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New Study Proves Insurers Have Misled Doctors and the Public

[Column 348, August 1, 2005] | Archived Columns

By Ken Suggs*

Can Americans trust the insurance industry to tell them the truth? In the debate about the high cost of medical malpractice insurance for doctors, the answer is no.

For years we've heard from insurance industry CEOs that an explosion of medical malpractice lawsuits is forcing them to raise premiums for doctors. Their proposed solution is to take away the rights of Americans who've been maimed or the families of those killed by medical negligence to file lawsuits.

Nothing ruins a good story like the facts.

A new study of medical malpractice insurers entitled "Falling Claims and Rising Premiums in the Medical Malpractice Insurance Industry" has found that insurance companies have been price-gouging doctors by drastically raising their insurance premiums, even though malpractice claims payments have been flat, or in some cases decreasing.

The study, conducted by former Missouri Insurance Commissioner Jay Angoff for the Center for Justice and Democracy, a consumer advocacy organization, compiled data from the 2004 annual reports of the 15 largest insurance companies, which are filed under oath with state insurance departments. According to the insurance companies' own numbers, which they swore to be correct:

• Over the last five years, the amount malpractice insurers have collected in premiums has increased by 120%, while claims payouts have remained essentially flat.
  
  
• During this time, even industry projections of claims they plan to pay out in the future—their justification for higher premiums—have decreased.
  
  
• Leading insurers increased their surpluses, or excess profits, by one third.

The Kaiser Family Foundation reports that total malpractice payouts have actually fallen an average of 2.4% per year since 2001, when adjusted for medical care inflation.

"I was surprised to find out, to say the least, that medical malpractice claims actually went down, contrary to everything we've heard and read about," study author Angoff said.

Medical malpractice claims are down. The amount the insurance companies have to pay out to victims has remained constant. And even the losses the insurance companies predict they'll have to pay in the future are down.

So where's the medical malpractice explosion? This is final proof - from the industry's own numbers—that insurance executives are price-gouging doctors and misleading Congress and the public.

Even worse, they're paying millions to corporate lobbyists to try to take advantage of the false impressions they created and convince Congress to take away your rights if you or your family are ever the victims of medical negligence.

Already state attorneys general and insurance commissioners are calling for action.

"There is no excuse for malpractice insurers doubling their rates while their claims payments decrease," declared Missouri Attorney General Jay Nixon.

"[The numbers in the study] cast a completely different picture than the public or many public officials have assumed. Clearly the numbers underscore the need for much tougher and much more aggressive oversight to prevent and punish profiteering. Insurance company greed can be hazardous to our health," said Connecticut Attorney General Richard Blumenthal

The irony is that doctors should have known that the insurance industry is not their friend. America's physicians had to file—and recently won—a giant class action lawsuit against the insurance industry for refusing to pay doctors' valid claims for the medical services they provided.

Doctors and patients should realize that—as is so often the case in health care—they're on the same side against a powerful insurance industry that cares more about profits than good health care.

This should totally change the debate about medical malpractice. Medical malpractice premiums are too high. But now we know the problem isn't lawsuits by injured patients or the compensation juries say they deserve; instead, it's old fashioned price-gouging. And the solution isn't to take away people's rights, it's to stop the price-gouging.

*Ken Suggs, president of the American Association for Justice, is a partner in the Columbia, SC, law firm of Janet, Jenner & Suggs.