How New York's Medical Malpractice Insurance Changes Can Affect Injured Patients

Our team of medical malpractice lawyers represent injured clients in New York, where the malpractice insurance market is undergoing significant change. Although this may not be on the public’s radar, it could leave injured patients vulnerable and without prompt payments.

When a patient is seriously injured or killed from medical negligence, the have the right to file a claim against the doctor, nurse, or hospital responsible for their injuries. All health care professionals are required to pay medical malpractice insurance premiums (like auto insurance) precisely for this reason. Doctors pay their premiums, and the insurance companies are responsible for paying claims filed by injured patients and their families.

In 2012, U.S. insurers spent over $3 billion in malpractice payments.

Like all other types of insurance, malpractice markets are governed by state law. In New York, the market is undergoing a dramatic shift as local carriers struggle to compete with out-of-state carriers taking advantage of a loophole in federal law.

This may not seem like a big deal, or like it won’t affect your daily life. But anyone can be affected by medical negligence at any time, even the healthiest and wealthiest among us are not immune to mistakes in medical care. In fact, medical negligence is the third leading cause of death in the United States, behind heart disease and cancer.

New York’s second-largest malpractice insurer, Physicians’ Reciprocal Insurers (PRI) was recently involved in a federal corruption case – the one that brought down Senate majority leader Dean Skelos – and may soon be sold to an out-of-state company. PRI’s poor financial situation is important because New York only has five malpractice insurance carriers. These companies pay into a fund that acts as a safety net if one of the companies folds. If one goes under, the costs spread among the other four insurers, ensuring doctors are covered and patients owed money are paid.

Out-of-state insurance companies do not pay into this fund, and can charge health care providers significantly cheaper premiums. This is, obviously, attractive to many doctors and hospitals looking to lower their insurance payments, and these out-of-state companies are growing quickly. Their growth not only weakens the state’s safety fund, but presents a host of other wide-reaching issues as well.

Out-of-state insurers are governed by the laws of their home state, so New York cannot inspect their books or regulate their practices. This loophole is based on a 1986 law – the Liability Risk Retention Act – which sharply limits state’s ability to regulate out-of-state malpractice insurers in any way. New York’s attempts to regulate these insurers have bee denied by federal appeals courts repeatedly.

How This Affects Patients

If a malpractice insurance company folds, all of its pending injury claims are paused. This stops seriously injured patients from receiving the timely payments they desperately need. Receiving compensation in a malpractice case is already a lengthy process. Injured patients, meanwhile, need to pay for their continued care today. If they can’t rely on the court to get them the money they need, more often than not, they have to turn to Medicare or Medicaid.

This exact situation occurred in 2014, when a chiropractor sexually molested one of his patients. The patient filed a malpractice lawsuit against the chiropractor, and secured $101,175 a judgement in court. When the chiropractor failed to pay the patient, she filed suit against his insurance company, an out-of-state insurer called Allied Professionals Insurance Company (APIC). APIC denied payment to the victim, because the victim filed lawsuit under state law, and APIC was immune to any state regulation.

A federal appeals court upheld the denial based on the 1986 law. The victim never received her judgement solely due to the federal loophole APIC exploited. APIC insures more than 4,000 New York doctors.

For years, PRI and another company, Medical Liability Malpractice Insurance Company (MLMIC), dominated New York’s malpractice insurance market. As out-of-state carriers lure clients away with lower premium costs, PRI’s premiums have decreased by 24%. New York legislators are concerned that doctors don’t understand exactly what they’re buying when they switch to out-of-state carriers, and are unaware that these cheaper carriers do not have safety nets.

New York health care providers are required to carry $1.3 million in insurance for each incident. The state provides an extra $1 million of protection beyond this – but only if they’re insured by an in-state carrier. Out-of-state carriers do not have this extra level of protection, and they can choose to leave the New York market at any time, leaving doctors and hospitals without any malpractice coverage at all.

The largest competitor is MedPro, a company based in Washington D.C. and managed by a Warran Buffet company. It is currently offering doctors premium prices 40% lower than PRI and MLMIC. In the last four years, 16 new out-of-state carriers have entered the New York market.

The medical malpractice attorneys at Pintas & Mullins Law Firm have been fighting on behalf of injured patients and their families for 30 years. We travel all over the country to personally guide clients through the process of filing a claim and obtaining compensation for their suffering. If you have any questions about medical malpractice in your state, contact us for a free consultation and case review.

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