The health care reform law will produce "staggering changes" in the U.S. health care system, said W. Stancil Starnes, chairman and chief executive officer of professional liability writer ProAssurance Corp.
Starnes said his own view of the world, "which does not have a bit of actuarial science behind it, is that the health care reform act is going to cause frequency in medical professional liability cases to go up."
The Patient Protection and Affordable Care Act will add 30 million people to primary insured rolls, Starnes said.
"The two drivers of medical professional liability litigation are patient frustration and unexpected outcomes. One of those two things is generally what sends a patient to a lawyer," said Starnes, speaking at the annual insurance conference of the New York Society of Securities Analysts. "Now stop and think for a moment, and see if you can figure out anything that the health care act is going to do to reduce patient frustration or to eliminate unexpected outcomes. I would suggest to you that it's going to increase both of those things."
Claims trends for ProAssurance, which primarily writes medical professional liability, remain favorable, Starnes said, with new claims opened falling to 3,890 in 2009, down from 6,577 in 2004. The company will report fourth-quarter and full-year results on Feb. 24.
The impact of health care reform on the medical professional liability market was the topic of a recent A.M. Best webinar, which can be viewed at http://www.bestreview.com/webinars/health11.
Starnes said there is no meaningful tort reform in the health care reform act, and states' efforts at tort reform are a "mixed bag with mixed results."
Meaningful tort reform -- at the national level -- will be difficult to pass, Starnes said.
"We very much need tort reform, because we need to insulate physicians from being second guessed when they make decisions based on judgment. And there are lots of bad outcomes in medicine, because there are lots of things that happen that are beyond the control of the physician. But if he exercises good judgment, he shouldn't spend the next three to seven to 10 years of his life defending a decision he had to make in 30 seconds."
Starnes said it is important to physicians that insurers defend cases where they didn't do anything wrong.
"When an insurance company settles a case, the insurance company gets to close its file. The physician never will close her file. It will be open the rest of her life. Every time she fills out an application for staff privileges, every time she fills out a credentialing issue, every time she applies for professional liability coverage, she'll have to disclose that," Starnes said.
The regulatory burden on physicians is growing, Starnes said.
ProAssurance last year acquired Austin, Texas-based American Physicians Service Group for $227.5 million (BestWire, Sept. 7, 2010). Starnes said the acquisition is going well. At the end of the third quarter -- prior to closing the purchase of American Physicians -- ProAssurance had some 63,000 policyholders.
The ProAssurance Group, based in Birmingham, Ala., currently has a Best's Financial Strength Rating of A (Excellent).
In afternoon trading on Feb. 11, shares of ProAssurance (NYSE: PRA) were trading at $59.06, up 0.22% from the previous close.
(By Diana Rosenberg, senior associate editor, BestWeek)
