Although the Oklahoma Legislature passed bills over the last two years that supporters said would rein in medical malpractice insurance rates, officials with the state's largest medical malpractice insurer say more reform is needed.
Although malpractice rates are expected to hold steady for the next two years, the long-term outlook is not good, officials say.
We see a continued need for legislative help to try to get stabilization like six or seven other states in the country have, said Carl Hook, chief executive and president of the Physicians Liability Insurance Co., which provides medical malpractice coverage to 65 percent of Oklahoma doctors.
Hook said passage of a hard cap on non-economic damages in medical malpractice lawsuits is the key reform needed to stabilize the market.
Non-economic damages, also known as pain and suffering awards, are meant to compensate plaintiffs for problems that cannot not be quantified, while economic awards pay the actual costs of verified damages that occur due to medical negligence.
Medical officials have argued for a hard cap of $250,000 to $300,000 that allows no exceptions.
Under the lawsuit reforms (also known as tort reform) passed in the past two years, there is a hard cap on damages only for Oklahoma doctors in emergency rooms and those delivering babies.
Hook said a hard cap on non-economic damages would allow a stabilization of malpractice rates within three to five years after enactment because of the lag time involved in processing malpractice lawsuits in the court system.
In Texas, passage of a hard cap on damages over a year ago allowed one company that covers roughly half of Texas doctors to cut its rates, but other insurers have not approved rate reductions, Hook said.
Nobody can guarantee that doctors' premiums will go down from the hard cap being passed, but they do expect stabilization and to stop the bleeding, if you will, Hook said.
PLICO officials say malpractice rates in 2006 should be the same as those charged for 2005. Beyond that point, they cannot predict which direction rates will head, but say current trends aren't promising.
In the medical professional liability arena, there is still no indication that the trends have changed in a direction that will soften prices, said Dale Neikirk, executive vice president of PLICO.
The drive for additional lawsuit reform in Oklahoma comes even as PLICO officials are working to improve the company's financial standing.
Officials said PLICO had a $140-plus million deficit at the end of last year. The Oklahoma Legislature amended state law to allow malpractice insurers to operate without maintaining reserves sufficient to cover all potential claims for an 18-month period.
They've given us time to be able to have a better performance in future years - in 2005 and on out - in order to recover the funds sufficient to pay all those estimated reserves, Neikirk said.
He said the deficit is currently just an actuarial situation but the company was expected to experience cash-flow problems within two to three years that would have prevented PLICO from paying its bills.
Under current trends, the company expects to eliminate the deficit within three to five years, assuming the company does not lose its current market share. …