Skyrocketing Inflation Causes $4 Billion in Malpractice Damages
In a concerning development for the medical community, a new report by Moore Actuarial Consulting for The Doctors Company has highlighted a significant increase in malpractice insurance costs. The study, authored by Toni Clark, suggests that inflation is reshaping the legal and financial environment of healthcare, with malpractice awards adding billions of dollars to malpractice losses.
The average of the 50 largest malpractice verdicts in 2024 stood at $56 million, a substantial increase from previous years. This rise in large settlements, coupled with economic pressures, is causing doctors to face rising premiums, according to Robert E. White, Jr., president of TDC Group.
The report argues that the impact of inflation on malpractice insurance is larger and more persistent than many had realised. Consequently, doctors may be led to leave certain specialties, avoid high-risk procedures, or retire early. This could potentially lead to fewer available doctors, longer wait times, or increased costs passed along to patients.
The study also indicates that cases with payouts above $2 million have grown more than tenfold since 1990 and have rebounded strongly after a brief drop during the pandemic. This trend, combined with the rising premiums, could put a significant strain on the insurance industry.
The report prepared by Moore Actuarial Consulting updates earlier findings on the impact of inflation on malpractice insurance. It reaffirms the suggestion that third-party litigation funding could add between $13 and $25 billion in costs to the insurance industry over the next five years.
Despite these challenges, The Doctors Company remains committed to tracking the data, pressing for reforms, and working with doctors to manage the risks they face. The company reported a $4 billion increase in insured losses and expenses over the past decade due to inflation in the medical malpractice insurance market.
Malpractice awards are meant to make patients whole, not to enrich attorneys or investors. Reforms are needed to ensure that healthcare remains accessible. As these changes continue to unfold, both doctors and patients alike are feeling the weight of these developments, and the ripple effects are likely to continue in the years ahead.
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