Three ‘Crisis’ States Show Improvement after Tort Reform

Published May 1, 2005

Physicians aren’t ready to celebrate just yet, but tort reform efforts are showing signs of positive effects in Ohio, Texas, and West Virginia, where reform legislation was enacted in 2003.

From lower liability insurance premiums–or at least less-dramatic premium increases–to more insurers entering the market, doctors are starting to see some of the results they hoped for when they pushed for change in their respective states.

In Texas, every insurer but one lowered liability premiums for 2005, and the last one soon may follow suit, said Texas Medical Association President Bohn D. Allen, M.D. West Virginia has seen an increase in new physicians and a decline in defense costs for liability insurance companies. Ohio has seen a moderation of premium increases and two new insurers enter the market.

States Were in Crisis

The states are three of 20 the American Medical Association (AMA) declared to be in crisis because of rising medical liability insurance premiums, based on the results of a March 2004 survey. In those 20 states, some physicians were retiring early, and others were forced to discontinue high-risk procedures or move to states not in crisis, as a result of high liability premiums.

Progress attributable to measures passed in Ohio, Texas, and West Virginia has been gradual, but the signs of what’s to come are encouraging, say medical association representatives.

“I liken this with taking an aspirin for bringing a fever down,” said Evan Jenkins, executive director of the West Virginia State Medical Association and a state senator. “Trial lawyers want you to think when you take the medicine, you’ll see the effects immediately, but it takes a little time.”

“We realize it may take time for the full benefit of legislation to take effect,” noted Donald J. Palmisano, M.D., J.D., immediate past president and member of the executive committee of the American Medical Association. “We’re encouraged that the American public understands the issue is a loss of access to care.”

Texas Amends Constitution

In Texas, early in 2003 voters approved a constitutional amendment capping awards for noneconomic damages at $250,000 beginning in September of that year. Access to care seems to be improving as a result.

“[Obstetrics] groups around the state that had stopped delivering babies have gone back to doing that,” Allen said. “One group in Fredericksburg [near Austin] put a big ad in the newspaper saying, ‘We’re back.’ I think we’ve turned the corner.”

Medical liability insurers are also responding. Texas Medical Liability Trust, which insures more than one-third of the state’s physicians, followed up its 12 percent cut in rates last year with another 5 percent drop this year. Maury Magids, president of the American Physicians Insurance Exchange, said premiums for Texas physicians insured by the company would decrease by a total of $3.5 million this year. Effective May 1, he said, 2,200 of the 3,500 physicians insured by the company will see an average drop of 5 percent.

The Doctors Company, a Napa, California-based firm that insures more than 1,100 physicians in Texas, announced plans to reduce premiums for 90 percent of its doctors in the state this year. Some reductions will be as much as 30 percent; physicians at the most common coverage level will see a 14 percent decline on average, said Richard E. Anderson, M.D., chair and CEO of the company.

Allen said such premium reductions are examples of the overall effect of the constitutional amendment, which, unlike legislative action, can’t be struck down by a court or changed by subsequent laws. “It’s rock solid,” he said.

West Virginia Laws Challenged

West Virginia physicians have seen their fight shift from the state legislature to the courts. Tort reform measures, including a $250,000 cap on noneconomic damages, have stood up to challenges so far, Jenkins said.

Physicians have responded positively to the reshaping of the liability climate, Jenkins said. The West Virginia Board of Medicine reported 377 new physicians were licensed to the state in 2004, the most since 391 were licensed in 1999. The state hit a low point with 305 new licenses in 2000.

A report issued late last year by the West Virginia Insurance Commission noted medical liability insurance rates continued to rise in the state, but the increases were less dramatic than in previous years. Loss results for insurance companies have leveled off, and defense costs declined in 2002 and 2003, according to the report.

“We still have an affordability crisis in West Virginia, but every indicator at this point is very promising, suggesting rate relief,” Jenkins said.

Ohio Physicians Optimistic

Ohio physicians are equally optimistic that rate relief is coming, because they’re seeing signs of stability in the liability insurance market, said Tim Maglione, senior director of government relations for the Ohio State Medical Association. Two new companies have begun selling liability insurance in the state since a $350,000 cap on noneconomic damages took effect in 2003, Maglione said.

Premiums, which had been increasing at rates in the 30 percent range before tort reform measures passed, were increasing between 10 and 20 percent this year, he said.

However, the Ohio Department of Insurance reported in February on a “Physician Medical Malpractice Insurance Survey,” conducted by Paul Werth Associates, a Columbus, Ohio marketing communications firm, which concluded rising malpractice insurance costs are still having an adverse effect on doctors and patients.

When assessing the state of the medical liability insurance market, Ohio Department of Insurance Director Ann Womer Benjamin reported in February premiums had increased at a lower rate in 2004 than they did in the two previous years. Some companies had even lowered rates for general practice physicians in certain regions of the state, she noted.

Michael Norbut ([email protected]) covers practice management issues for American Medical News, where this article originally appeared. Reprinted with permission.

For more information …

The State of West Virginia’s 2004 Medical Malpractice Report, issued November 2004, is available online at

The Ohio Department of Insurance’s work on medical malpractice reform, including the February 2005 survey by Paul Werth Associates, is available online at