Home Medical Malpractice Richard Anderson’s inflation worry isn’t what you might think

Richard Anderson’s inflation worry isn’t what you might think

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Inflation is on the mind of Richard E. Anderson, MD, FACP, chairman and CEO of The Doctors Company and TDC Group, the Napa-based 80,000-member physician-owned medical malpractice insurance company, the largest in the United States. It’s the inflation of jury awards.

“We are seeing really high verdicts compared to historical norms. What is different now is this is occurring all over the country—in very liberal and conservative venues,” he said

In part Anderson blames “social inflation” where the jury is swayed by socioeconomic and behavioral trends instead of purely by legal arguments. He said the desensitization of large sums of money is triggering what he said are sky high juror awards.

“A lot of jury verdicts are based on emotion. It is the emotion in how you feel about the plaintiff or injured party, and how you feel about the individual lawyers, and the defendant, and if there is a doctor you don’t like, it often affects the outcome of the verdict,” Anderson, 74, explained.

To get away from the stress of work Anderson travels with his wife, combining those adventures with his love of photography. Like many travelers, the pandemic delayed their plans to see the pyramids in Egypt and cruise down the Nile River until later this year.

He likes the outdoors, with whitewater rafting providing some of his most memorable adventures, including several trips through the Grand Canyon.

“Another rafting trip was on the Tatsheshini River that goes from Canada to Alaska. You are rafting with glacial ice for about a week and end up in Alaska’s Glacier Bay all on a rubber raft.”

The couple is also kept busy with family. Between them they have seven children and 10 grandchildren.

The following is a Q&A between the Business Journal and Anderson that has been edited for clarity and space.

What types of lawsuits have been brought forward that are COVID related?

An estimated 15,000 COVID-related lawsuits have been filed nationally as of mid-2021. While the majority of these initial lawsuits were against long-term care facilities, it was thought the next targets would be providers and other facilities, including some hospitals.

But here we are over two years into the pandemic, and we that has yet to occur. The Doctors Company has had 39 COVID-related claims as of July 1, 2022, and has not paid any indemnity. A physician is more likely to have a complaint made to a licensing board for a COVID-related incident than to have a medical malpractice claim.

What is affecting the cost of medical malpractice insurance premiums?

COVID has not affected the cost of medical malpractice insurance. What has generated an increase in medical malpractice insurance rates is severity, or the average cost of a medical malpractice insurance claim.

From 2014 to 2018, the number of verdicts in excess of $25 million more than tripled. Similarly, from 2010 to 2019, the average cost of the top 100 jury awards for medical malpractice cases nationwide rose by nearly 50%.

Most carriers were slow to notice this increase, but The Doctors Company responded and instituted modest rate increases in most venues to avoid a large increase all at once. We are almost caught up, but the rest of the industry has not, so industry rates are trending upward while ours have stabilized.

How many cases involving your members are with merit v. frivolous?

In an average year, we close 80% of the cases brought against our members without a payment to the patient. We prefer to think of those cases as non-meritorious. Among those non-meritorious cases is a subset of cases that can be considered to be frivolous.

How do the cases without merit impact the medical profession?

Even though we win over 80% of our cases with no indemnity paid to the plaintiffs, the average claim costs over $100,000 to defend.

These costs are reflected in the cost of medical malpractice insurance, which is an overhead cost of practicing medicine. All of that gets added into the ultimate costs that every one of us pays to get our health care.

And to the extent that medical malpractice insurance is unaffordable or to the extent that, for example, an obstetrician in a rural area literally cannot afford medical malpractice insurance to cover deliveries, access to care is seriously impaired.

What are your thoughts about Assembly Bill 35, which affects civil damages in medical malpractice cases?

With the withdrawal of the Fairness for Injured Patients Act (FIPA) initiative from the November 2022 ballot and the passage of the new legislation AB35, key features of the state’s longstanding Medical Injury Compensation Reform Act (MICRA) have been maintained. The increase in noneconomic damage caps under AB35 is limited and will not take full effect for 10 years.

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