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Wisconsin High Court Decision Unsettling for Healthcare Providers

Posted on: Monday, 25 July 2005, 15:00 CDT

Medical Protective's Vice President Governmental Affairs, William Daley, issued the following comments in response to inquiries about Medical Protective's view on the Wisconsin Supreme Court's recent rulings on medical liability caps:

"After decades of relatively stable rates and loss predictability, this month's Wisconsin Supreme Court decision striking down the cap on non-economic damages on constitutional grounds presents significant challenges to Wisconsin healthcare providers.

"Wisconsin's loss costs and loss trend inflation (two big drivers of malpractice rates) have proven to be relatively predictable and stable. While Wisconsin healthcare providers have not been immune from recent industry challenges and the resulting rate increases (in some cases significant), physicians and patients alike have benefited from a malpractice environment that has proven, over the long haul, to be more predictable and stable than in many other areas of the country.

"We believe - as in the case of other states with significant tort reform measures that have been endorsed by constitutional amendments and/or high courts - that such predictability and relative stability in rates over time was due, among other key factors, to Wisconsin's long-standing cap on non-economic damages. While the impact of this month's decision must be studied in depth, we expect that future loss costs and loss trend inflation will prove to be less predictable (and ultimately higher), and that malpractice rates - particularly in the higher layers of coverage now retained by the Injured Patients and Families Compensation Fund - are likely to increase at levels higher than historical Wisconsin loss inflation.

"Decisions such as this recent one in Wisconsin and in many other states, prove once again that there is significant uncertainty in medical malpractice, and why so many carriers - who have not exercised the discipline necessary for long-term commitments - have failed in this volatile segment of insurance. In fact, it seems that a AAA-commitment to responsible, long-term data-driven rate making, together with forceful actions like Proposition 12 in Texas (where the voters decided by referendum to permit caps) are the best combination to, over the long-term, stabilize loss inflation and ensure a predictable, stable and fair market for health care providers and their patients.

"Fortunately, despite the challenges and uncertainty created by this decision, Medical Protective - with our AAA financial ratings, industry-leading defense, national scope & balance, and century-long experience - has the resolve to continue to serving Wisconsin healthcare providers in an uninterrupted fashion. We remain committed to Wisconsin, its doctors, its healthcare institutions and its patients."

About Medical Protective

With more than $700 million in annual premium and $2 billion in statutory assets, Medical Protective is a national leader in primary medical professional liability coverage and risk solutions to physicians, dentists and professional corporations. As the nation's first provider of medical professional liability insurance, Medical Protective has been protecting the assets and reputations of physicians, dentists and other primary providers of health care for over 100 years. Its offerings include professional liability insurance on both claims-made and occurrence forms, risk management consulting and education, premium finance solutions, insurance support services, and - through affiliates and partners - additional financial products and services for its healthcare providers. Medical professional liability insurance products are underwritten by The Medical Protective Company, rated AAA (Extremely Strong) by Standard & Poor's, and are distributed through a nationwide network of employee market managers and appointed agents. Medical Protective is a member of the Berkshire Hathaway group of businesses.

www.medpro.com

1-800-4MEDPRO

Source: Business Wire

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