February 3, 2003 by Canadian Underwriter
With doctors across the U.S. planning or having already walked out over increased medical malpractice insurance costs, rating agency Fitch says such action could turn into a credit concern for hospitals.
Fitch’s suggestion is the latest step in a growing crisis, which has seen doctors walk of the job in several states, most recently with 800 Palm Beach-area doctors doing so for two days. Another is planned for next week in New Jersey, Fitch reports.
The impact on hospitals could be tremendous, even with the temporary loss of their most profitable business, surgery. Specifically, Fitch says, many of the doctors taking action are cardiac and orthopedic surgeons, two of hospitals’ most significant profit centers. As well, the walk-outs shift the work burden to emergency rooms, which are already unprofitable parts of hospital operations.
President George W. Bush is asking Congress to institute a US$250,000 cap on non-medical awards (i.e. for pain and suffering) in medical malpractice lawsuits as a means to limiting some of the large payouts being made by med-mal insurers. In his submission, the President notes that med-mal insurance costs rose in some cases more than 100% last year. In Pennsylvania, the increase was 40% in 2002, in Florida it reached 75% and in Arkansas doctors saw increases as much as 112% increase in one year. Specifically affected are obstetrics/gynecology physicians who have seen rates jump more than 100% in some cases over the past four years.
Speaking in Scranton, Pennsylvania earlier this month, the President said, “we’re a litigious society; everybody is suing, it seems like. There are too many lawsuits in America, and there are too many lawsuits filed against doctors and hospitals without merit.” He went on to say, “it is the fear of unlimited non-economic damages and punitive damages that cause docs and the insurance carriers to unnecessarily settle these cases. You can pretty well blackmail a doctor into settlement if you continue to throw lawsuit after lawsuit, and the system looks like a giant lottery.”