Los Angeles Times Looks at Effect of Increasing Malpractice Insurance Rates on Patient Care

In a March 4 front-page story, the Los Angeles Times examines the impact that increased medical malpractice insurance has had on patient care and trauma centers. The increase in malpractice insurance rates -- up 400% in some states -- began after the Minnesota-based St. Paul Cos., the nation's second largest malpractice insurer, announced last December that the company would no longer sell malpractice insurance. St. Paul reported a $1 billion loss in the company's malpractice insurance business last year. As a result, other malpractice insurance companies began "charging much higher rates to avoid the losses" that St. Paul reported, the Times reports. Physicians who perform the "highest-risk procedures," including obstetricians, specialty surgeons and emergency room doctors, face the largest increases in malpractice insurance rates. Many physicians receive reimbursements for procedures set by the government and private insurance companies, and hence, they cannot "pass the additional costs along to patients." Many doctors have moved to states that have passed laws that cap the amount of damages awarded in malpractice lawsuits and, as a result, offer less expensive malpractice insurance policies. The loss of doctors in other areas has prompted hospitals nationwide to close maternity wards and trauma centers, the Times reports. In addition, many patients cannot find specialists to provide treatment.

The Case in Nevada
The Times examines malpractice insurance rates in Las Vegas, Nev., which has suffered "particularly acute" problems as a result of increased malpractice insurance rates in the state. Two of the eight trauma surgeons in the city's only trauma center cannot afford the cost of malpractice insurance, which will force the center to close for 12 hours on March 12. Sixty percent of physicians in Las Vegas purchased malpractice insurance through St. Paul, and their new policies cost 400% to 500% more -- more than the salaries of the doctors in some cases. Larry Matheis, executive director of the Nevada State Medical Association, said, "Las Vegas is on the edge of having its health care system implode. This is a crisis." Nevada lawmakers have proposed a bill that would help reduce the amount of damages awarded in malpractice lawsuits, but the Times reports that the legislation will not likely pass for more than a year (Gorman, Los Angeles Times, 3/4). Physicians in the state also have considered a plan to establish their own malpractice insurance company (American Health Line, 1/31). Nevada Insurance Commissioner Alice Molasky-Arman plans to hold a hearing March 4 to examine the issue (Los Angeles Times, 3/4).