The dirty little secret that medical malpractice carries are not telling the public

by faithgibson on November 11, 2021

Here is an excerpt from a newspaper article about a lobbying campaign by physicians in Tennessee to change the state’s medical malpractice laws in ways that would have benefited the med-mal carriers and supposedly reduced the premiums paid by doctors.

What came to light in this excellent example of investigative journalism was the part of the story that med-mal carriers didn’t want the rest of us to know — that med-mal companies were actually making a huge profit by investing the premiums left over after they pay out the annual claims in the stock market.

Here are the ugly details.

Newspaper headline in The Tennessean ~

 “Docs become Mr. Hydes as lobbyists” 

By Larry Daughtrey –04/23/06

“Was there a crisis to begin with? State regulators didn’t think so. A little-noticed report for the year 2004, issued last October, had some startling findings.

During that year, only six medical malpractice cases reached juries in Tennessee, with awards totaling $1.9 million. Insurance companies settled 444 before trial at a cost of $108 million, with an average settlement of $45,904.

Insurance premiums charged that year totaled $327 million.

The dominant medical malpractice insurance firm in Tennessee is a mutual company owned by the doctors themselves, meaning that it returns dividends to its members.

It has $765 million in reserves. Tennessee ranks in the lowest third of the states in malpractice premiums.”


Editorial Comment: 

Apparently having the general public be hysterical about a malpractice “crisis” is good for the medical malpractice business! 

Of course, this is the best argument for a national ‘no fault’ fund for parents whose baby is diagnosed in the first 6 months of life with profound and permanent neurological damage, irrespective of any necessity to prove causation.

As for all the malpractice issues aside of neurologically damaged babies, self-insuring is a reasonable arrangement and by far the best one for midwives.

However, this pool of money should not be used as in the above story, that is, as an investment opportunity for bonds and hedge funds designed to make money for the mutual-owned carriers.