Soaring malpractice insurance squeezes out doctors, clinics

The shock from Jim Lawson's July 4 death in Nevada auto accident was felt well beyond his family and friends.

The two-car crash on a busy street leading to Las Vegas airport came just one day after the nearest trauma clinic, at the University Medical Center, closed down. The 58 orthopedic surgeons who rotate through the hospital had insisted on relief from the soaring cost of medical malpractice insurance.

No one can be sure his death, confirmed at an emergency room an hour away, could have been avoided. Trauma centers generally offer more effective attention for accident victims.

But it prompted a quick July 13 reopening of the university center. Some 10 to 15 of the doctors agreed to become temporary employees of the county hospital, limiting their liability to $50,000, while the governor tries to enact legislation that would restrict medical malpractice awards.

On a much broader level, it brought new attention to a national problem that doctors say is obliging many of them to flee certain states or give up certain specialties -- or the entire profession -- because of skyrocketing insurance premiums linked to soaring jury awards.

The impact of the trauma center's closure in Las Vegas was summed up by its director, Dr. John Fildes: "The standard of care in our community was set back 25 years."

The number of communities suffering similar problems is mushrooming.

This summer, two Pennsylvania hospitals, one Arizona hospital and a clinic in Oregon closed their obstetrics units.

Several counties in upstate New York have no obstetricians covering night shifts.

Soon, two counties in Pennsylvania won't have a neurosurgeon. Seven hospitals on the Mississippi coast share 3 neurosurgeons, one of whom, Terry Smith in Biloxi, is likely to leave next month because he can't find insurance.

Thirteen insurance companies have refused to cover Dr. Smith, who currently pays $65,000 in annual premiums. One company may agree to cover him, but it is likely to cost $100,000, an amount he says he can't afford.

Smith said he often puts in seven-day weeks now to meet the community's needs.

"This is an area with lots of poor and minority people, so you as a doctor feel you doing something important," Smith said. "I feel guilty about leaving but I just don't have a choice.

"The two guys I'm leaving behind are friends of mine and they'll be working even harder," he said.

Mississippi is one of 12 states where rising premiums, tied to awards by state juries in malpractice cases, are creating a crisis, according to the American Medical Association. The others are New York, Nevada, Florida, Ohio, Texas, Georgia, Pennsylvania, New Jersey, Washington, Oregon and West Virginia.

Because of risks associated with certain medical conditions and forms of treatment, some specialties pay especially high rates, and those rates are compounded by being charged in states where laws place fewer limits on jury awards.

For example, while premium increases this year average about 15 percent nationwide for all practices, rates for obstetricians and gynecologists in Pennsylvania are set to balloon by anywhere from 40 percent to even 81 percent, according to Medical Liability Monitor, a trade publication. In West Virginia, they are catapulting anywhere from 29 percent to 36 percent.

The average jury award for medical malpractice doubled to $1 million in the six years ending in 2000, according to Jury Verdict Research, a private database used by lawyers, insurers and doctors. Lawyers who handle malpractice cases are critical of the database, pointing out that it is not comprehensive and contending that its findings are inflated.

In any event, verdicts of more than $1 million are common in states like Mississippi and Nevada. In the first six months of this year, there were five jury awards in in Mississippi and the average verdict was $5.6 million, according to the state's medical association.

"I think juries are just frustrated with managed care and health care in general, so they take it out on doctors," said Dr. Michael Daubs, an orthopedic surgeon who said he may leave Las Vegas if his rates keep rising.

He says he has never been sued but his insurance jumped $20,000 to $60,000 a year. He has applied for medical licenses in three other states.

Some insurance companies are leaving the medical liability business. St. Paul Cos., the second largest provider of medical malpractice insurance, announced last December it would stop writing policies, leaving 42,000 doctors searching for coverage. St. Paul said it lost close to $1 billion on its medical malpractice line last year.

Smaller insurers are also cutting back or leaving the business. Pennsylvania's second-largest medical malpractice insurer, Phico Insurance Co., failed earlier this year and was liquidated by the state.

Legislation has been introduced in Congress that would limit the pain and suffering portion of malpractice awards to $250,000. The bill, intended to override state laws, would also curtail lawyers' fees and allow juries to hear about the plaintiffs' other sources of income.

"We absolutely need tort reform," said Dr. Donald Palmisano, president elect of the AMA. "The situation has spiraled out of control.

The AMA lists six states as having their malpractice situations under control: California, Colorado, New Mexico, Wisconsin, Indiana and Louisiana. In Wisconsin, where there is a limit on awards, St. Paul did not suffer a loss.

Trial lawyers are opposed to the caps. They cite surveys showing juries rule in favor of doctors in two thirds of all malpractice lawsuits. They say doctors and hospitals should focus on reducing mistakes, not jury awards.

"If you run over someone over by accident, no one is putting a cap on what you will have to pay them. Why do we want to elevate one group in society above another?" said Leo Boyle, president of the Association of Trial Lawyers of America.

Boyle blames insurance companies for keeping rates artificially low in the 1990s to win business as they expanded wildly, a practice made possible by booming returns in the stock market. "Insurance companies were reckless in their pricing and now patients are supposed to pay for it?" he said.

Joseph Roethel, who follows the medical insurance industry as assistant vice president at A.M. Best Co., an insurance rating agency, parcels out the blame equally: Insurance companies kept rates too low in the 1990s and jury awards have gone too high.

Now, he said, "Insurance companies don't have the reserves for these types of jury awards."

Some doctors are resorting to working without insurance, using a credit line or their own money to cover malpractice expenses. The practice isn't common but is done, especially in Florida. Most hospitals won't allow that practice.

Two hospitals in West Virginia have begun directly employing more doctors and paying their insurance to alleviate the doctor shortage. Many hospitals consider such an option too expensive.

At Bluefield Regional Medical Center in West Virginia, doctors are more careful now in delivering medicine, according to hospital president Eugene Palowski. But they are also much less willing to care for high-risk patients with multiple conditions, leaving them to find physicians in surrounding states.

Many patients are confused, or just plain angry.

Marine Hawkins, 20, of Boyle, Miss., was shocked to hear from her obstetrician that he was closing his practice -- just two weeks before her due date of July 21.

The nearest doctor is 30 minutes away. She doesn't have a car, and will have to rely on relatives to get there.

"This isn't what I needed now," she said.

On the Net:

www.ama-assn.org

www.juryverdictresearch.com

www.MedicalLiabiltyMonitor.com

Association of Trial Lawyers of America: wwwl.atla.org