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A vicious cycle: High patient compensation fund cap, number of lawsuits making medical malpractice insurance unaffordable for NM doctors
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EDITOR’S NOTE: EDITOR’S NOTE: The Health of New Mexico is a series of articles aimed at breaking down the state’s doctor shortage. Each week a different topic that’s playing into the shortage will be introduced and discussed with input from state legislators and Dr. Julie Harrigan, founder and CMO of Physician EHR Solutions, LLC, who practices and consults not only in New Mexico but also several states around the country. Article 2 focuses on the patient compensation fund.
“It’s getting to the point where we’re uninsurable.”
That’s what Dr. Julie Harrigan had to say about the rising cap on New Mexico’s patient compensation fund during the Health of New Mexico Episode 2.
Harrigan, founder and CMO of Physician EHR Solutions, LLC, who practices and consults not only in New Mexico but also several states around the country, explains what the patient compensation fund is:
“The patient compensation fund is designed to put a cap on medical malpractice claims in the state. In New Mexico … that is currently, if I’m not mistaken, $650,000 but up from $250,000 a few years ago.”
When she started practicing in New Mexico, that max, she believes, was at $125,000.
Additionally, as a doctor that consults and practices in several other states, Harrigan said it’s $400,000 higher than the highest cap she’s seen elsewhere, which is $250,000.
“The problem with the compensation fund is that it incentivizes people to sue providers, because they know that even if they settle, the can get up to that amount,” she added.
Where it causes a problem for the state’s physicians, she said, is that the high cap, as it continues to rise, raises the medical malpractice insurance rates for providers on top of having to contribute to the fund.
“Every time they raise a patient compensation fund amount is more that the insurance company will have to pay in the case of a lawsuit,” Harrigan said, making them uninsurable.
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And, the state tops the nation in the number of malpractice claims per capita, which feeds into the problem, state Sen. Martin Hickey, M.D., said.
“New Mexico is potentially so uninsurable because of the large number of claims is so litgioous that nobody with a B.A. in business would take on malpractice insurance with the record in this state,” he said.
Harrigan has experienced that personally, saying that as the owner of a med spa where she sees patients 2% of the time and she hasn’t been sued, her insurance goes up 10-90% each year. “I can’t make enough to cover the malpractice insurance, and that’s just for me; that’s not for everybody else,” she said.
And, Harrigan said, the two continue to feed into each other.
“The higher the patient compensation fund goes up, the more money that the attorneys make, the more they’re incentivized to sue,” she said. “It was developed with good intentions … but at the same time, if you keep raising the cap, then you’re just raising the ceiling. You’re insuring a jalopy for the price of a Lamborghini, so it’s not sustainable, and the insurance companies, the fact of the matter is, they will not cover us anymore, and you can’t practice without adequate medical malpractice coverage.”
State Sen. Craig Brandt, who came on to discuss tax incentives for episode three, circled back to the issue.
“Our medical malpractice insurance is just absolutely through the roof — most expensive state in the nation for that. We have a very litigious society,” he said. “Basically, the only one who seem to make any real money in New Mexico is the trial attorneys.”
And that’s where Harrigan feels the drive to continue to push up the cap on the patient compensation fund comes from.
“When you look at our legislators, you go to the Roundhouse and you look at the lobbies and the lobbyists, who are they? It’s a lot of trial lawyers,” she said. “It seems pretty obvious that in a highly litigious state, where when you go to the Capitol when you have these legislative sessions and there is an overabundance of trial lawyers, it seems a bit shifted.
“In the state of New Mexico, when you have such a large — almost like a giant conglomerate of, let’s face it — trial lawyers, it behooves them to continue to do this because they’re making money off of it.”
So what can be done to make the state more friendly to doctors and physicians?
For Harrigan, the answer is easy. “We need to stop raising the patient compensation fund,” she said. “The downstream consequences are just tremendous: It’s affecting the doctors, it’s affecting the insurance, it’s affecting the patients because we can’t have doctors stay in the state.
“It’s well-intentioned, and I do think that having a cap on medical malpractice claims is a responsible thing to do for multiple reasons, but the fact that they keep raising it and raising it to the detriment of the state, of the hospital systems, of the physicians, and now, this trickle-down effect where it’s affecting patients and patient care. If you can’t get in to see your primary care physician … how sick are you going to be by the time you land at the hospital? How many tumors are you missing? How many stage-four cancers are you missing? These are the trickle-down effects of the fact that we’re becoming unpractical and uninsurable and practices are having to close their doors.”
Brandt feels a change in culture is needed.
“It’s really ironic that we always call it the practice of medicine but we expect doctors to be perfect, right?” he said. “They’re not magicians; they’re doctors, and we have a society that thinks that just everything can be fixed immediately or it should be fixed yesterday, and if not, I’m going to sue you about it. That’s not the right culture for us to have, and we’ve got to change that culture.”
Hickey is interested in studying what’s working in other states and taking a balanced approach to finding solutions.
“There are 11 other states that have this patient compensation fund. … How is it working for them? Again, it’s getting back to the patient who isn’t able to get the care because the service that was provided has to be dropped,” he said. “If there’s no one there to see them, and this is one of the issues that’s driving that, we need to understand that and try to get more of the facts out on the table.”
He does feel there is a need for the fund, but that more balance is needed. “People do get injured, and they definitely need to be compensated, especially for the injury, so there’s definitely a role, but when I look at it, what I’m sensing is it’s unbalanced.”
Hickey also addressed making sure the money actually makes it to the patient instead of the lawyers.
“The attorney for the plaintiff, if successful, can get somewhere between 40-50% and maybe even 60% of the settlement, so there is a definite financial motive at play. … It kind of incentivizes potentially more suits that do not have merit, or very questionable merit,” he said, noting that other states have put a cap on the percentage lawyers can earn to take away that incentive. “I think we need to find what works to sustain the trial bar and their function but also not deter and make it essentially financially unworkable for clinicians to be here with the number of rate increases they’re now getting.”
“I think this really deserves a special committee to tease out all of these things,” Harrigan said. “You need a patient advocate to come to the table, you need the lawyers to come to the table, you need the physicians to come to the table and we need the legislators to come to the table, and the insurers, and really hash these things out. Lowering the patient compensation fund would be a fantastic first step.”
However, getting it done at the legislative level could be a challenge, especially if you ask Brandt if there’s a will to get it done.
“The fact of the matter is, we can fix education in this state. We just don’t have the will to do it. We know how to fix it,” he said. “We just won’t do it because there is a political group that doesn’t want us to, and kind of the same issue with this issue is we have a group that’s a very strong, very active political group that doesn’t want it fixed because they’re making a lot of money from it.”
Hickey was more in line with Harrigan’s idea. “We need to bring all these parties to the table to sit down, get a great facilitator — someone who really knows malpractice inside and out in other states — and what’s a fair way to do it and try to come up with legislation, with the appropriate regulation. … There are solutions to the problems, and a lot of states are doing it. We do have a tendency here in New Mexico to reinvent the wheel and then it comes out square.
“Again, I’m going to come back to the base of this: Who’s suffering?” he said. “The other question is, will we be a state that, because we can’t get the good doctors, we get what’s left over? That’s not good for patients. We need to get the best clinicians. … We need to get the best possible into this state, and that’s going to be better for care all around.”
