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Hospitals, lawyers clash over medical liability claims report

Maryland hospitals are calling for legislative solutions to address the state’s medical professional liability climate, which they claim is driving insurers from the state and forcing hospitals to spend funds on malpractice claims that could be spent on other investments.

But the Maryland Association for Justice, an organization representing the state’s trial lawyers, argues that the state’s hospitals pay roughly the same costs towards medical liability claims as  the rest of the nation, calling into question the validity of a recent report indicating otherwise.

The report, an actuarial analysis of Maryland hospital professional liability market that was funded by the Health Services Cost Review Commission, indicated that medical professional liability costs in Maryland are higher, when adjusted for population, than the national average. The report also showed that the average size of a hospital professional liability claim in Maryland is 75% higher than the nationwide average.

These findings were presented to a group of legislators Thursday afternoon by Stephen Koca, an actuary with Milliman, Inc., who completed the analysis.

According to hospital leaders, the volatility of Maryland’s medical professional liability market has led insurance companies, who pay towards liability claims when they cost more than the hospitals’ coverage through self-insurance, to stop providing coverage in the state. High MPL costs also prevent hospitals from being able to invest that money elsewhere.

“The medical malpractice market here in Maryland, it is destabilizing hospitals’ finances in a way that prevents us from making investments in what our model calls for,” said Victoria Bayless, CEO of Luminis Health, which operates medical centers in Anne Arundel County, Prince George’s County and other parts of Southern Maryland. “The model is calling for significant investments not only in hospital-based care but care outside the walls, care in the community, population health-based investments.”

But the representatives from the MAJ criticized the analysis use of data. Milliman relied significantly on a survey of Maryland hospitals to learn about their liability claims and did not provide the results of that survey in the report.

Jay Angoff, an attorney, consumer advocate and insurance regulator who spoke on behalf of the MAJ, claimed that publicly available data, including data provided by the Maryland Insurance Administration, National Association of Insurance Commissioners and the National Practitioner Data Bank, does not indicate that the state’s MPL environment is any worse than other state’s.

He cited a recent reporton the availability and affordability of MPL insurance, released by the MIA, that stated that “the stable rate environment and the continuing availability of coverage in the Maryland market are positive indicators for health care providers,” and that closed claim numbers remain well below a peak that the market experienced in 2012 and 2013.

Additionally, he said, the National Practitioner Data Bank does indicate that hospital liability payouts in Maryland are worse than the national mean — but only by 3.5%.

“Not the 75% that Milliman comes up with based on their nondisclosed data,” Angoff said. “Of course, Maryland and the mid-Atlantic region is going to have higher payments in general than the country as a whole because everything costs more here.”

Brian Frazee, vice president of government affairs for the Maryland Hospital Association, countered that Milliman is a national agency whose work was overseen by HSCRC and is required to follow actuarial standards.

“This is an independent report from a firm that doesn’t have a horse in this race, if you will,” he said.

He also explained numerous reasons why the report did not rely on MIA, NAIC or National Practitioner Data Bank data. MIA data, for example, does not include information on self-insurance, which was a central focus of the Milliman report and the legislative briefing.

Legislators expressed confusion about the disparate information, with some wanting a chance to speak with insurers directly in hopes of getting more accurate data. No insurance companies were represented at the briefing.

“I think we need the insurance companies in a meeting to hear directly from them,” said Sen. Pamela Beidle, D-Anne Arundel. “I’m really confused where the legitimate numbers are coming from.”

One comment

  1. Robert E. Oshel, Ph.D.

    The problem with malpractice is not malpractice payments, it is malpractice itself. Rather than trying to limit the compensation payment they make after malpractice has occurred, hospitals and physicians should work to reduce malpractice itself.

    According to National Practitioner Data Bank data, in Maryland over a 20 year period 0.8% of physicians were responsible for half of all the money paid out for malpractice claims, yet only 10% of this small group of physicians who caused half of the payments had ever had any action against their license and only 9 percent had ever had any action against their clinical privileges.

    Rather than shifting the costs of malpractice to the victims, hospitals and physicians should reduce malpractice costs by reducing malpractice. Protecting the public from the few who cause the bulk of the problem by taking action to require retraining or limiting their licenses or clinical privileges would be a good start.