"The malpractice insurance crisis which has been ravaging medical communities just across Maryland's borders will take hold firmly here," T. Michael Preston, head of the state medical society, warned insurance regulators yesterday.
Preston told a Baltimore hearing sponsored by the Maryland Insurance Administration that a proposed 28 percent increase in malpractice insurance premiums is necessary to pay for the growing costs of medical malpractice verdicts won by trial lawyers in the state.
Jay Angoff, an expert witness for the Maryland Trial Lawyers Association, called a malpractice crisis here unlikely.
He said that only a 3.7 percent premium increase is needed and that the increase is necessary primarily because the medical malpractice insurance company's investment income was down.
He told regulators that Medical Mutual Liability Insurance Society of Maryland, which covers most of the state's doctors in private practice, is seeking higher rates than it needs, in part because it is "over-reserving" - setting aside more money than it is likely to need for claims.
Angoff, a former Missouri insurance commissioner, was a consultant to Maryland officials during the CareFirst sale hearings this year.
Yesterday's debate is the latest episode in a long-running argument between doctors and trial lawyers over whether the threat of a malpractice crisis in the state is manufactured or real.
A decision from the insurance administration on Med Mutual's rate increase proposal is expected in the fall.
Whatever the outcome, the doctors and the lawyers expect to take their fight to the legislature in January.
Preston, who is executive director of MedChi, the state medical society, said he would be seeking new state laws on malpractice to end what he called "runaway payments" to injured patients.
J. Mitchell Lambros, a Cockeysville attorney who is president of the trial lawyers' group, said MedChi has fought legislative efforts to strengthen the state's system of disciplining bad doctors, "and now they're fighting to make it easier for bad doctors to get insurance."
Med Mutual is owned by Maryland doctors.
Preston, who is a member of Med Mutual's board, said the doctors are considering legislative proposals including limits on attorney fees and a lower ceiling on nonmonetary damages. (Maryland has a limit of $620,000 on "pain and suffering" payments, in addition to direct damages such as medical expenses and lost income.)
David L. Murray, president and chief executive officer of Med Mutual, said higher claims payments, not a drop in investment income or reserves, are the main reason for higher rates. Through the end of last month, he said, Med Mutual had paid out $54.7 million, almost as much as the $$56 million it paid all of last year.
The average claim, Murray said, is $364,886 this year, up from $234,000 in 2000.
MedChi agrees that the 28 percent rate increase is justified by claims - it hired an actuary who agreed with Med Mutual's calculations - but Preston said the higher premiums could lead some obstetricians, particularly in rural areas, to stop delivering babies.
Obstetricians pay among the highest rates, an average of about $84,000 a year, which would increase to about $107,500 if the full 28 percent increase was approved.
He said the increase would also have an impact on primary-care physicians, who pay relatively low premiums but operate on tight margins already.
Dr. Alan Leffler, senior partner in a five-doctor pediatric practice in Ellicott City, said his practice currently pays $5,000 to $6,000 per year per doctor in malpractice premiums - a cost of about $1.50 per patient visit. The practice collects an average of about $64 for each visit.
He said the practice can't pass on the higher insurance costs, since its rates are set by contract with managed care insurers, so the increase "would come right out of my pocket." Pediatricians in his practice make $85,000 to $90,000 a year, he said, and would have to bear an increase of about $1,500 each in malpractice premiums.
Brendan Bridgeland, director of the Center for Insurance Research in Cambridge, Mass., said the debate between Maryland doctors and lawyers reflects a national struggle.
Consumer groups, he said, generally line up with the lawyers. He said his group believes the current malpractice rates are heavily influenced by "business cycles and investment cycles," and that the national data on increasing malpractice awards is unconvincing.
'A big deal'
But Paul Ginsburg, president of the Center for Studying Health System Change, a nonprofit Washington think tank, said studies conducted by his group in 12 markets around the country (not including Maryland), have found that "in some of them, malpractice really is a big deal, to the point that it is affecting the delivery of care."
The current system, he said, does a "miserable job" at its two principal aims: compensating injured patients - at which it is slow and inefficient, he said - and assuring patient safety.
In general, he said, problems appear less severe in Maryland than elsewhere.
"It doesn't sound like in Maryland there's a crisis," Ginsburg said "but that doesn't mean you don't want to look at how to improve the system."