The Potential of Captive Medical Liability Insurance Carriers and Damage Caps for Real Malpractice Reform

Abstract

Medical malpractice continues to be a contentious health policy issue particularly from the perspective of physicians and patients. The medical malpractice insurance market as a whole has changed considerably since the mid-1970s, with widely fluctuating premium prices and crises in the availability and affordability of medical malpractice insurance. More recently, hospitals and physicians have increasingly chosen to self-insure through a variety of vehicles including captive insurance companies.

This Article suggests that two existing strategies can be intentionally designed and coordinated to facilitate the fair and expeditious resolution of medical malpractice claims. Specifically, captive insurance companies operating in states with damage caps can work more effectively with healthcare providers to resolve identified malpractice claims, and they can identify and compensate medical injury where claims are not pressed. This knowledge establishes space for the providers and the captive insurers to settle claims expeditiously and fairly. The space also enables the providers and the captive insurers to go further and express apologies to patients who have been injured in the care process. However, the National Practitioner Data Bank under the Health Care Quality Improvement Act of 1986 poses challenges for physicians in participating in captives. This article explores how captives can be structured and barriers addressed to mitigate the problems for physicians and to improve the management of medical error for all stakeholders.

Keywords: medical malpractice, medical liability, health policy, health law