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Court challenge to our malpractice law could double, triple your malpractice insurance rates
e-Reports, April 2, 2012
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The U.S. Supreme Court began hearing oral arguments about the two-year old health care law as this issue went to press. But the Indiana Supreme Court sits poised to hear oral arguments of its own in Plank vs. Community Hospital.

The Plank case challenges the constitutionality of a cornerstone of our medical malpractice law – the $1.25 million medical malpractice damages cap. A last-minute postponement placed oral arguments in Indianapolis on hold, but the pending threat to our 37-year-old malpractice cap remains a concern for physicians, hospitals and health care providers.

Our state’s Supreme Court ruled favorably for us in the past; however, the court changed recently. Chief Justice Randall T. Shepard and Justice Theodore R. Boehm, who had historical perspective on our law, have retired.

If the plaintiff in the Plank case succeeds and the cap is ruled unconstitutional, we can’t be certain what will happen to Indiana malpractice insurance rates. But if neighboring states without a malpractice cap are any indication, our rates will increase significantly – perhaps even skyrocket.

“All physicians need to know that the challenge to our medical malpractice act is real and it is serious,” said Tom Vidic, M.D., ISMA president. “In an environment of unlimited liability, the state’s physicians could be forced to take steps to protect their personal assets.”

The ISMA joined the fight in the Plank case in 2011; read more about it on the ISMA website.

A bit of history
Instituted in 1975, our cap was set at $500,000 and raised twice over the years. It was a period when insurers faced a liquidity crisis because of large malpractice awards and limited capacity. Bill Cast, M.D., chair of the ISMA’s Committee on Professional Liability in 1975, recalled a legislative emergency that affected all the people of Indiana.

“The law guarantees that funds will be available to pay patients who have legitimate claims of negligence,” said Dr. Cast. “The cap, like that in place for worker’s compensation, insures money will be available to pay those claims. It was passed at a time when physicians faced a choice between leaving practice or going bare (without insurance).”

The cap protects society in general, Dr. Cast added. Overturning it today when doctors’ pay is decreasing and hospital margins are narrowing “would be disastrous for medical coverage in our state.”

Our neighbors’ rates
According to an annual report of national medical malpractice insurance rates in the Medical Liability Monitor, Indiana’s 2011 rates were generally lower than neighboring states and competitive nationally.

The Medical Liability Monitor publishes commercial rates for major insurers in all 50 states for internal medicine, general surgery and obstetrics/gynecology. The report offers a baseline comparison for rates across the country, but does not reflect credits or other factors that may reduce or increase rates. For applicable states, patient’s compensation fund surcharges are also part of the report.

The graphic provided below shows the reality of Indiana’s affordable malpractice insurance coverage.

Your role in controlling rates
Indiana Med MalThe ISMA is actively defending the Plank case on your behalf, to help maintain affordable malpractice insurance rates. Thank you for renewing your membership because the ISMA can continue its efforts only through the dues support of members like you.

We speak for approximately 8,000 physicians, yet thousands of your colleagues are not ISMA members. They do not support us in this fight. Encourage your physician friends and colleagues to join the ISMA. Ask your group or employer if all your physicians are ISMA members. Pass along this newsletter or direct colleagues to the ISMA website where they can read the story and apply for membership.

“The cost of ISMA dues is a fraction of the cost of losing this case,” noted Julie Reed, ISMA general counsel. “If our damages cap is taken away, we may never be able to get it back.”

State Med Mal rates

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