WASHINGTON – When Dr. John Prodoehl joined a 19-member orthopedic surgery group in Delaware County, Pa., in 1996, his malpractice insurance premiums were $30,000 a year.
By 2001, with his rates at $80,000, Prodoehl decided to move his two orthopedic offices across the border, to Havre de Grace and Elkton, for the lower malpractice premiums. He made it out just in time: Premiums for orthopedic surgeons in Pennsylvania jumped to $200,000 this year, he said.
“I was very upset that we had to move,” said Prodoehl, who also moved his family from his hometown of Springfield to Port Deposit. “But, it was almost like I was running from a burning building. I didn’t necessarily know where I was going or what it was going to be like, I just had to get out.”
Prodoehl is not alone. He is just one of several doctors — many in high- risk areas like obstetrics and gynecology, orthopedic surgery or neurosurgery — who have fled Pennsylvania’s malpractice insurance “crisis” to seek refuge in Maryland.
Compared to neighboring states, Maryland’s insurance market for doctors is relatively stable thanks to a physician-owned malpractice insurance company that held 42 percent of the market in 2001, according to the Maryland Insurance Administration.
That company, Medical Mutual Liability Insurance, has increased its rates just 7 percent over the past two years, said Sabrina Friedman, professional liability manager for PSA, a multiline insurance agency. The other top carriers in the state have increased rates 25 to 30 percent over the same period, she said.
Those increases pale next to Pennsylvania rates that increased 80.7 to 147.8 percent between 1997 and 2001, said Chuck Moran, a spokesman for the Pennsylvania Medical Society. The increases, coupled with a pull-out by four major insurance carriers, have made Pennsylvania one of 12 states in an insurance “crisis,” according to the American Medical Association.
But the AMA also considers Maryland one of 30 states showing problem signs.
Friedman said that several carriers have pulled out over the past few years, and those that are remain face problems.
Princeton Insurance Co. has a moratorium and is not writing any new business, GE Medical Protective is very selective in writing policies and PHICO has gone into receivership, she said. In the past two years, the St. Paul Cos. have stopped offering malpractice insurance nationwide.
But those companies only held a fraction of the malpractice business in Maryland, said Debbie McKerrow, spokeswoman for the state insurance administration.
“Medical malpractice rates are increasing just like any other insurance, but the Maryland Insurance Administration doesn’t see a crisis,” McKerrow said.
Besides the fact that Medical Mutual Liability Insurance holds much of the market, Maryland is also helped by a cap on non-economic malpractice damages and legal standards that require a higher burden of proof of plaintiffs.
Maryland’s cap on “pain and suffering” was set at $500,000 in 1994 with an annual increase of $15,000. As of Oct. 1, that cap reached $620,000.
In addition, patients in Maryland must show the doctor acted with “actual malice,” in order for punitive damages to be awarded, said Michael Preston, executive director of MedChi, the state’s medical society. An award in Maryland can also be offset by contributory negligence, if the patient’s own actions added to the damage.
Supporters of tort reform say those measures are not enough.
The House this month passed a bill that would cap pain and suffering damages at $250,000 nationwide, with punitive damages capped at $250,000 or twice the amount of the economic damages, whichever is greater.
The bill, which is not expected to go far in the Senate, has been attacked by consumer advocates and trial lawyers. They say it will not reduce premiums, but will only make it harder for injured patients to recover damages.
Bob Lembo, a spokesman for the Maryland’s Trial Lawyer Association, says tort reform is unnecessary. Insurance companies are simply going through a typical market fluctuation.
He said stock market gains in the 1990s brought in new insurers who were eager for premiums. Those same insurers are fleeing the market now that the economy is in decline, he said, leaving doctors without coverage.
“It’s an insurance marketplace phenomena and it is something that happens about every seven to 10 years. The more things change the more they stay the same,” Lembo said.
Rates are naturally higher for high-risk specialties, because there are fewer doctors among whom to spread the risk, Lembo said.
Medical Mutual rates for a general surgeon range from $31,000 to $42,000, while neurosurgeon can pay $50,800 to $68,500, said John Franklin, a company spokesman. Rates for obstetrics and gynecology range from $76,000 to $90,500.
But theory is not as important as the reality of lower rates for doctors like Brian Holmes, a neurosurgeon who moved his practice from Scranton, Pa., to Hagerstown.
Holmes said he was paying around $60,000 a year before his Pennsylvania insurance company dropped neurosurgeon coverage last year. In Maryland, Holmes pays Medical Mutual $14,000 — a low first-year rate that he fully expects will increase. But not to Pennsylvania levels.
“In January, I take office as the president of the Pennsylvania Neurosurgeon Society, but I had to move my practice to Maryland to keep practicing medicine,” Holmes said. “I think there’s a bit of irony in that.”