Georgia Malpractice Premium Cuts Haven’t Panned Out

Despite promises that rising medical malpractice insurance rates would be suppressed under new state laws, many of Georgia’s insurers have hiked their premiums since the sweeping reforms took effect last year, according to an Associated Press analysis of state insurance records.

Six of the state’s top insurers of doctors and dentists have increased their liability rates, in some cases, by more than a third, since new restrictions on malpractice cases became law in February 2005, according to state Department of Insurance records obtained by the AP through an open records request.

The reforms passed by the Georgia Legislature last year included a $350,000 limit on jury awards for malpractice victims’ pain and suffering, tougher standards for expert witnesses in malpractice trials, and new incentives for patients to settle out of court.

Doctors and hospitals contended the measures, dubbed “civil justice reform,” would curb malpractice insurance rates and help lure more doctors to Georgia. Business lobbies, too, threw their weight behind the legislation because it encourages speedy out-of-court settlements and penalizes parties who make frivolous claims.

But trial lawyers and patient advocacy groups argued that limiting damage awards puts an arbitrary price on a victim’s life, and that the state’s medical insurers have fostered a false crisis by driving up premiums in a market with little competition.

“Our worst fears have come true,” said Allie Wall, the director of consumer group Georgia Watch, which vigorously opposed the new laws. “More than a year has gone by, yet Georgia doctors have not saved a penny on their insurance, as promised, and the insurance companies are still raking in record profits.”

Insurance Commissioner John Oxendine, who supported the reforms that backers vowed would help cut costs for medical providers, said ways must be found to entice more competition in the state’s malpractice insurance market. Providers of malpractice insurance in Georgia typically seek the insurance commissioner’s approval of any planned rate increases, even though they are not required to do so.

“We’ve got to get these people in here. I can afford to tell someone ‘no’ on homeowners and car insurance hikes,” Oxendine said. “I don’t have as much flexibility when I don’t have as much competition” in the malpractice insurance market.

He said the smaller insurers are hiking their rates to “catch up”‘ to market leader, Atlanta-based MAG Mutual, which covers roughly three out of four doctors in Georgia and has frozen its rates since the malpractice measures took effect.

The company has promised state lawmakers that it eventually will cut its premiums by 10 percent, but not until the changes withstand a legal challenge in the state’s highest court. The court has yet to hear a challenge, and patient advocates warn it could be years before it does.

Defenders of the state’s malpractice reforms point to MAG Mutual’s commitment to freeze its rates as an example of their success.

“Tort reform is working,” said Senate Pro Tem Eric Johnson, the chamber’s leader. “I think the fact that the big one has frozen rates is a sign that it’s working.”

Officials at MAG Mutual declined to comment on their decision to freeze rates.

The six other companies that increased rates in the past 15 months represent only about 15 percent of the state’s malpractice market. The largest of that group, The Medical Protective Company, underwrites roughly $23 million in medical malpractice claims while MAG Mutual writes $162 million in Georgia.

The biggest increases were by Birmingham, Ala.-based Medical Assurance Co. and Jacksonville, Fla.-based First Professional Insurance Co. Both companies requested rate increases of 64 percent but settled with the state on hikes of 35 percent. Medical Assurance’s increase was approved last April, while First Professional’s rate jump was brokered with the state just days after the reforms were approved by lawmakers.

Officials at both companies didn’t immediately return telephone messages seeking comment on why they requested the increases.

Rate increases among the four other insurers ranged from 2 percent to 15 percent.

To doctors who were squeamish about the law’s impact, the premium boosts validated their fears.

Dr. Kelly Thrasher, who practices internal medicine in Sandy Springs, was skeptical of the legislation during last year’s debate. Since the bill was signed into law by Gov. Sonny Perdue, he’s seen his malpractice rates nearly double from $9,000 last year to about $17,000 this year.

“I feel like I’ve been duped,” Thrasher said. “(The debate) pitted doctors against lawyers because I think there’s a natural rivalry, but a lot of my colleagues were hoodwinked.”