Editor’s Note: A Tale of Two Solutions?

January 1, 2008

Is the medical malpractice insurance crisis over? Has the long nightmare of frivolous jury awards, over-the-top settlements, skyrocketing premiums, and fleeing physicians finally come to an end? Hear what Physicians Practice’s executive editor has to say.


Has the long nightmare of frivolous jury awards, over-the-top settlements, skyrocketing premiums, and fleeing physicians finally come to an end? It has in Texas. Historically plagued with low numbers of physicians per capita, doctors are now flocking to the Lone Star State. Since 2003, when Texas passed the nation’s most aggressive package of tort-reform measures, new physicians practicing there have climbed 18 percent, and the spike in 2007 was 30 percent. So overwhelmed is the state medical board with new license applications that incoming physicians are placed on a six-month waiting list.

Key to the state’s reforms was a tight cap of $250,000 on pain-and-suffering jury awards. Trial lawyers continue to gripe that injured patients are harmed by such caps, but it’s clear that patients are harmed more by an inability to see a doctor than by an inability to sue a doctor for more than a quarter of a million bucks.

The crisis is over in Pennsylvania, too, according to the governor, Ed Rendell (D), who says reforms he pushed for in 2003 cut malpractice claims in half and are now leading to lower insurance premiums for physicians. “The results are almost phenomenal,” Rendell gushed in October. “It is a problem that has, for all intents and purposes, been resolved.”

Rendell’s solution was less aggressive than Texas’, and the results have been less dramatic. Instead of pain-and-suffering caps, which Rendell opposes, reforms included a new “certificate of merit” system, under which claims must pass a physician reviewer’s muster before moving forward, and rules to prevent trial lawyers’ “venue shopping” for courts with plaintiff-friendly reputations, whether the targeted physician practices in that jurisdiction or not.

But the key to the governor’s plan was to shift some of the burden of sky-high premiums away from physicians and onto taxpayers. Pennsylvania physicians are required to carry at least $1 million in coverage - the first half in the private market, the rest from a state-run fund called MCare. Rendell’s idea was to use part of the state’s cigarette-tax revenue to subsidize physicians’ MCare premiums, with higher-risk specialists getting bigger discounts.

“That one measure took 30 percent to 40 percent of many physicians’ premium bills away overnight,” says Lewis Sharps, a Philadelphia-area orthopedist and president of Positive Physicians Insurance Exchange, a malpractice insurer founded at the depths of the crisis.

Only an amendment to Pennsylvania’s constitution would make Texas-style pain-and-suffering caps possible. Even without caps, Rendell notes, the state’s two largest malpractice carriers kept their rates stable for six years and are now asking regulators for rate decreases. The physician hemorrhage Pennsylvania endured four years ago “has slowed to a trickle,” Sharps says.

Yet Sharps, like many physicians in Pennsylvania, bristles at the governor’s mission-accomplished proclamation: “We’re seeing the market soften but it would be wrong to describe the crisis as over.” While physicians have stopped fleeing, “it’s still extraordinarily difficult to recruit new ones.”

There’s more to do, he says. Pennsylvania should establish a specialty court to handle malpractice cases, just as it has for bankruptcy and family law. Its certificate-of-merit system should be strengthened and loopholes to the venue-shopping restrictions closed. As for pain-and-suffering caps, well, Sharps would like nothing better, but he’s a realist.

Texas has proven that caps work. While it’s too soon to be sure, Pennsylvania may prove that measures short of caps can also work - not as dramatically nor as quickly, but certainly better than nothing.

Bob Keaveney is executive editor for Physicians Practice. He can be reached at bkeaveney@physicianspractice.com.

This article originally appeared in the January 2008 issue of Physicians Practice.