Empowering Missouri Physicians

Medical professional liability insurance has changed dramatically in Missouri, especially during the past 10 years. In the 1990s and early 2000s, numerous insurers left the Missouri market, stopped writing new policies, went out of business altogether or were declared bankrupt.

One Missouri case is helpful in understanding this trend. In 2002, SSM Health Care St. Louis was found liable in the case of Scott vs. SSM Health Care St. Louis. The decision in this case led to a weakening of tort reform laws enacted in the 1970s and 1980s. Insurers saw the looming possibility of increased payouts; physicians saw their medical malpractice insurance begin to rise. In 2003, the American Medical Association added Missouri to a list of states with a “crisis of availability” in which torts against medical professionals were directly responsible for limiting consumer access to healthcare.

In the June 2003 Public Policies, a publication of the Missouri Department of Insurance reported:

“From August 2001 to May 2002, Missouri lost 57 percent of its market capacity to write new business for physicians and surgeons because two national writers closed because of insolvency, the largest national carrier withdrew from the entire line of business and Missouri’s leading writer exhausted its financial capacity to grow as demand grew. This capacity problem greatly complicated efforts to insure doctors who lost their carriers or were shopping for new insurers, and the restricted supply- along with other factors- fueled major increases in rates.”

In 2003, Missouri Professionals Mutual began writing policies as a medical malpractice insurer. Today, MPM has 35 percent of the medical malpractice market share in Missouri. Its closest competitor has 11 percent.

On June 7, 2003, the Associated Press reported: “Some physicians have seen their malpractice premiums triple in just a few years, even when they have not been found liable in a malpractice lawsuit. As a result, doctors have started turning away from traditional insurance companies and have begun insuring themselves…”

Christi Nies, reporting for the Columbia Daily Tribune, wrote in December 31, 2003: “Tim Trout, managing director of Missouri Physicians Mutual, said the February startup boasts $15 million in premiums and expects to end its first year with 20 percent of the Missouri market share…

‘Physicians are sick of being pushed around by out-of-state carriers,’ Trout said. ‘We’re trying to bring some semblance of order back to Missouri physicians.’”

Trout refers to the crisis declared in 2003 as a “crisis of unmitigated greed by publicly held stock insurance companies” and said Missouri physicians were being “egregiously overcharged” for medical malpractice insurance. Trout says MPM has never filed for a rate increase since its inception.

Trout today attributes this success to a combination of factors, including an outsourced business model (engaging outside law firms to defend claims) and financial stability afforded by a recent retrocessional reinsurance transaction.

Robert  F. Kennedy, actuary, reinsurance broker and president of ReSource Intermediaries, Inc. who helped put together the retrocessional reinsurance transaction, said “Reinsurance in general is a risk management technique. It’s a way to close off the past years and get all of those liabilities off the books.”

In a letter posted on the MPM website, Kennedy said, “The retrocessional transaction is a sophisticated approach to accessing the global reinsurance market. It is a part of an on-going effort to continually enhance and strengthen the company and to offer greater financial security behind the insurance products it offers to insureds.”

Trout says his ability to read and understand the numbers are critical to his success.

“Numbers, correctly applied, do not lie,” he said.

But there are other factors. During 35 years in the medical malpractice insurance business, Trout has learned to pay close attention to the human cost.

“It’s the right thing to do,” he said.

Trout says his company monitors the court filing system closely and knows when one of its physicians has been sued, usually before the physician knows. An MPM representative immediately contacts the plaintiff’s attorney to accept service on the suit.

“It’s humiliating for a doctor to be served in their own office in front of patients,” Trout said.

The numbers tell an even more disturbing story.

“A physician with an open malpractice lawsuit is twice as likely to be sued than one who doesn’t have an open case,” Trout said.

Why?

“Being sued takes its toll,” he said. “Some physicians really take it hard.”

This is in part why Trout pushes for quick resolution in cases in which there has been a failure to meet the standard of care.

He has developed personal relationships with many attorneys at medical professional liability plaintiff’s law firms in Missouri and says this has helped in bringing claims to resolution.

“Again, it’s the right thing to do,” he said. “I have no problem sitting down with a doctor and saying ‘You blew it, we gotta pay it.’ They know I speak from the heart.”