Opinion ID: 1787098
Heading Depth: 1
Heading Rank: 7

Heading: The Cap Helps Reduce the Size of Malpractice Insurance Premiums

Text: ś 260. The majority also questions whether the damage cap has actually reduced malpractice insurance premiums. Majority op., śś 121-29. It trumpets a report by the GAO that multiple factors have contributed to increased malpractice insurance premiums. But even the GAO report concluded that losses on medical malpractice claimsâ which make up the largest part of insurers' costsâ appear to be the primary driver of rate increases in the long run. [27] The Congressional Budget Office concluded that federal caps on damage awards, in combination with other tort reforms, would reduce malpractice insurance premiums by 25 to 30 percent over the ten-year period between 2004 and 2013. [28] ś 261. The majority also attempts to disparage the Weiss report's conclusion that Wisconsin insurance premiums dropped by 5% during 1991-2002. [29] In that same eleven-year period, the median malpractice premiums rose between 35 and 50 percent in other states. [30] ś 262. Undeniable statistical evidence reveals that increases in malpractice insurance premiums are far lower in Wisconsin than in states without caps. For example, during the two-year period between 2001 and 2003, federal studies showed that the average highest premium [31] increased 5% in Wisconsin. [32] Over the same time period, the cost for the same type of insurance coverage increased 45% in states without caps. [33] One study took care to note that this success in holding down premiums is not accidental. [34] ś 263. As of 2004, in 28 states, medical malpractice insurers reported a loss ratio above 100 percent; that is, for each premium dollar received, more than one dollar is expected to be paid out. [35] As of 2001, medical malpractice insurers nationally paid out $1.53 in claims and expenses for each $1 in premiums collected. [36] On the other hand, Wisconsin reported the lowest ratio, 61.71 percent, of all reporting jurisdictions. [37] ś 264. Yet another recent empirical study showed that malpractice [p]remiums in states with a cap on awards were 17.1 percent lower than in states without such caps. [38] ś 265. The majority simply chooses to disbelieve this evidence, claiming that differences in both premiums and claims payments are affected by multiple factors in addition to damage caps, including state premium rate regulation, level of competition among insurers, and interest rates and income returns that affect insurers' investment returns. Majority op., ś 125. ś 266. The majority questions whether the crisis is real. See majority op., ś 160 n. 213. Consider this: St. Paul, for many years the number one medical malpractice insurer in the nation, announced in 2001 that it would completely abandon providing medical malpractice insurance because it was no longer profitable. In an unrelated section of the majority opinion, the majority notes that St. Paul provided only 3.3% of malpractice insurance in Pennsylvania. Majority op., ś 167 n. 222. Nationally, though, St. Paul was the largest malpractice carrier in the United States, covering 9% of all doctors. [39] ś 267. However, even the studies the majority cites recognize that while there are several factors driving up the cost of insurance premiums, malpractice awards are one of those factors. [40] ś 268. For example, the GAO report conclusively showed that during 2001-02, states with caps experienced an average premium rate increase of 10%, as compared with a 29% increase for states without caps over the same period. [41] ś 269. As the majority admits, the Wisconsin Commissioner of Insurance is in accord: rate stability could be dramatically impacted for both the Fund and primary carriers should the caps be removed and insurers face unlimited non-economic damages. [42] ś 270. The majority's rejection of such straight-forward statements and evidence provides further proof of its complete abandonment of the standard of review. As in other parts of its opinion, instead of searching for or constructing a rationale to support the legislature's action, the majority takes it upon itself to weigh competing evidence and decides the matter as if it were deciding a case on de novo review. ś 271. This court used to summarize the appropriate standard of review as follows: `Judicial response to a challenged legislative classification requires only that the reviewing court locate some reasonable basis for the classification made. ' Sambs, 97 Wis. 2d at 371 (emphasis added) (citation omitted). Now, instead of attempting to locate a rationale to support the caps, the majority searches for studies to discredit them. ś 272. The legislature had a rational basis to find that the noneconomic damage cap assists in reducing medical malpractice insurance premiums.