The medical malpractice problem which this Commission was directed to study pursuant to Senate Joint Resolution No. 135, House Joint Resolution No. 174 and House Joint Resolution No. 259 of the 1975 Session of the General Assembly is an extremely complex one. There is little question that in the last five years the frequency and severity of malpractice claims have increased dramatically. (See the report of the State Corporation Commission on Medical Malpractice Insurance in Virginia, hereinafter referred to as Exhibit l, pp. 19-24. Exhibit I is appended hereto.) Some estimate that approximately ninety percent of all malpractice claims in the United States have been reported since 1965. As a result, the annual premium charged by one insurer in Virginia to the lowest risk category of doctor for a policy with $100,000/$300,000 limits has increased 366% since 1967 while the premium charged to a doctor in the highest risk category for a policy with the same limits has increased 786%. (Exhibit I, pp. 13-14). In all likelihood, medical malpractice premium rates will continue to increase.

The increasing number of malpractice claims has stimulated the practice of defensive medicine. The costs of defensive medicine and the skyrocketing costs of medical malpractice insurance are ultimately borne by consumers, both those who are treated and those who purchase medical and hospital insurance. Thus, while physicians, hospitals, and other health care providers are currently most concerned about these costs, the entire public is affected. Increasing costs is but one facet of the problem. An even more critical problem, at least in the short term, is assuring the availability of malpractice insurance. Because of the rapid rate of change in the frequency and severity of malpractice claims, companies are finding it increasingly difficult to predict the cost of malpractice insurance and are, therefore, reluctant to continue writing this form of coverage. The major exception in this State is the St. Paul Fire and Marine Insurance Company which insures approximately 80% of the physicians engaged in active practice in Virginia.

There is a need to develop permanent solutions; however, the development of such solutions is complicated by the fact that the real underlying causes of the recent increases in frequency and severity of claims include economic, scientific, sociological and psychological factors. Such causes include the growing popularity of litigation to air and resolve real or imagined grievances, unrealistic public expectations regarding what medical science can do, increasing depersonalization in the delivery of health care and more advanced but riskier medical procedures and treatments. Advances in medical science also increase the complexity and thus the cost of resolving medical malpractice claims. In addition, the present high inflation rate, which increases the losses caused by injuries as well as the cost of processing claims, is a contributing factor. Although it is certain these are the primary reasons underlying the increase in claims, the degree to which each contributes to the problem is extremely difficult to quantify with precision. (See Exhibit I, pp. 53-58).

Interim remedial measures can be taken that will alleviate the problem of availability of insurance and provide for the collection of additional data in order to permit informed decision-making on a continuing but gradual basis. An immediate need is to develop a mechanism to assure the continued availability of malpractice insurance coverage. Part I addresses this issue but not the more complex problem of the cost of insurance. The recommendations contained in Parts II and III relate to cost.