Insurance Fraud

First things first. I don’t handle medical malpractice cases. But, I do handle cases involving insurance fraud and claims involving insurance companies who have broken their contract with their clients. That being said, when insurance companies perpetrate a fraud upon the public, it typically catches my attention.

In 1993, the Medical Malpractice Reform Act (MMRA) was enacted here in Michigan. One of the original sponsors of the Bill, former Representative Richard A. Bandstra, now Judge Richard A. Bandstra on the Michigan Court of Appeals, indicated that the goal of the legislation was to lessen the cost of medical insurance and/or to prevent the escalation of premiums. Both prior to and since that Act, insurance companies have claimed repeatedly that the reason for rising malpractice insurance rates is the trial attorneys and the filing of frivolous medical malpractice lawsuits. In looking at the facts, since the Medical Malpractice Reform Act of 1993 was enacted, it is clear that the trial attorneys and/or the lawsuits that they file have little, if anything, to do with the insurance rate gouging that has occurred within the malpractice insurance industry.

According to a recent article in Michigan Lawyer’s Weekly, since 1993, medical malpractice insurance rates have increased by approximately 51% for one of Michigan’s largest writers of medical malpractice insurance, American Physicians Assurance Corporation. During that same time period, the filing of new medical malpractice lawsuits is down 75%. Further, between 1991 and 2006, American Physician Assurance Corporations payments on medical malpractice claims against it’s Michigan doctors dropped approximately 60%.

If I was a physician who has been told for the last 15 years that my insurance rates have gone up each year due to the trial attorneys and then I found out that medical malpractice filings were down 75% and the amount of money that my insurance company was paying out was down 60%, while my own premiums had increased 50+%, I would be absolutely livid.

I suppose the trial attorneys are an easy target and one that, not only our legislature and general public, but doctors as well, have demonized as the cause for rising insurance rates. But the fact of the matter is since the Michigan Medical Malpractice Reform Act of 1993 was enacted, insurance rates are way up, lawsuit filings are way down and, more importantly, the amount of money that the insurance companies are paying out on lawsuits has dropped significantly. This leaves only one reason for the rising insurance rates – large profit margins for medical malpractice insurance companies.