The Professional Liability Insurance Crisis Could Affect Your Ability to See Your Orthopaedic Surgeon

In some parts of the country, orthopaedic surgeons and other physicians are closing their practices, retiring early or leaving their state due to the unavailability or unaffordability of medical liability insurance.

Medical liability insurance protects doctors in medical malpractice liability suits. Medical liability insurers are raising their prices or not providing physicians with coverage because their costs have been increasing while their revenues have been decreasing. The increasing costs have been caused by a tremendous rise in the awards granted in some medical malpractice lawsuits and by the cost of defending against frivolous suits. In some of these cases, the amount of the awards is way beyond the extent of the injury that the patient has suffered. Insurers also have been hurt by the downturn in the economy.

The AAOS believes that injured patients should be fairly compensated for their damages. When malpractice occurs, orthopaedic surgeon and other physicians should be held accountable and awards in lawsuits should be high enough to compensate the injured patient for his or her medical expenses, lost wages, pain and suffering.

However, when injured patients are given awards that are disproportionate to the extent of their injuries, it not only drives up the cost of medical liability insurance for doctors, but it can increase the costs of health care for everyone. It can also make it harder to get health care because physicians are sometimes forced out of practice when they either can't afford insurance or obtain it at any price.

The following is background information on the crisis and how it can affect your ability to receive care from your orthopaedic surgeon.

According to the American Medical Association, twelve states are facing a medical liability insurance crisis: Florida, Georgia, Mississippi, Nevada, New Jersey, New York, Ohio, Oregon, Pennsylvania, Texas, Washington and West Virginia.

In these states, physicians are having an extremely hard time finding or affording liability insurance and is either closing their practices, limiting care, retiring early or moving out of state.

Thirty-one states are showing problem signs. In these states, liability insurance premiums are rising at a high rate and insurance companies are not writing new policies. Physicians are beginning to alter their practices in response to the situation.

Only seven states have not been significantly affected by this issue: California, Colorado, Hawaii, Indiana, Louisiana, New Mexico and Wisconsin.

In 2001, the St. Paul Companies, the largest underwriter of medical liability insurance, announced that it would end its medical liability business. Since many other insurance companies had already filed for bankruptcy, many doctors were left without any means to get insurance.

At the same time, companies that are still in the liability market are dealing with skyrocketing losses because of rising awards from lawsuits and the downturn in the financial markets. They have to pass off these losses to their physician policyholders through higher premiums.

In most states, physicians cannot practice medicine without insurance, so if they are unable to find insurance they must either move to a state where they can get it or suspend their practices until they can find it.

For example, in Pennsylvania, 40% of the orthopaedic surgeons had their policies discontinued at the end of 2001. About 31% of these orthopaedic surgeons were not able to find new insurance by the beginning of 2002 forcing them out of practice.

Since the average amount of awards from lawsuits differs from state-to-state, liability insurance costs also differ across state lines. The amount that physicians pay for liability insurance also differs depending on the type of medicine they practice. For example, the premium for an internist will be much lower than for an obstetrician or an orthopaedic surgeon because the services that an internist provides are not as risky as the services provided by these other physicians.

In those states where there is a crisis, orthopaedic surgeons have been forced to either retire early, move their practices to states with different legal systems, or alter their practices to stop performing surgery and only seeing patients in the office (this lowers their premiums).

The professional liability insurance crisis could most dramatically affect your care if your orthopaedic surgeon is forced to retire, move out of state or stop performing surgery. A recent survey of orthopaedic surgeons found that the increased cost of medical liability insurance has caused:

• 39% to avoid performing spine surgery;
• 21.3% to eliminate emergency room call;
• 6.2% to eliminate all surgery;
• 5.4% to retire early; and;
• 55% to refer more cases to other physicians.