by J.D. Tuccille and Dr. Ethan Hausman
March 30, 2003

America's ailing health care

Important as it is to human well-being, health care is always in the news for one reason or another. While many issues are exaggerated for headlines or political posturing, the current problem is far more alarming. Doctors are losing access to malpractice insurance, and with it the ability to continue to serve their patients. The crisis threatens hard times ahead for health care in Virginia, Tennessee and throughout the country.

On retiring from practice, or changing jobs, most physicians are required to buy an extended malpractice insurance policy called a "tail" -- sometimes, but rarely, this supplemental insurance is included in a basic malpractice policy. These policies cover doctors against claims arising from acts that occurred before they retired or changed employers. Since standard malpractice applies only to physicians' current practices, without tails doctors could never switch employers or close up shop without risking financial ruin from even the most frivolous of lawsuits.

But these policies are worthless if the insurance company that issues them goes bankrupt.

To avoid that fate, at the beginning of 2002, the St. Paul Companies, the second-largest provider of malpractice insurance in the nation, announced that it would offer no new malpractice policies because its medical liability division is hemorrhaging money. Rising premiums just couldn't keep up with skyrocketing jury awards.

Even with its dramatic concession of an entire area of business, a year later, the company's existing malpractice policies continue to cost the firm millions of dollars.

But that's better than what happened to the Reciprocal Alliance Risk Retention Group, which is now in receivership. With the group's various companies on a corporate death watch, doctors who paid their premiums in good faith now find themselves stripped of the protection for which they handed over good money.

Unless we are able to get these companies back on their feet "...doctors and lawyers and medical facilities will be entirely responsible for paying these [malpractice] claims," said Paula A. Flowers, Tennessee's Commissioner of Commerce and Insurance.

Who will get the tottering companies back on their feet is an open question. Private conversations with state officials and insurance executives reveal that the Corporation Commissions of Virginia and Tennessee are waiting to see which companies are willing to come to the rescue. The insurance companies are waiting for the states to create a politically mandated solution. While new policies are available for active practitioners with current policies, no policies are offered for retirees or doctors who had tails for past job switches, but who now need new coverage.

Without physician access to insurance for past acts, patients with legitimate grievances will be unable to collect damages from doctors who have done wrong. Also, many good and honest physicians will be left holding the bag for even the most minor claims, frivolous or not, and they'd have no resources for a defense, let alone monies to pay judgement.

As it is, medicine as a profession is growing increasingly unattractive to current and potential physicians who see financial catastrophe as a likely reward for years of study and diligent work.

If Americans are to continue to enjoy access to top-quality medical care, doctors must be able to protect themselves with malpractice insurance. Plainly put, it's the cost of doing business. This isn't a matter of insulating physicians against the consequences of their actions; it's a necessary means of ensuring that patients can be made whole for the actions of bad doctors and that good doctors aren't bankrupted or, even worse, forced out of practice due to skyrocketing premiums or lack of access to malpractice coverage.

Insurance also injects a third party into medicine -- the insurer -- that has a vested interest in policing the quality of medical care.

But insurance can only be offered if it's financially feasible. The risks associated with insuring doctors must be somewhat predictable, and the awards for legitimate claims must be reasonable. If the legal system, with its out-of-control liability and jury awards, isn't reformed immediately, insurance companies will follow the example of the St. Paul Companies and leave the business, or the example of the Reciprocal Alliance Risk Retention Group and go out of business.

And then patients will wonder why, in the wealthiest nation on Earth, they can't get health care.

This column was published June 2003 in the Medical Society of Northern Virginia News.

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