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Medical Malpractice in West Virginia
In its November report to the Legislature, the state Insurance Commission pointed to what it termed were excellent loss ratio figures for West Virginia’s medical malpractice insurance industry. The commission declared the end to our state’s medical malpractice crisis. Thanks to civil justice reform first initiated by the Legislature in 2002 and the creation of a physicians’ mutual company to provide state physicians with coverage, “medical malpractice rates have stabilized and are generally declining in West Virginia.” It is gratifying to examine our progress. In 1999, the direct combined loss ratio (the percentage of each premium dollar a property/casualty insurer spends on claims and expenses) in West Virginia was 182.2 percent. It now stands at 48.3 percent, compared to 89.3 percent nationwide. After accounting for dividends and investment gain, medical malpractice insurers experienced a slight operating profit in 2003, and greater gains in 2004 and 2005, in West Virginia. And the physicians’ mutual, West Virginia Mutual Insurance Co., experienced a very promising first year in operation, with a loss ratio of 55.3 percent and a combined ratio of about 72 percent for 2004. In 2005, the loss ratio was 30.3 percent. The mutual has reduced rates by an average of 5 percent and plans another 15 percent cut in January. The nonprofit company now insures almost two-thirds of the state’s doctors and has $50 million in reserves. This newfound stability is attributed to a sharp decline in loss ratio (the ratio of incurred losses to earned premium); a continued decline in loss adjustment expense (the cost on the part of the insurance company to cover expenses incurred in settling claims); a decline in underwriting expenses; and the recovery and stabilization of investment gains. A significant factor in affecting the number of frivolous medical malpractice lawsuits was the Legislature’s new requirement that anyone filing a medical professional liability suit against a health care provider must produce a “certificate of merit,” which is certification under oath by a health care expert that the suit is based on a legitimate claim. “We believe that this screening process explains the sharp and maintained rise in the percentage of dismissals seen beginning in 2002,” the Insurance Commission states. For instance: - The number of claims filed has dropped from 379 in 2001 to 193 in 2005, almost a 50 percent reduction. - Approximately fewer than 10 percent of malpractice claims go to court. Of those that do, about 70 percent received no monetary judgment. - On average, 60 percent of malpractice claims are settled without court involvement. - But the average settlement being paid out to the insured is increasing. Between 1993 and 1999, the average paid settlement was $163,500. Between 2000 and 2004, the average was $238,000, but it is leveling off. Medical Malpractice Report on Insurers with Over 5% Market Share Progress on Medical Suits 11/16/2006 © The Charleston Daily Mail CHARLESTON - Five years ago, West Virginia policymakers had so tilted justice in favor of plaintiffs and plaintiffs' lawyers that it was in danger of losing medical malpractice insurers and physicians. West Virginia legislators had, for example, allowed juries of only six people in medical malpractice cases. It's easier to persuade six people to award damages than to persuade a jury of 12. Physicians and insurers complained that the climate was one of lawsuit lottery. Doctors had difficulty finding coverage they could afford, and insurers were choosing not to do business in the state. Finally, a crisis forced the state to re-balance the scales of justice to retain insurers and doctors. And to prevent an exodus, state officials created what immediately became -- and remains -- the state's largest medical malpractice insurer. The Legislature gave West Virginia Mutual $30 million of the taxpayers' money for startup costs, to be repaid over 30 years at 1.5 percent interest. West Virginia now requires 12-person juries on medical malpractice cases. It requires plaintiffs to have claims certified, and to pay higher filing fees for damage suits. The state compressed the pre-trial process and allowed for mediation. It also capped damages for pain and suffering, awarded in addition to actual damages, at $250,000. These legal changes have made a difference. The number of medical malpractice suits filed in state courts has dropped by almost half in five years. Patients brought 379 lawsuits in 2001. By 2005, the number of cases had fallen to 193. Malpractice insurers that do business in the state have since made more than twice as much as they spent, according to the state Insurance Commission. The mutual, which insures two-thirds of the state's doctors, has $50 million in reserves, has cut rates by 5 percent, and plans a 15 percent cut in January. The state did not go as far as it could have to take the pressure off the medical community. The plaintiffs' bar thinks the state has made it too difficult for victims of medical malpractice to recover damages. It is a balance that will be re-examined forever. But the changes saved the state's medical infrastructure. Now to repay taxpayers, which should not take 30 years. Malpractice Insurer Seeks Lower Rates CHARLESTON - In an apparent nod to West Virginia’s friendlier malpractice environment, the state’s largest malpractice insurer put in for a 15 percent rate decrease last month. West Virginia Physicians’ Mutual — the safety net for nearly 1,700 West Virginia doctors — went for the significant cut in its annual malpractice premium because the number of malpractice claims and payouts dropped in recent years, company leaders said. The state Insurance Commissioner will rule on the rate request by mid-December. If approved, the rate decrease takes effect Jan. 1. “The climate in West Virginia has been good and the company has been a success so far,” said Tamara Lively, the company’s executive vice president and chief operating officer. Lively credited state laws passed in 2001 that limited the amount of money a patient could be awarded in economic damages and applied more stringent guidelines on proving a claim. “The Legislature did a superb job,” she said. “They did what they needed to do and the reforms are working. The climate in this state has changed.” Tales of a physician exodus from West Virginia abounded prior to the laws’ passage. But a Gazette investigation in 2001 found that the number of doctors in the state actually increased by 14.3 percent between 1990 and 2000, while the overall population increased by only 0.7 percent. A Gazette-Mail investigation of 2,300 resolved malpractice claims found that their number decreased from 1993 to 2001 and that West Virginia had fewer settlements and verdicts than border states, and the average payment was equal to or less than those awarded in neighboring states. Such a large rate reduction would make a nice New Year’s gift for many physicians. The 2-year-old Physicians’ Mutual boosted premiums by 10 percent when it began, then chiseled off 5 percent last year. The new rate reduction would shave off what’s left of the initial hike and more. “We’re sort of thrilled,” said Dr. Robert Ghiz, an orthopedic surgeon and chairman of the Physicians’ Mutual board. “If you pay $100,000, that’s a $15,000 reduction.” Fifteen percent is the overall rate decrease, Lively said. A doctor’s personal rate reduction depends on his specialty and years in the business, she said. Physicians in primary care and other low-risk fields might pay only 13 percent less if the new rate passes, she said. Doctors in riskier fields such as brain surgery could pay yearly premiums 26 percent lighter than they pay now, Lively said. The yearly rate for a veteran doctor in a low-risk practice would fall from $23,612 to $20,389, according to Physicians’ Mutual’s rate-change application. A typical orthopedist — one who does not perform spine surgery — pays about $90,000 each year for malpractice insurance, Ghiz said. Under the new rates, such a surgeon could save $15,000, he said. New doctors seeking to set up shop look closely at malpractice rates, he said. In the last few years, Ghiz’s practice, Bone and Joint Surgeons Inc., recruited three new doctors (one since left), he said. In years past, he and his partners struggled to recruit one, he said. Lower expenses and less risk of lawsuits also means doctors might be inclined to practice longer and perform more difficult procedures, he said. “It’s a more pleasant environment to treat patients,” Ghiz said of West Virginia. “What it means to citizens is there are more doctors available to treat them.” Medical Malpractice Reform in West Virginia After passing tort reform measures in 2003 that included a $250,000 cap on noneconomic damages, West Virginia has seen an increase in the number of new physicians in the state. According to the West Virginia Board of Medicine, 377 new physicians were licensed to the state in 2004, the most since 391 were licensed in 1999. The state previously had hit a low point with 305 new licenses in 2000 (The Heartland Institute, 5/1/05). West Virginia Physician's Mutual, the states largest medical malpractice insurer has added 100 new doctors who had previously left West Virginia to its membership rolls. In addition, the company has applied in 2005 for a 5 percent reduction in premiums physicians pay for malpractice coverage. The president credits the reduced premiums and the addition of doctors to medical malpractice reforms that have been passed since 2001 (Charleston Gazette, 8/20/05). Woodbrook Casualty Insurance, the state's largest private malpractice coverage provider serving about 250 doctors, sought a 3.9 percent rate decrease in 2005. The request must go to the state Insurance Commission for approval (Charleston Gazette, 8/20/05).
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