Placing Caps On Damages in Medical Malpractice Cases Will Lower Doctor Malpractice Insurance Rates, Right?

I keep hearing that Tennessee doctors pay a lot of money for malpractice insurance and that if we limit the right of patients to bring lawsuits doctors will save money on insurance.  Is that right?

There is no reason to believe that malpractice rates will be dramatically or even materially reduced if the Tennessee Legislature caps damages in medical malpractice cases.  

Here are a few statistics that address the issue.  In 2010 an internist in Tennessee paid $7076 for $1,000,000 worth of medical malpractice insurance.  This provided the doctor for up to $1,000,000 for any single act of malpractice and total payments for three or more claims of $3,000,000 in any year.  The rate for this insurance was 23.11% less than it was in 2009.

Texas has capped the damages that can be recovered in medical malpractice cases.  To get the same insurance coverage as a Tennessee internist, a Texas internist would pay between $13,190 and $25, 609 (depending on the county where he or she practiced.

Mississippi has caps on damages in malpractice cases.  The same insurance company who would insure an internist in Tennessee for $7076 would charge a Mississippi doctor $10, 016. That’s right – the insurance company protected by damage caps in Mississippi actually charges Mississippi doctors more for the same insurance coverage!!!!

Missouri has caps on damages in medical malpractice cases.  An internist in Missouri pays between $16,553 and $22,212 for the same insurance coverage that a Tennessee internist pays $7076.

The list goes on and on, but you get the point.  Caps on damages don’t translate into lower malpractice rates for doctors.

I confess I told a little lie when I told you that a Tennessee internist pays $7076 for insurance. Actually, it is less.  You see, the doctors in Tennessee own their own medical malpractice insurance company.  It is called State Volunteer Insurance Company (SVMIC).   In other words, they sell it insurance to themselves.  Their motto:  "We are physicians taking care of physicians.  We are SVMIC."

In 2009, the company made almost $72,000,000  in profits and gave its doctor-owners a dividend of $20,000,00.  This reduced premiums by about 8%, which means that the internist paid $560 less than the list price for insurance.

But that is still not correct.  You see, if the doctor attends a one-day seminar to learn how to protect patients from injury, they save another 10%.

So, in 2010, Tennessee internists paid about $5800 for medical malpractice insurance.

The numbers for the doctor owned company in Tennessee are not public yet, but when they are reported I predict that they will show profits of over $50,000,000.   I predict another dividend to the doctors of $20,000,000 or more.  And I predict a rate decrease for 2100 of 10% or more.  This will occur even though the damage cap law, if passed, will not be effective until after July 1, 2011.

Call your legislator and urge him or her to oppose restrictions on the right to trial by jury in medical malpractice cases.  Go here to get your legislator’s telephone number.