The company that insures Cayman’s obstetricians last month added $40,000 to doctors’ malpractice premiums, bringing rates to a record high of $162,360.
For those obstetricians, it’s an additional economic burden that has been growing larger over the past half decade that has seen rates increase by 300 per cent.
In a bid to combat those escalating insurance rates, and to pave the way for the proposed Dr. Devi Shetty medical tourism hospital, the government last month passed a bill capping
non-economic damages relating to medical negligence at $500,000. That limits the amount a court can award for pain, suffering and loss of amenities, but does not affect the amounts awarded for medical costs and loss of earnings.
For Cayman’s obstetricians, however, that has not meant a drop in premiums, which increased on 1 March – nearly three weeks before the law governing the cap was passed. The insurance company, UK-based Medical Protection Society, has said a limit on the amount of cash a court can award an individual for the pain and suffering incurred due to medical negligence is just one of a number of steps that need to be taken to bring down the rates.
Dr. Tim Hegan, director of international operations for the insurance company, has said the $500,000 “only makes up a small part of the overall compensation package”.
The impetus for the increasing costs has been a perceived willingness of courts to give higher awards to complainants, which have a knock-on effect on the cost of indemnifying doctors.
Cayman has six obstetricians in private practice and four at the public hospital in George Town. Until recent years, there were seven private obstetricians, but one stopped practising due to the rising insurance rates.
Private obstetricians say if their insurance premiums rise any further, they may no longer be able to practise in the Cayman Islands. If there are fewer private obstetricians, this has the catch-22 implication of an increase in insurance rates for the remaining private practitioners and those in the public sector who have to share the overall premium amount.
Health Minister Mark Scotland, in his presentation of the Medical Negligence (Non-Economic Damages) (Amendment) Bill 2011 to the Legislative Assembly, explained: “At the current rate of $164,000 per practitioner per year, if one dropped out, their contribution would be spread across the remaining five.” This would mean an increase of another $32,000 per doctor.
Scotland said it also affected the Health Services Authority, as it pays an aggregated rate for insurance for its medical staff. That aggregated amount has also seen an increase. “They have been advised that one of the main drivers [of the insurance premiums increase] is risk associated with obstetricians,” he said.
He added that the Medical Protection Society considers the risk for the four HSA obstetricians higher than those in the private sector “as they are responsible for nearly half the deliveries and there are fewer practitioners to spread that risk around”.
Essentially, if the private sector were to lose more obstetricians, mothers-to-be would likely turn to the public hospital’s obstetricians to deliver their babies, meaning the public doctors would have a heavier caseload, higher risks and, hence, higher malpractice insurance premiums.
The Medical Protection Society is a non-profit organisation. It describes itself as “the world’s largest medical defence organisation” and has 270,000 members in 40 countries. Although it indemnifies members, it says it is not an insurance company.
Hegan said the organisation had put off increasing the rates in recent years, as it awaited government intervention. Increasingly high court-ordered payouts in malpractice cases in Cayman, and worldwide, had led to the increase in premiums, he said.
According to the Society’s list of rates for medical professionals in Cayman, obstetricians’ fees are far higher than those classified as “super high risk”, including surgeons involved in
neurosurgery, plastic and reconstructive surgery and spinal surgery. They are charged $35,080 per annum. Doctors working in the “very high risk” category, which includes bariatric surgery, gynaecology, hand surgery, trauma and orthopaedic surgery
, pay $25,430 a year in malpractice insurance premiums.
In Cayman, more than 600 babies are delivered each year. Approximately half of the deliveries are done at the Cayman Islands Hospital by public service obstetricians and midwives, and the other half are done by the six private practitioners.
Scotland gave his Legislative Assembly colleagues an example based on 2010 insurance rates that showed that obstetricians, if charging an average of US$3,000 per delivery, would have to deliver 51 babies each just to cover their insurance premiums. Using that same average fee, under the new rates, the obstetricians would now need to deliver 66 babies each to cover the malpractice insurance rates.
Local private practitioners say that if the rates increase any further, it will simply be economically unfeasible for them to continue to deliver babies. The options for obstetricians are limited. They can pass the increase along to the patients, which eventually is likely to price the doctors out of the market as more parents turn to more affordable public sector care; they can take on more cases, but with a small population, there simply are not that many babies to go around; or more obstetricians could be introduced to the Island, hence lessening the economic burden as the premiums are divided between more practitioners. However, this last option is a hard sell, said one local obstetrician, as the costs of setting up business as an obstetrician here are prohibitive, especially with the high malpractice insurance costs.
As Scotland pointed out, partly in jest, one other answer could be for people to have more babies. However, even that would be unlikely to help, as an increased number of deliveries means an increase in risk, so it’s possible it might lead to another increase in premiums.
Acourt case that has drawn the concern of the insurer is one in which the total award paid out for medical negligence was $5.8 million. Of that award, $350,000 was non-economic damages. This is the highest known amount that has been paid out in non-economic damages. In that case, the court awarded $350,000 for pain, suffering and loss of amenities (also known as non-economic damages); $1.15 million for future loss of earnings; $3.4 million for future cost of care; $19,000 for one-off future cost of care; $882,000 for future loss of profit share; and nearly $35,000 for interest.
That case did not involve an obstetrician, but the Medical Protection Society feels it showed a willingness by the courts to give higher payouts than previously seen in Cayman. That same case was cited by the Law Reform Commission last year as part of its objection to the government introducing a $500,000 limit to non-economic damages. The commission argued that since, as far as its research could find, no court in Cayman had awarded more than $350,000 in non-economic damages, there was no reason to set a $500,000 cap on those awards and that the courts should retain the discretion to set awards.
The commission, in its report, stated that it was aware of three unresolved malpractice claims pending in the courts arising from the mismanagement of new born deliveries, but it was unaware if these had already been settled out of court.
Scotland said the insurer was keeping a “careful eye” on pending cases.
He said the organisation had informed government back in 2006 of a number of actions needed to mitigate risk for obstetricians. These included a cap on non-economic damages, which can now be ticked off its list. However, other proposals it made will be harder to achieve. Those included government covering medical malpractice cover for obstetricians, which Scotland said was not reasonable; an undertaking that attorneys would only take on cases that had reasonable grounds of success; and efforts to keep malpractice cases out of court through mediation and resolutions.
The health minister insists that capping of damages works in slowing the rate of increase of premiums and that there is evidence of this in other jurisdictions that have introduced non-economic damages limits, citing an American Medical Association report in 2005 that showed a lower growth in medical liability losses in US states with caps than in those without caps.
He also said Shetty had reported that he had received two estimates from his insurer relating to the medical malpractice rates his proposed 2,000-bed hospital would have to pay. With the $500,000 non-economic damages cap, it would be 85 per cent less than without a cap, the minister said.
“Imagine the savings it would mean to our local practitioners and their costs of doing business here. Even a fraction of that savings would be welcome,” he said.
In the meantime, obstetricians are still paying more than $162,000 and fear that it could rise even higher.