Published 12/1/2007
Starr McCaffery

Florida reforms on track to drive competition

Report documents ED exposure risk

Since Florida passed medical liability legislative reforms in 2003, the medical liability insurance environment is continuing to improve, according to a recent report from the Florida Office of Insurance Regulation. The report specifically documents a net decline in medical malpractice rates for the primary market, which includes physicians and surgeons.

Although the report notes that rates for all companies in Florida had a net decrease of 3.06 percent for 2006, individual carriers were able to lower their rates as much as 16 percent. The report further states that the number of malpractice insurance providers in the state has more than tripled, from 3 to 10, since 2003. In sum, these figures suggest the legislation has successfully fostered the growth of a competitive marketplace in the state.

“Action had to be taken because physicians in Florida were forced to significantly lower their liability coverage to a fraction of the national average, or drop coverage completely, due to high cost at the peak of this crisis,” said Fraser Cobbe, executive director of the Florida Orthopaedic Society (FOS). “Many physicians in Florida now practice without any coverage, which is unheard of in most states.”

Going bare
In 2005, FOS conducted a survey of its active members regarding insurance issues. When asked about insurance coverage, 24 percent of respondents admitted to practicing without any medical liability insurance coverage and 39 percent indicated that their plan had limits of just $250,000 per incident/$750,000 aggregate. Only about one in five had a policy with limits of $1 million/$3 million—the level of coverage typically carried by physicians across the nation.

“With a new, competitive marketplace, we are hopeful that more Florida physicians will begin to be able to afford adequate coverage,” Mr. Cobbe said.

Legislation passed in 2003 put in place a $500,000 pierceable cap on noneconomic damages in medical liability cases. In addition, the medical community was able to pass a constitutional amendment to cap attorney fees in medical liability cases.

“Although these reform measures by themselves probably will not drive down rates quickly or significantly, we hope that the cap will help stabilize the marketplace and create a competitive environment that will force rates lower,” said Mr. Cobbe. “That is seemingly what is happening.”

On-call exposure risk
Perhaps the most interesting finding of the Florida Office of Insurance Regulation report is that nearly 13 percent of all lawsuits filed against physicians are tied to emergency department (ED) situations. This a first step toward quantifying the exposure risk for being on call.

“This is the first time that I have seen a percentage of lawsuits attributed to ED coverage. This is a major hot-button issue across the country,” said Mr. Cobbe. “We have always asked if the liability carriers can quantify exposure risk for being on-call, and this seemingly does that for the first time.”

Remarkably, the 2005 FOS survey found that when comparing emergency call surgical cases to other cases, nearly the same percentage of respondents (13 percent) found these cases to be litigious “most of the time.” The Florida Office of Insurance Regulation report now validates what practicing physicians have long recognized.

Starr McCaffery is a communications consultant working with the AAOS office in Washington, D.C.