Published: December 03, 2006 12:02 am      

Medical malpractice crisis at end, commission reports

Opinion

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.

— Contact House Speaker Kiss, D-Raleigh, by phone: (304) 340-3210; by writing: Office of the Speaker, Room M-228, Building 1, Capitol Complex, Charleston, WV 25305; or by e-mail: castor@mail.wvnet.edu