Michigan State Medical Society Reports Rate Drop Evidence that Tort Reform is Working

A clear indication that Michigan’s 1993 tort reforms are working is that the
state’s largest physician medical malpractice insurer is cutting its
premiums by 12 to 25 percent for Wayne County physicians, the Michigan State
Medical Society (MSMS) announced recently at a news conference in Detroit.

The average decrease for all physicians in Wayne County will be 13 percent
beginning January 1, according to American Physicians Assurance Corporation,
a medical liability insurer based in East Lansing that is a wholly-owned
subsidiary of the publicly held American Physicians Capital, Inc.
(APCapital).

Statewide, American Physicians’ malpractice insurance rates will be reduced
by an average of 6.5 percent in 2008.

“Michigan’s carefully designed tort reforms do not deny a truly injured
patient from just compensation,� said Sophie J. Womack, MD, a Detroit
neonatalogist who serves as president of the Wayne County Medical Society of
Southeast Michigan and as a member of the MSMS board of directors. “The
reforms have helped reduce the ‘lottery mentality’ of each mal-occurrence,
or bad outcome, from becoming a lawsuit.�

“Let me put this in perspective,� said Robert J. Jackson, MD, an Allen Park
family physician and a member of the American Physicians Advisory Board.
“Rates for my specialty, family practice, will go down 14 percent. Nothing
in the overhead costs of my practice is going down, except, unbelievably,
the cost of my malpractice insurance.

“If this isn’t evidence that Michigan’s tort reforms are working, I don’t
know what is,� Jackson said.

Jackson said that obstetricians will see a 14 percent reduction and
orthopedic surgeons will see a 25 percent reduction.

“Even neurosurgeons, who perform very high risk procedures, will see a 12
percent cut,� Doctor Jackson said.

Since the tort reforms went into effect in 1994, each component of the
legislation has withstood constitutional challenges from the trial bar,
according to Doctor Womack. Unfortunately, tort reforms in Illinois were
overturned on November 13, prompting the Illinois State Medical Society to
issue a news release stating that the “verdict could derail health care
access.�

“Over the past 13 years, the Michigan Supreme Court has supported the
obvious intent of Michigan legislators to improve the medical liability
climate in our state so that their constituents, our patients, will be able
to have access to the physicians they want and need,� Doctor Womack said.

Previously, many physicians who practiced in high-risk specialties such as
obstetrics, neurosurgery, and orthopedic surgery often left Michigan for
states where lawsuits were not as frequent and jury awards were not as high.

“The news about medical malpractice rates announced today certainly is good
news for our efforts at the Michigan Health Council,� said MHC vice
president Susan Sanford, who heads a program called “Practice Michigan.�
“We believe that improvements to Michigan’s practice environment will
directly correlate to our success in recruiting and retaining physicians
here.�

Michigan is a more favorable place to practice than many neighboring states,
Doctor Jackson said.

He said a neurosurgeon practicing today in Detroit pays a manual rate of
$201,512 for a $1 million/$3 million policy, while a colleague in Chicago,
where tort reform was just overturned, pays $256,404—a difference of
$54,892.

As part of the 1993 tort reforms, the licensing fee that physicians pay to
the state was tripled. The extra money was earmarked for the Attorney
General’s office to conduct investigations of patient complaints against
physicians.

During this same time period, roughly the past two decades, a nationwide
movement also has been underway focusing on risk management education for
physicians and their practices, as well as on patient safety and quality
initiatives throughout the U.S. healthcare system.

“The bottom line is that all of these efforts have improved patient access
to health care by limiting the exposure to unjustified lawsuits. They also
have improved the overall health care system,� Doctor Jackson said.