Bold move, but makes sense in a state with caps:
Dr. R.E. Hamrick often wondered why, if he’d never paid out a medical malpractice claim, his medical malpractice insurance premium was so high.So his next move was only natural after the state’s Legislature passed a few tort reform measures in 2003.
“When this all came out, he was paying hundreds of thousands of dollars in malpractice insurance when over 20 years he’d never paid out for a claim,” said Richard Walters, an attorney with Miller, Weiler and Walters in Charleston.
“Because of the medical malpractice crisis, he was still paying six figures.”
Hamrick, fed up with the premiums, decided to insure himself.
(via MSSPNexus Blog)
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Why does the presence of caps make it make sense, Kevin? Is he only going to treat the elderly and children – people with no income?
Otherwise, a catastrophic injury that caps would apply to will still likely have hundreds of thousands in past and future medical bills, as well as lost income.
Sometimes I wonder about your financial reasoning.
I guess this dispenses with one of the caps supporters arguments, though. That they are needed to reduce malpractice premiums.
“”The tort reform has helped the nature of the environment in West Virginia,” Walters said. “Not just in medical malpractice but litigation in general — whether it’s real or perceived — insurers come in and provide premiums that are going to be sky-high because their perception is they are going to be paying millions of dollars.”"
Insurers don’t make their premium calls on perceptions.
Anon 10:19, can you restate your concern? I must have the same financial problems as Kevin here. In a state without caps, it would be very risky to self-insure because there’s always a chance you’ll be asked to pay an order of magnitude more than you can afford. There’s no way you can afford to put that much away in advance. In a state with caps, there is some degree of predictability that makes $1 million in the bank likely to cover the most likely of malpractice claims. What’s wrong with this reasoning?
The problem with your theory is that caps only apply to noneconomic damages.
A case that’s going to involve significant pain and suffering damages to the point that a cap would come into play will likely have significant medical damages and lost income (those are the bulk of most awards, anyway) which will likely exceed $1 million.
Really, all a cap does is act as a deterrent to those without jobs bringing a malpractice claim, regardless of merit.
The same case that exceeds the 1 million dollars that he has capitalized his one-man insurance company with, would also exceed the 1 million dollars of insurance that he was probably buying before. Either way, we are all of us always at risk for losing everything we own and everything we ever might own everytime we touch a patient.
He has just decided to spend one million now, once, instead of 100,000 annually. If he doesn’t get a claim for the the next 7 years or so, he is ahead of the game, if he gets a large claim, he loses his gamble, I suppose. Meanwhile, what the million earns will build up in the company. Depending on the insurance laws there, he can either pay that back to himself as earnings, or let it build up in the company. If he retires without a claim, I suppose he can dissolve the company and kaching, kaching! The company might be declared insolvent by the regulators if he has claims that drops it much below a million–but defense or claim costs of under 70,000 or so will probaly be paid from the earnings on investment without additional funds from him.
“Either way, we are all of us always at risk for losing everything we own and everything we ever might own everytime we touch a patient.”
No, you’re really not, with some basic asset protection planning.
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