Insights from a Medical Malpractice Carrier Executive

By Peter Leone

I have spent 34 years primarily handling an estimated 40,000 malpractice claims. In addition, I have attended several hundred trials and made the ultimate decision on hundreds more. I have personally settled several hundred claims in excess of $500,000. At one time 60 law firms in 5 states reported to me and I had one year (during the height of the crisis) when we paid a million dollar claim once every week.  I also took 28 verdicts in excess of the policy and counseled each of those physicians.

We had a fairly sophisticated computer system and program for sorting data. Through that sorting process I determined we paid approximately 40 million in defensible claims. These are claims in which it could be determined that the physician did nothing wrong and did not deviate from any reasonable standard of care. The last figures I saw showed approximately $200 million paid annually in loss for all med mal carriers in New Jersey. Unscientific interpolation would produce a paid loss of approximately 80 million in defensible cases.

This is the crux of the matter and the plaintiff’s bar would have you think otherwise. We pay too many defensible cases and not nearly enough doctors are allowed to try their case.  Settlements drive the crisis despite and the crisis will continue as long as defensible claims are paid. Every day another doctor has a surcharge placed on his insurance premium, and thus pays far more than he should. Worse and more egregious are those doctors who find themselves in the surplus lines market paying 200% of their expiring premium.

Here is what happens when defensible claims are paid:

• they produce surcharges when none should exist
• they send the wrong signal to the plaintiff’s bar
• they lull the carrier into shirking their fiduciary responsibility
• they place an enormous financial and emotional burden on the physician
• they result in across the board rate increases
• they cause increases in reinsurance costs
• they signal to the plaintiff’s bar to find high value claims with or without deviation from the standard of care
• they create a society of experts willing to compromise their colleagues
• they drive up expenses (typical claim can cost on average $30-40,000 and more.)

Our current system has been bastardized by the plaintiff’s bar with the judiciary as a willing co-conspirator.  In addition many other players have contributed to the “crisis.”

Professional liability carriers have driven rates up and in many cases this occurred due to their own malfeasance both in acts of omission and commission.

Our legislators have failed our physician community mainly due to apathy and ignorance and generally a failure to come to grips with the issues.

The media has failed to understand the issues and as a result continue to watch the slow death of the medical profession.

Thus, I have come to the conclusion that the plan of having the state reward physicians who provide charity care with medical malpractice coverage for their entire practices would have several benefits. The taxpayers would be relieved of this enormous burden of the Medicaid system.  The poor would have better access to care, and physicians would be able to practice in an environment whereby they are not expected to order every possible test on the first encounter.  This plan is a good one and should be advanced by the New Jersey legislature.