Latest / Off the Chart: A Business of Medicine Podcast / S1 Ep181: Why physicians are getting sued less and paying more, with The Doctors Company President Robert White
Transcript
- Unknown Speaker 0:00 Two very different stories today. Claims frequency is at historic lows. The Unknown Speaker 0:07 number of claims against physicians is about one doctor in 21 Unknown Speaker 0:12 nationally was sued in Unknown Speaker 0:22 2025. Unknown Speaker 0:29 Welcome to Off the Chart, a business and medicine podcast featuring lively and informative conversations with healthcare experts, opinion leaders, and practicing physicians about the challenges facing doctors and medical practices. My name is Austin Latrell, and the associate editor of Medical Economics, and I'd like to thank you for joining us today. In today's episode, Medical Economics managing editor Todd Shryock sat down with Robert White, president of the Doctors' Company and TDC Group, to talk about the two numbers that define medical malpractice right now, and the fact that they're moving in opposite directions. Fewer physicians are getting sued than at any point since 1973, roughly one in 21 nationally. But the cases that do get filed have never cost more, and White walks through why falling claims frequency has quietly been holding premiums down, and what happens when it stops falling. They also get into the rise of nuclear and thermonuclear verdicts, including the largest medical liability award ever handed down, why artificial intelligence is the emerging liability risk that White is watching most closely, and the one question that he thinks every physician should ask before choosing a carrier. With that said, Robert, thank you for joining us. Let's get into the episode. Unknown Speaker 1:33 I'm here with Robert White, president of the Doctors Company and the TDC Group, to talk about current trends in malpractice. Robert, thanks for joining me. Unknown Speaker 1:42 Happy to be here, Tom. Unknown Speaker 1:44 So, what do you see with the current trends in in malpractice as far as claims frequency and and severity? Unknown Speaker 1:52 Two very different stories today. Unknown Speaker 1:55 Claims frequency is at historic lows. The Unknown Speaker 2:00 number of claims against physicians is about one doctor in 21 Unknown Speaker 2:06 nationally will be sued in 2025, or was sued in 2025. You have to understand that when you look back to 1999, if you remember, that was the year that the Institute of Medicine published its famous report to Err as Human. Unknown Speaker 2:24 One in five doctors was getting sued in 1999. So between Unknown Speaker 2:31 a real push to elevate patient safety in the practice of medicine, Unknown Speaker 2:38 tort reform, and other things that we did as advocates for physicians, Unknown Speaker 2:45 we got claims frequency down from one in five doctors being sued in 1999 to one in 14 doctors being sued in 2016, Unknown Speaker 2:58 and today it's one in 21 doctors can expect to be sued nationally. That's the lowest claims frequency's been since 1973. Unknown Speaker 3:11 On the other hand, you have claim severity. Claim severity has never been higher. Unknown Speaker 3:18 In fact, if you isolate physician payments to the and reports to the National Practitioners Data Bank in 2025. The average physician Unknown Speaker 3:29 payment or a payment made on behalf of physicians that was reported to the National Practitioners Data Bank Unknown Speaker 3:37 was $514,000 Unknown Speaker 3:41 per closed report, Unknown Speaker 3:44 that's up about 20% from 2022. Unknown Speaker 3:49 Oddly enough, that about matches inflation for the time frame 2022 to 2025. But remember, in 2022, inflation was 8% Unknown Speaker 4:00 and and and and you also have to remember that when we're making rates, we don't use closed claim payments by year. We match the premiums that were paid in that year to the losses that were generated from that year and what they cost. So when we make when we charge a rate today, we don't know whether that rate is right or not for three to five years after we actually start charging it. So when you lay the the Unknown Speaker 4:29 the flat frequency trend that we're currently experiencing with the losses that will come from these years, you see severity trending up about 5% per year, and that's well ahead of inflation. And the good news is low claims frequency. The bad news is in 2026 we're seeing early signs in bellwether states Unknown Speaker 4:59 of. Unknown Speaker 5:00 Increased claims frequency, which is Unknown Speaker 5:05 not to Unknown Speaker 5:07 be-it's not unexpected with social inflation Unknown Speaker 5:11 rearing its ugly head Unknown Speaker 5:14 in the medical professional liability line of insurance. Unknown Speaker 5:17 I hear the term nuclear verdicts. Can you define what a nuclear verdict is and how that impacts malpractice insurers? Yes, nuclear verdicts is a verdict in excess of $10 million. Unknown Speaker 5:32 They were relatively unheard of. Unknown Speaker 5:36 In fact, when you when you look at what's happened Unknown Speaker 5:41 with social inflation Unknown Speaker 5:44 and nuclear verdicts? You can go back to 2009 when there was a book that was written by a plaintiffs lawyer and a jury consultant, a psychologist who helps plaintiffs' lawyers pick jurors to sit on in trial, Unknown Speaker 6:02 it was called 2009 Unknown Speaker 6:05 reptile, Unknown Speaker 6:07 the plaintiffs' revolution. Okay, and this this is where the reptile theory comes from. Unknown Speaker 6:13 It it it plays off of the social inflation aspects of Unknown Speaker 6:21 people thinking that there should be compensation for every bad thing that happens to a human being, Unknown Speaker 6:28 and that spurred this era of nuclear verdicts. Unknown Speaker 6:35 And and what they do for us is you have to remember Unknown Speaker 6:38 that only 7% of all malpractice cases ever go to trial in any given year, Unknown Speaker 6:45 and we win six out of those seven. Okay, so we're losing Unknown Speaker 6:51 one out of the seven cases we try every year Unknown Speaker 6:55 as an industry, but those Unknown Speaker 6:58 losses-that one loss Unknown Speaker 7:01 for that winds up in a plaintiff's verdict ends up setting the bar for what every case that settles of that same factual pattern and type of injury winds up settling for in the future becomes those verdicts become Unknown Speaker 7:20 the benchmark, the yardstick by which all settlements are measured. So even though we only see those big verdicts in a relatively small number of cases, and it's it averages a nuclear verdict Unknown Speaker 7:34 happens in the medical professional liability line of business about once per week somewhere in the United States, and and going back Unknown Speaker 7:44 to 2015, Unknown Speaker 7:46 that can happen in any state in America. There have only been five states since 2015 that have never had a nuclear verdict. Unknown Speaker 7:56 Every other state has, and and some of them have them have multiple verdicts. So what these verdicts do is they drive up the cost of every settlement, and and you will never see Unknown Speaker 8:11 that average payment reported to the Unknown Speaker 8:14 National Practitioners Data Bank go below $500,000 again. This is a steadily increasing line, Unknown Speaker 8:24 and and we expect it to continue. Unknown Speaker 8:28 You can look around and and and see Unknown Speaker 8:32 a state like Georgia, for example, which before 2022 never had more than four nuclear verdicts in a year, Unknown Speaker 8:41 but in 2022 it had eight. In 2023 it had eight. Unknown Speaker 8:46 In 2024 it dropped to six. But in 2025 it Unknown Speaker 8:51 had 11. So it's just had 33 nuclear verdicts in the last four years, and of of all the states in the United States, Georgia has become in the short term the hottest spot since 2015. Illinois has had the most; it's had I think the number is 58 nuclear verdicts, but but Georgia is quickly catching up, and it's second with 50. Unknown Speaker 9:19 After that, it's New York with 44, Florida with 39, Pennsylvania with 35, and California with 27. So, Unknown Speaker 9:29 but it can happen anywhere, and and they drive up the cost of doing business on the severity side. This is the severity side of the rate making process. Okay, Unknown Speaker 9:41 it's constantly going up, and and we expect it to continue to go up because of social inflation. Unknown Speaker 9:49 So it sounds like the fear Unknown Speaker 9:52 of going to trial and and losing and having a judgment, a thermal or a nuclear verdict against you, drives up. Unknown Speaker 10:00 The settlement cost because it's like well we better settle for Unknown Speaker 10:03 you know 75 cents on the dollar instead of going to trial. Unknown Speaker 10:07 Am I getting that that right that it's just pushing everything up? Unknown Speaker 10:12 As insurers who who try lots of cases every year, Unknown Speaker 10:17 we're thinking twice about trying any case, Unknown Speaker 10:21 and if you're a doctor who has a policy limit that will probably, in no way, shape, or form cover the eventual verdict that could come, Unknown Speaker 10:30 you're more worried than we are. Okay, Unknown Speaker 10:34 and and we have to listen to that doctor at trial time or or in the process of getting ready to go to trial about how strongly they feel about defending themselves. We actually have a consent policy. We write a consent policy in all 50 states. We can't settle a case without our doctor giving permission. Well, we don't have any trouble getting permission from doctors in most in most cases today because they're looking at these verdicts. They're reading about them in the newspaper. They're hearing about them on the radio and TV, and it and it it makes you think twice, especially when you're putting your own personal assets on the line. Unknown Speaker 11:10 I I heard a term a few months ago, Unknown Speaker 11:14 thermonuclear verdict. Unknown Speaker 11:17 Is does that mean there's verdicts out there that are so big they don't even fit the definition of nuclear verdict anymore. A thermonuclear verdict is any verdict in excess of $100 million. Unknown Speaker 11:28 In medical professional liability, we don't see them very often. In 2022, there were two. In 2023, there were four. In 2024, there were five. In 2025, there were only two, but already in April of 2026, we've already seen three, and the biggest thermonuclear verdict ever was just last year Unknown Speaker 11:54 in Utah, Unknown Speaker 11:56 963 million dollars Unknown Speaker 11:59 against a hospital, and that was you know we talk about juries all the time and and and how juries are inflating these awards. Well, this case was tried before a judge, so a judge made that particular award. So somebody who knows the price of tea in China, okay, because this is like a commodity. In settling these cases, you have to know what they go for. If you're on either side, the plaintiff or the defense side, you have to know what these cases are worth. And and here is somebody who knows the price of tea in China, and he thought that case was worth $963 million. That's the biggest verdict ever in a medical professional liability case. Unknown Speaker 12:44 I think we all know the answer to this next question, but what do all these trends mean for malpractice rates? Unknown Speaker 12:53 Well, the good news is Unknown Speaker 12:55 because frequency is an all-time low. Okay, it has dampened a lot of the pressure that Unknown Speaker 13:04 nuclear verdicts and social inflation have been putting on the rate-making process. Unknown Speaker 13:11 I talked about 2016, where Unknown Speaker 13:15 frequency had fallen to one in 14 claims against physicians. Well, what happened Unknown Speaker 13:23 is social inflation and nuclear verdicts had had had been happening all along, and because of falling claims frequency, it sort of dampened the effect on on rates, so that Unknown Speaker 13:37 rates were neutral, even though there was all this pressure on severity, Unknown Speaker 13:42 rates rates were stable because frequency was falling. Then we hit this period in 2016 Unknown Speaker 13:49 where frequency Unknown Speaker 13:51 stabilizes and remains flat. And what happens in 2018, 19, and 20 because we have flat claims frequency, Unknown Speaker 14:01 we get rate increases because there's no longer this downward trend in frequency to offset the upward trend on severity. So Unknown Speaker 14:11 we see rates go up. Every carrier was taking rate from 2018 to 2020, Unknown Speaker 14:18 and and the silver lining for at least our line of business was COVID came along, okay, and and it drove claims frequency even lower from that one in 14 Unknown Speaker 14:31 claims per doctor to one in 21. So guess what? It Unknown Speaker 14:37 takes the pressure that social inflation and nuclear verdicts would put on the rate-making process, and it it diminishes Unknown Speaker 14:47 that pressure again. So now we're out here in a period where we have flat claims frequency, and I think most people, most observers of this market, would tell you Unknown Speaker 14:59 that. Unknown Speaker 15:00 Medical professional liability line of business is in a neutral market, not soft, not hard. Okay, it's neutral. If you're talking about hospitals, definitely hardening to hard. Okay, but for physicians, neutral market, which means you'll probably see if you see any rate increases at all, they'll more likely than not be in the one to 3% range. Okay, and it depends what state you're in and and so forth. But generally speaking, nationwide, a carrier can expect to see its rates go up by about one to 3% in a market like this. But that concern I mentioned a little earlier with early signs of increasing increasing claims frequency because remember it's never been lower, it's never been lower than it is right now, Unknown Speaker 15:51 and with all of the pressure Unknown Speaker 15:55 that nuclear verdicts bring, with all of the advertising that plaintiffs' lawyers do with the third-party litigation funding that's happening with the assault on tort reform to make these cases richer from the plaintiff's perspective. Unknown Speaker 16:14 To me, Unknown Speaker 16:15 those are early signs that there will be rate increases in the future. That that they're not putting all this effort Unknown Speaker 16:25 out there for nothing. When when they get the market where they want it, Unknown Speaker 16:32 they're going to come back to it in a way we haven't seen in a couple of decades, Unknown Speaker 16:37 and I'm talking about the plaintiffs' lawyers. Unknown Speaker 16:47 Hey there, Keith Reynolds here, and welcome to the P2 Management Minute. In just 60 seconds, we deliver proven, real-world tactics you can plug into your practice today. Whether that means speeding up check-in, lifting staff morale, or nudging patient satisfaction north, no theory, no fluff, just the kind of guidance that fits between appointments and moves the needle before lunch. But the best ideas don't all come from our newsroom; they come from you. Got a clever workflow hack, an employee engagement win, or a lesson learned the hard way? I want to be true. Shoot me an email at kreynolds@mjhlifesciences.com with your topic, a quick outline, or even a smartphone clip, we'll handle the rest and get your insights in front of your peers nationwide. Let's make every minute count together. Thanks for watching, and I'll see you in the next P2 Management Minute. Unknown Speaker 17:39 Are there certain specialties that are experiencing the Unknown Speaker 17:43 greatest risk, and and are there emerging areas of liability Unknown Speaker 17:48 that doctors need to be aware of? And what comes to mind to me is is all these AI tools that are out there. Well, I would say that Unknown Speaker 17:57 the areas of specialty are the are the same ones we're always talking about. They're generally surgical specialties, Unknown Speaker 18:04 cardiovascular surgery, for example, orthopedic surgery, particularly low back surgery, Unknown Speaker 18:11 general surgery. Unknown Speaker 18:13 Those those are risky areas, and their rates reflect the fact that they're considered to be risky areas. Unknown Speaker 18:22 OB/GYN. Unknown Speaker 18:24 again, particularly from the obstetrics perspective, because of Unknown Speaker 18:28 the the Unknown Speaker 18:29 value that's placed on these claims involving neurologically impaired infant as a consequence of labor or delivery. Unknown Speaker 18:39 Those are the usual suspects, and they're the same ones we see. Unknown Speaker 18:43 As an emerging area of liability, we of course have our eye on how artificial intelligence will impact the practice of medicine. We we know it's out there, and we know it's embedded in a lot of particularly diagnostic imaging equipment, where there are things in the equipment itself to help a diagnostician make the Unknown Speaker 19:06 proper read from the equipment, but now we're beginning to see the actual implementation Unknown Speaker 19:13 of Unknown Speaker 19:15 AI in the diagnostic process and the treatment process itself, and so Unknown Speaker 19:21 we we expect that Unknown Speaker 19:25 the the wider implementation of that to become an issue in claims for the first time, and and the problem with it all it's always the same. The Unknown Speaker 19:37 legal system takes a a while to catch up Unknown Speaker 19:41 to to the to medical profession and and and medical treatment and how the legal system deals with these claims is a is a risk okay and and how it's going to be Unknown Speaker 19:57 utilized by the plaintiff. Unknown Speaker 20:00 How quickly we can Unknown Speaker 20:02 adopt the tactics to defend against the manner in which they choose to bring these claims. Unknown Speaker 20:09 We're all going to be learning about what the technology captures that we don't appreciate today, and how it can be used in an individual fact pattern to help establish liability or causation in these cases, but Unknown Speaker 20:23 that remains to be seen, and it is an area of risk for us that we're watching very, very closely. Unknown Speaker 20:31 So, with all these trends, what would you tell a physician out there? Do you have any advice for them? Well, I think it's important for every physician to think about who I'm going to buy insurance from, okay, and and how dedicated are they to protecting my professional reputation, okay? Unknown Speaker 20:53 Are Unknown Speaker 20:55 am I going to pick a carrier that Unknown Speaker 20:59 won't go to bat for me when I feel like what I did in handling an individual patient deserves to be defended in court, or am I just going to be a statistic that the carrier is going to look at is how cheaply they can get out of my claim? So do, Unknown Speaker 21:18 and in my case, I I would want a carrier that's going to fight for me when I thought I did nothing wrong, because the carrier's name isn't going to get sent to the National Practitioners Data Bank. It's going to be my name. Okay, so we we we Unknown Speaker 21:32 take it very seriously. Unknown Speaker 21:36 The Unknown Speaker 21:37 practice of of defending good medicine, the desire to protect the doctor. Unknown Speaker 21:44 What what kind of carrier are you going to trust your professional reputation to? And that's that's the real question you have to ask yourself when you're buying insurance because you are protecting your assets, but your name is the biggest asset you possess. And if your name is out there on a list, and it's not just the National Practitioners Data Bank. Certain states have closed claim databases where they collect claims information and publish it on the internet, so that a patient can look at your claims history before they decide whether or not you're you're someone they want to trust their their life and health too, Unknown Speaker 22:22 so those are the kinds of things you need to think about. And if it's just if insurance is just transactional to you, and and you want to get out of a claim at the lowest possible cost with the least amount of of wear and tear, pick one of those carriers that settles lots of cases and and and Unknown Speaker 22:40 go with that carrier, but if you care about your name, pick a carrier that will protect you when you think you're right. Unknown Speaker 22:48 Very good, Robert. Thank you for your time. I appreciate it. All right, Todd. It's my pleasure. Unknown Speaker 23:07 Once again, that was a conversation between Medical Economics Managing Editor Todd Shryock and Robert White, president of the Doctors Company and TDC Group. Unknown Speaker 23:14 My name is Austin Latrell, and on behalf of the whole Medical Economics and Physicians Practice Teams, I'd like to thank you for listening to the show and ask that you subscribe so you don't miss the next episode. Unknown Speaker 23:23 As always, be sure to check back on Monday and Thursday mornings for the latest conversations with experts sharing strategies, stories, and solutions for your practice. You can find us by searching off the chart wherever you get your podcasts. Unknown Speaker 23:33 Also, if you'd like the best stories that Medical Economics and Physicians Practice published, delivered straight to your email six days of the week, subscribe to our newsletters at medicaleconomics.com and PhysiciansPractice.com. Off the chart, a business and medicine podcast is executive produced by Chris Masolini and Keith Reynolds, and produced by Austin Latrell. Medical Economics and Physicians Practice are both members of the MJH Life Sciences family. Thank you.