Medical Malpractice Insurance Companies Making A Killing
Attorney
(866) 735-1102 Ext 645
Posted by
Brent AdamsFebruary 01, 2009 8:59 PM
The next time you hear someone talking about a “malpractice crisis” think about American Physicians Capital.
In a glowing feature article in the January 12, 2009 edition of Barron’s Business and Financial Weekly stock analysts had high praise for the malpractice insurance company and noted that: “it’s difficult to find any company more insulated from economic weakness than this one”.
In a time when most stocks have fallen by at least 50 percent, the stock in American Physicians Capital keeps rising.
From a $10.00 per share price in 2004, stock has risen to nearly $50.00 a share.
The article contained some interesting statistics which belies the claims of the insurance companies that there is a “malpractice crisis”.
The article notes that the company has cut claims in half compared with five years ago.
In interviews with the management of American Physicians Capital it was revealed that the company pays out on only 20 percent of the lawsuits filed. This is in keeping with the national statistics which show that patients only win one out of every five cases that actually go to court.
More significantly, the company noted that the size of the settlements has been trending significantly lower.
The company explains that part of the reasons that settlements are significantly lower is: “the new hard-line way we fight cases, and part of it is reform that has set damage caps”.
The chief executive of American Physicians Capital, Kevin Clinton, also claimed that the significantly lower settlements: “is also due to the way juries have stopped giving ridiculous billion dollar awards”.
The truth is, no insurance company has ever had to pay a billion dollar award in a medical malpractice case. Nevertheless, this type of rhetoric has given rise to what many of the public feel is a “malpractice crisis”.
Interestingly, the article notes that the company two years ago told its lawyers to stop accepting “court-house-step” settlement offers. The company felt that the settlements encouraged more claims from certain attorneys and that the new practice is one of the reasons that the claims have been cut in half compared with five years ago.
The company also has instituted formal training for doctors on how to improve communication with patients.
The company charges annual premiums depending upon the specialty involved between $200,000.00 and less than $20,000.00 per year.
The article did not indicate whether premiums have gone down since claims have been cut in half five years ago. There is a mention, however, of “what looks to be a temporary round of price cutting among local competitors”.
Before you shed crocodile tears for malpractice insurance companies who claim they are in the middle of a “malpractice crisis”, you should note that American Physicians Capital earns 16 percent on its total investment equity. Wouldn’t it be nice if we could go down to the bank and earn 16 percent on our savings account?
The article noted that the insurance company makes this high rate of return in part by handling claims strictly to minimize the payouts.