intended to strengthen the 1993 state tort reform law that had been eroded over the years.

Contact InsurePhysicians.com today to discuss how to best take advantage of changing state laws.

Johns Hopkins Report on Surgical Mistakes

A report out of Johns Hopkins highlights the number of surgical mistakes committed in the United States.

For surgeons this highlights that:

-Insurance companies are paying out on malpractice claims for even the most benign of surgeons

-Maintaining a clean record and documenting it will help you drive the best malpractice insurance premiums

-Working with a dedicated insurance broker who can explain your situation will result in the best insurance policy outcomes

Contact InsurePhysicians.com today to discuss cost effective malpractice options for your practice.

Bankruptcy Protection for MA Compounding Pharmacy

The Massachusetts pharmacy at the center of claims for injuries and deaths relating to tainted steroids have filed for chapter 11 bankruptcy protection. The situation highlights the needs of physician practices to understand the financial position and insurance carried by third parties they contract with. We suspect that many physicians will be held jointly and severally liability for judgments related to this event.

Contact InsurePhysicians.com today to better protect your practice.