THE MEDICAL MALPRACTICE INSURANCE INDUSTRY-A STUDY IN STUPIDITY

Aon Risk Solutions reports that costs stemming from medical malpractice claims will rise. But you have to wonder why it is practically alone in the wilderness performing this Chicken Little play, while most other national insurers have acknowledged that such costs are not only down, but continue to decrease. Even in New York, there was no increase in premiums for two years, followed by this year’s 5% increase (see earlier post here ). Pennsylvania insurers are seeing only drops in costs. Could it be that Aon will profit from the increased premiums it will likely be charging doctors and hospitals?

Meanwhile, it’s fascinating how little coverage has been given by the medical/insurance industry press to the early resolution of medical malpractice cases facilitated by New York’s own Judge Douglas McKeon, as part of President Obama’s Pilot Program addressing healthcare costs.   This is the only example I have seen, despite the fact that, as the article acknowledges, the program saves hospitals millions of dollars.  Could it be that it is essential to Judge McKeon’s process that hospitals acknowledge their mistakes early on, placing the liability insurers’ bean counters into a long-term and uncomfortable cringe state?

And yet, when hospitals are forthright at the beginning of the adversarial process, and engage in meaningful settlement negotiations, they save their insurers the cost of months of billable hours by defense lawyers doing little more than delaying and obfuscating so that they don’t kill the goose that laid the golden egg, that is, the lawsuit brought by the plaintiff.  As long as the suit is alive, they can keep billing the insurance company to “defend” it.

The smart insurance company sees the value in early resolution based on frank discussions from the outset.  The remaining insurance companies, who are unfortunately in the majority, roar for tort “reform.”  And apparently unbeknownst to them, they do so to their own detriment.