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Medical Malpractice Liability Insurance in Pennsylvania
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Pennsylvania’s medical liability climate is one of the most complex of all 50 states.
In fact, in a recent Harvard School of Public Health report described Pennsylvania
as being in the midst of an “extreme-level” medical liability crisis.
While doctors in Pennsylvania are still faced with some of the highest medical malpractice
insurance rates in the country, the outlook is improving on the back of legislative
changes made early in the decade. For example, according to the Medical Liability
Monitor's 2008 Rate Survey, one major malpractice carrier decrease rates by 17%
in 2008 over 2007 for OB\GYNs practicing in Philadelphia and Delware Counties.
General surgeons in Bucks and Chester Counties saw rates decrease by 28%.
To better understand the current condition of Pennsylvania’s medical liability climate,
it is necessary to look back at the situation facing physicians prior to the Mcare
Act of 2002.
The Malpractice Crisis Facing Pennsylvania Doctors
In early 2000 there was a general consensus among medical professionals and state
lawmakers that Pennsylvania doctors were facing a medical liability crisis. The
effects rippled across the state. For example, hospitals across southeastern Pennsylvania
were having difficulty keeping certain specialists on staff because of fear of malpractice
lawsuits and seemingly out of control insurance costs. Northeast Philadelphiaall
saw all the maternity wards in the region close and in Chester County there was
not a single emergency neurosurgeon in practice. The high volume of malpractice
cases saddled most Philadelphia-area doctors with malpractice insurance premiums
exceeding $100,000 annually, while million-dollar-plus jury verdicts were becoming
increasingly common across the Keystone State.
This medical liability problem and its knock-on effects appeared to be increasing
each year. In 2001, 704 medical school residents stayed in Pennsylvania after completing
their residency training; by 2003, that number had fallen to just 285. There was
a concern that the citizens of Pennsylvania were seeing a deterioration in their
ability to access to quality healthcare.
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The Mcare Act
In response to the crisis brewing across the state, the Pennsylvania State Legislature
passed Act 13, the “Medical
Care Availability and Reduction of Error (Mcare) Act” of 2002.
Some of the main points of the Mcare act were:
- replaced the existing CAT Fund that covered catastrophic loss liability with the
Insurance Department-supervised
Mcare Fund
- ended "venue shopping" for a more "favorable" county to hear the case as well as
capped punitive damages
- set new requirements in the area of patient safety, including the establishment
of a Patient Safety Authority
- reformed mandatory medical professional liability insurance amounts
- enacted certain tort reforms that required a certificate of merit
- grants power of remittitur to the courts (in other words, it allows the court to
reduce a jury verdict that is deemed to be excessive)
Initially, the Mcare Act provided modest savings to general practitioners and slightly
more for specialists through discounts on surcharges and assessments.
Physicians were still required to maintain medical professional liability insurance;
however, in 2003, the maximum required coverage was reduced to $1 million per occurrence,
from $1.2 million ($500,000 in basic coverage and $700,000 from the CAT Fund to
$500,000 basic coverage and $500,000 from the new Mcare Fund in 2003). Aggregate
annual limits were also lowered.
Mcare's Goal - Long-Term, Positive Effect on Liability Insurance
The full impact of Mcare is to be seen in the longer term with savings realized
three to five years down the road. In particular, the act limits when awards of
punitive damages may be made and specifically provides that, if punitive damages
are awarded, the damages may not exceed 200 percent of the compensatory damages
awarded. The minimum punitive damage award that may be made is $100,000 (unless
a lower verdict amount is returned). The plaintiff would receive 75 percent of the
punitive damage award and 25 percent would be paid to the Mcare Fund. This would
be used to offset medical professional liability surcharges.
Progress Is Being Made On The Issue Of Medical Liability
PA Chief Justice Ronald Castille
While Pennsylvania continues to be considered a medical liability “crisis state,”
the Mcare Act is considered by many observers to have been a measurable success
in helping reduce medical malpractice rates in Pennsylvania. In April 2008, Ronald
Castille, Chief Justice of the Pennsylvania Supreme Court, released a report entitled
"Latest
Medical Malpractice data shows continued decline in number of cases and verdicts".
The report highlighted the fact that in 2007 there were 1,617 filings, representing
an almost 41 percent decline from the “base years” 2000- 2002. In Philadelphia,
the state’s judicial district with the largest caseload, the decline was more than
50 percent during the same period.
Pennsylvania Malpractice Rates Are Declining
Pennsylvania still ranks as one of the top states in the U.S. for high medical malpractice
insurance rates. However, both the cost of primary coverage with one of the state’s
largest medmal insurers, and Mcare surcharges have experienced declines since
2005.
In 2008, a large insurance company serving Pennsylvania announced an immediate,
overall 11-percent rate reduction for its physician insureds. Another carier
soon followed suit by lowering its premiums by 6 percent, effect July 1, 2008.
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