2020 California Doctors Buying Guide to Medical Malpractice Insurance

California Medical Professional Liability Insurance Market Summary

Doctors in California have many great options for medical liability insurance in the state. The major insurers are:

  • The Doctors Company
  • Medical Protective
  • Aspen American Insurance Company
  • CAP MPT
  • MIEC
  • NORCAL Mutual (purchased by ProAssurance)

These companies are considered the best insurers in California because of their A-rating from A.M. Best and their proven ability to provide strong legal and financial support for physicians. These carriers use proprietary methodologies to set rates and there is no set standard rate across insurers for each specialty.

Historically, medical malpractice insurance rates for California doctors have been steady and competitive due to the early passage of the Medical Injury Compensation Reform Act (MICRA) in 1975 and a healthy abundance of major malpractice insurance companies to choose from.

Medical Malpractice Insurance Requirements for California in 2020

There is no legal requirement in the state of California for most providers to carry medical malpractice insurance – a physician only is required to carry liability insurance in an outpatient surgery setting. How much insurance is needed – just like with any doctor – is based on the risk of the specialty that is being practiced.

Regardless of state law, many California hospitals and health centers require doctors to carry medical malpractice insurance if they want admitting privileges. Liability limits of $1 million per occurrence or claim and $3 million per annual aggregate are the standard policy amounts.

Medical Malpractice Insurance and COVID-19 in California

California confirmed its first positive COVID-19 case on January 26, 2020 and declared a state of emergency on March 4, 2020. In what was considered a bold directive at the time, in mid-March Governor Gavin Newsome issued a statewide order asking 39.5 million people to stay at home indefinitely.

Throughout the summer of 2020, recommendations were made to open with restrictions or remain closed based on the business type, county, and rates of positive cases reported. After a steady rise since the first report, positive COVID-19 cases peaked in August and then began to decline through October 2020. While hospitals had reported a PPE shortage initially, the state was able to flatten the curve enough that additional healthcare resources like additional hospitals and ventilators were not considered critical needs.

As of December 2020, along with the rest of the country, California has experienced a sharp increase in positive cases, with new lockdowns in place for 85% of the state’s residents through the holiday season. ICUs across the state have dropped to below 15% available capacity, and physicians are now concerned about the healthcare system’s ability to handle the explosion of patients.

To be able to respond confidently to the changing needs of patients during the COVID-19 pandemic, California doctors are encouraged to have a comprehensive policy in place from a top-rated medical malpractice insurance carrier.

Telemedicine in California

California was an early leader in creating telemedicine legislation, passing the Telemedicine Development Act of 1996. Despite the head start, the legislation remained unchanged for decades, even though the technology was rapidly evolving.

Spurred by a report from California’s Center for Connected Health Policy, major reforms were approved in 2011 and 2012 which broadened the number of licensed healthcare professionals eligible to provide telehealth services and expanded the range of telehealth services available to patients. Since then, telehealth policy has continued to be amended, and the California Telehealth Policy Coalition hosts an annual legislative briefing at the state Capitol.

Due to the COVID-19 pandemic, on April 3, 2020 Governor Gavin Newsom signed an executive order relaxing state privacy and security laws around telemedicine for healthcare professionals. In addition, the annual legislative briefing occurred on October 5 and focused on telehealth policy in California after COVID-19. Notable changes to the state’s telehealth policy during the COVID-19 state of emergency include:

  • Private insurance plans are required to reimburse health care providers at the same rate for telehealth visits as in-person visits
  • Medical facilities and staffing agencies can apply for a licensing waiver so they can hire additional healthcare workers from out of state
  • An exception has been made to the Ryan Haight Act – providers are permitted to e – prescribe controlled substances without an initial in-person exam

Since physicians are held to the same standard of care regardless of whether they are practicing via telehealth or in-person visits, it is recommended that doctors carry insurance that specifically covers telemedicine.

Malpractice Insurance Rates for California Doctors

Malpractice insurance rates for physicians in California are considered moderate. They tend to be higher than in neighboring states but nowhere near the cost of medical malpractice insurance for New York and other states along the east coast.

State filed rates from 2016

Tort Reform in California

California was an early leader in tort reform, passing the Medical Injury Compensation Reform Act (MICRA) in 1975. The Act placed a $250,000 cap on non-economic damages in medical malpractice cases. Like many other states across the country, California was experiencing extremely high medical malpractice premiums with insurance carriers threatening to pull out of the state. The legislation was enacted in response to this crisis and served as a model for subsequent states’ legislation on damage caps.

Subsequent tort reform in the state followed throughout the next several decades, including imposing limits on attorney’s fees, imposing shared liability rules (if a patient is found liable for part of their injury, their award of damages is diminished in proportion to their fault), and a new code requiring a patient to notify the healthcare provider of their intent to file a lawsuit at least 90 days before doing so.

In 2014 a proposition to increase the state’s cap on non-economic damages from $250,000 to over $1 million failed by 67%.

California’s Damage Caps on Medical Malpractice Lawsuits

The Medical Injury Compensation Reform Act (MICRA) of 1975 placed a $250,000 cap on non-economic damages in medical malpractice cases that is still in place today. Non-economic damages include things like pain and suffering, anxiety, emotional distress, depression, humiliation, and a variety of other non-financial losses.

California has no cap on economic damages. Economic damages are quantifiable and specific monetary losses related to an injury and include things like medical bills (past, present, and future), lost wages, and diminished future earning capacity.

Statute of Limitations for Medical Malpractice Claims

Here are the major guidelines for California’s statute of limitations for medical malpractice claims:

  • a medical malpractice lawsuit must be filed within three years after the date of injury or one year after the injury is discovered (or should have been discovered), whichever occurs first
  • there is no filing deadline for cases where a foreign object was left in the patient
  • exceptions to the deadline (for both minors and adults) can be made when the health care provider intentionally acts to defraud the patient or hide a mistake
  • claims filed by or on or behalf of minors under the age of six must be filed “within three years of the occurrence of the malpractice, or prior to the child’s eighth birthday, whichever timeline provides a larger filing window”
  • claims filed by or on or behalf of minors over the age of six must be filed within three years of the date of malpractice

Tail Insurance in California

If you are a physician with a claims-made policy practicing in California and you DON’T have Prior Acts insurance (also known as Nose Coverage), having a tail insurance policy will make sure you’re protected from malpractice claims if you change jobs. Tail insurance covers the time between your retroactive date with your former employer, and the last day you are covered by that policy. The dates typically line up with your first day on the job and your last day seeing patients at that job. Before you start with your new employer, the new employer will often want to confirm you have tail coverage from your prior job. To get the best rates on tail insurance in California, contact a broker before you notify your employer of your resignation.

When and why is tail insurance necessary?

When a doctor leaves an employer, their insurance coverage with that employer ends on the last day of employment. Since most malpractice insurance policies are underwritten on a claims-made basis, you will be exposed to a lawsuit if someone files a claim against you after you leave your employer, without tail coverage. Tail insurance covers you from your retroactive date up to the last day the policy is in effect – with the ability to report claims years after the last day. Read more about tail malpractice insurance.

Medical Malpractice Insurance Outcomes in California for 2019

TOTAL PAYOUT

The total medical malpractice payout in California for 2019 was $174,384,950.

Closing Remarks

Overall, California is an attractive option for healthcare providers, especially if you are considering opening a private surgical practice, as the state is known for paying out some of the highest salaries for orthopedic surgeons. In addition to competitive wages, California doctors can also look forward to a large patient population and the legendary beautiful weather.

MEDPLI helps doctors from all specialties. Whether you are an OB/GYN in Los Angeles, an anesthesiologist in San Diego, or a cardiologist in San Jose, we can help you find medical malpractice insurance. To get coverage from an A-rated carrier, contact us by requesting a quote.

About Max Schloemann

Max Schloemann is a medical malpractice insurance broker, focused on helping physicians secure Medical Professional Liability coverage. He helps Doctors and Surgeons, as well as Physician Assistants, Nurse Practitioners, and healthcare entrepreneurs launch new medical practices across the country. Max graduated Magna cum Laude from Southern Illinois University College of Business and was named the Outstanding Management Senior. Max’s career in medical malpractice insurance began in 2008 with an industry-leading firm. Max founded MEDPLI in 2017 to help private practice physicians and doctors changing jobs navigate the complexities of medical malpractice insurance in the new era of healthcare. Max’s wife, Kristen, a Physician Assistant, and their 4 kids (plus 1 dog) enjoy hiking, golf, and cooking.

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