AIA: Ill. Malpractice Bill Includes Caps, but Sends Anti-Competitive Message to Insurers

After years of political wrangling, the Illinois General Assembly passed a controversial bill late to address the state’s medical malpractice crisis. The American Insurance Association (AIA) said the measure sends an anti-competitive message to insurers in spite of the inclusion of caps on non-economic damages.

“The General Assembly did the right thing by including caps on non-economic damages in the bill, but the new insurance regulations are very burdensome and send the wrong message to insurers who may be considering entering the market,” said Steve Schneider, AIA vice president, Midwest Region. “We have said all along that comprehensive liability reforms are the proven solution to stabilizing medical malpractice premiums and more should be done in that area to help doctors stay in Illinois.”

The current crisis has resulted in only a handful of insurance companies still writing policies in the state, and more than 135 physicians fleeing Illinois during the past two years in just the downstate Metro East area. In addition, more than 44 verdicts or settlements of $5 million or more have been handed down in Cook County alone in 2004 (source: Cook County Jury Verdict Reporter; Circuit Court filings).

The bill passed by the legislature is Amendment 1 to Senate Bill 475, and Gov. Rod Blagojevich (D) has indicated he will sign the measure when it reaches his desk. Key provisions in the measure include the following: a cap on non-economic damages of $500,000 per doctor and $1 million per hospital; increased doctor scrutiny via posting disciplinary action and malpractice lawsuit outcomes on the Internet; and greater regulatory authority over rates for the Department of Insurance – such as requiring a public hearing when a rate increases just six percent from the previous year, or if one percent of those insured by a specialty demand a hearing. Insurers will now be required to provide their actuarial data, which can then be released publicly, at these hearings.

“Medical malpractice rates already can be reviewed and denied by the insurance commissioner. Injecting emotion and politics into the system, and invading insurers’ proprietary business practices by allowing an insurance director to arbitrarily call a public hearing, are bad provisions that certainly will not encourage insurers to come to Illinois,” added Schneider.