As of November, significant statutory changes to the law of medical malpractice cases went into effect in Massachusetts. Referred to by some as the so-called “disclosure, apologize and offer” law, the statute has been touted by the healthcare industry as a “model for the nation” that could greatly benefit patients by reducing some unnecessary and protracted lawsuits, while improving patient safety. The Mass Medical Society has characterized the new law as resulting from a “historic and unprecedented partnership between physicians and attorneys in Massachusetts”.
So what does the new law actually do? In summary, the new law requires the following:
1. The law purports to require a healthcare provider of a patient who has suffered an unexpected medical result as a result of a medical error to disclose to the patient the error;
2. In the event the healthcare provider makes an apology to the patient, the apology will be inadmissible in a courtroom;
3. A person intending to file a claim against a medical provider will now be required to serve the provider with a presentment letter setting forth the factual details of the claim, what the claimant contends is the applicable standard of care, what the claimant contends constitutes the breach of the standard of care in the particular case, and the basis for asserting that the breach of the standard of care is the proximate cause of the claimant’s asserted harm;
4. After sending the letter, the patient is required to wait six months for a response from the healthcare provider or from the provider’s insurer;
5. The statute reduces the interest payable on verdicts in medical negligence cases to 2%, plus the one-year treasury bill rate. Since the current one-year T-bill rate is less than one-tenth of one percent, this effectively lowers the interest rate on malpractice verdicts to 2% per year.
6. The statutory cap on damages recoverable from a charitable healthcare provider is raised from $20,000 to $100,000.
How the new law will affect the current culture for medical negligence case is uncertain. Given that one of the purposes of the law is to make the system fairer for patients is hard to understand exactly how reducing the interest rate on a judgment is related to the purposes of the statute. The interest rate on medical malpractice verdicts will now be 2% compared with 12% to personal injury actions in general. One of the purposes of allowing pre-judgment interest on verdicts is to promote the settlement of cases. Many lawyers with years of experience in handling medical negligence cases question whether the new statute will simply have the effect of encouraging the med mal insurers to force malpractice plaintiffs to obtain a verdict to receive reasonable compensation. The new law comes after years of outcries against out-of-control verdicts and proliferation of lawsuits. Medical negligence tort reform advocates have asserted that reforms are necessary to protect doctors from soaring increases in their medical malpractice premiums, and as a means of helping to control the out-of-control increase in the cost of medical care arising from defensive medicine practice by healthcare providers under siege from plaintiffs’ lawyers.
This article will address only one of these issues in as simple and factual way as possible. The issue is from 2007 to 2012, what really has happened with respect to what physicians in Massachusetts have been paying for their professional liability insurance?
In 2007, ProMutual, the leading provider of medical malpractice insurance in New England, announced that there would be no increase in premiums for Massachusetts physicians, surgeons, dentists or mid-wives. ProMutual further announced that in a number of specialties, including obstetrics, orthopedics and anesthesiology, physicians should expect reduced rates of up to 10%.
In 2008, by press release ProMutual announced that it would be increasing malpractice premiums for Massachusetts physicians and surgeons by 5.3%. According to ProMutual, the increase was based on a forecasted trend of increased claim losses. In the same press announcement, ProMutual disclosed and declared a 5% dividend payable to ProMutual policyholders as the result of previous years’ losses being “less than anticipated”.
In 2009, ProMutual announced a 4% increase in its rates for Massachusetts physicians and surgeons. At the same time, ProMutual announced a 6% dividend payable to its insureds because its losses had been less than expected in prior years.
In 2010, ProMutual announced a 3.5% increase in its base rates for Massachusetts physicians and surgeons. At the same time, ProMutual announced a 6% dividend payable to its policyholders to reflect the fact that costs of claims had been less than anticipated.
In 2011, ProMutual announced that there would be no rate increase with respect to the premiums for Massachusetts physicians and surgeons. At the same time, ProMutual announced the payment of a 6% dividend to its policyholders due to costs of claims being less than anticipated.
In 2012, ProMutual, after changing its name to Coverys, announced that there would be no rate increase in 2012 for Massachusetts physicians and surgeons. In addition, a 7.5% dividend payable to its policyholders was announced reflecting a “continued lower than expected frequency of claims and a lower than expected loss severity trend”.
Medical societies and tort reformers will no doubt continue to rail against the prevalence of frivolous claims, out-of-control jury verdicts, and skyrocketing medical malpractice premiums. Tort reformers will continue to stress the need for reform in order to lower the cost of medical care in this country by reducing the incidents of defensive medicine. Medical malpractice lawyers and certain public interest groups will continue to assert that the only crisis in the area of medical malpractice is the malpractice itself, citing studies that in excess of 98,000 Americans die each year as a result of medical errors.
The need for reform in the area of medical negligence law in Massachusetts may be debatable. What all should have been able to agree on, however, is that the past six years’ experience of the malpractice insurers has showed that the frequency of claims has been lower than expected and the loss severity trend was also lower than expected. ProMutual’s own statistics show that in 3 of the last 6 years, there was no increase in premiums and the total rise from the three years where premiums did increase was 12.8%. As the same time, the dividends were returned to policyholders totaling 30.5% of premiums paid. Thus, the indisputable facts are that when premiums and dividends paid are considered, Massachusetts physicians paid less in premiums over the last six years than what they paid in 2006.
Under these circumstances, it is difficult to ascertain the policy reason for revising the statutory scheme to provide malpractice insurers with a virtual immunity from paying interest on judgments rendered in meritorious cases. Indeed, this aspect of the statute appears to be just another piece of special interest legislation and seemingly inconsistent with the total statute’s purpose of reducing protracted lawsuits.