Malpractice payouts not to blame for premium hikes?

August 1, 2005

A recent study on closed malpractice claims in Texas found that "insurance market dynamics"—not increasing payouts in lawsuits—were to blame for rising insurance premiums, according to Medical Liability Monitor (April 2005). The study, authored by three law professors, was promptly criticized by medical groups and insurers.

A recent study on closed malpractice claims in Texas found that "insurance market dynamics"-not increasing payouts in lawsuits-were to blame for rising insurance premiums, according to Medical Liability Monitor (April 2005). The study, authored by three law professors, was promptly criticized by medical groups and insurers.

The study, Stability, not Crisis: Medical Malpractice Claim Outcomes in Texas, 1988–2002, supports arguments by trial lawyers that tort reform, such as caps on noneconomic damages, is not the answer for reducing high insurance premiums. Based on a review of closed claims compiled by the Texas Department of Insurance, the authors found that claim rates, payments, total costs, and jury verdicts were stable and defense costs rose by 4%.

Insurers and medical groups, however, called the study "seriously flawed," citing problems with the authors' methodology. The American Medical Association also noted that by focusing on closed claims, the study omits lawsuits that take much longer to resolve and often result in larger payouts. In addition, these groups noted that the study flies in the face of other evidence demonstrating that high payouts result in high liability premiums and that tort reforms, including those passed in Texas, have helped reduce these rates.