Evaluation of Early Offer Reform of Medical Malpractice Claims: Final Report. Evaluation of Early Offer Reform of Medical Malpractice Claims: Final Report : Table 13

06/05/2006

: Table 13

VariableQuestion NumberComments/Explanations
Age2, long form onlyUsed to impute economic share of settlement using Florida data. Average economic share calculated for all cases used for short form claims.
Type of injury4, long form onlyGrouped into 3 categories by severity: fatalities; serious injuries (amputation, brain damage, or spinal cord injury); all other nondeath, nonserious injuries. Because multiple injuries can be reported, some cases reporting death or serious injury also report other injuries. As reported in the 2002 Annual Report of TDI (p. 13), the injury types with the largest median settlement amount are brain damage ($450,000), spinal cord injuries ($350,000), death ($300,000), and amputation ($240,000). Because injury type is not reported on the short form, we group short form claims in the early offer analysis with nondeath, nonserious injuries. Given the indemnity cap of $25,000 for short form reports, the injuries are unlikely to be death or serious injury.
Policy type7a4Cases are selected if policy type is medical professional liability. See Phase I report for discussion at text, note 19.
Reserves8a - 8fPrimary carriers reported initial and final reserves for indemnity and expenses corresponding to their payment reported in question 12a1. As reported in the 2002 Annual Report (p. 11), some insurers included expense reserves with indemnity reserves. This means that total reserves reported in 8c and 8f may be more reliable than the components reported in 8a, 8b, 8d, and 8e. For cases in which primary carrier reports zero payment in 12a1, reserves correspond to payment reported in 12a2. For cases involving a self-insured entity, reserves correspond to the sum of 12a1 and 12a2. Per conversation with TDI staff, the relevant comparison of reserves in 8a - 8f is to the sum of 12a1 and 12a2 for all claims.
Attorney employed9Attorneys were employed by the plaintiff in 98 percent of the claims and by the insurer in 94 percent of the claims. For simplicity, we assume all claims will employ an attorney.
Legal stage10aThe question identifies stage of legal system at which a settlement was reached or an award made.
Damage components11b2 a - e, 11d3 a - e, 11e3 a - eFor some claims, total damage amounts are reported in four components: economic losses, noneconomic losses, exemplary damages, and prejudgment interest. Claims settled by court verdict or settled after a court verdict are required to report this breakdown. Claims settled out of court report the breakdown only if, in the opinion of the individual completing the form, the settlement was influenced by a demand for or possible award of noneconomic, exemplary damages, or prejudgment interest. For these amounts, we use the TDI calculated variables reported in Columns 184 - 188, labeled ECONOMIC, NONECO, EXEMP, and INTEREST. For claims not reporting the breakdown, we use Florida data to impute economic loss as a fraction of the total court award or settlement amount. The fractions are as follows: 0.359, nonfatal <age 18; 0.156, nonfatal > age 18; 0.345, fatal < age 18; 0.246, fatal > age 18. Because age and injury type are not reported for short form claims, we use the same economic share for all short form claims of 0.348, calculated as the weighted average for all nonfatal claims. The average are based on numbers reported in Table 5A and Table 5B of the Phase I report.
Payments12a1 - 7Payments are reported by the primary carrier and are reported as amount paid by primary carrier (12a1); amount paid by the insured, due to deductible (12a2); amount paid by excess carrier (12a3); amount paid by the insured due to settlement or award in excess of policy limits (12a4); amount paid by other insurers on behalf of other defendants (12a5); amount paid by other defendants that were not insured (12a6). The total amount of settlement or court award is reported in 12a7 and is the sum of the numbers reported in 12a1 - 12a6. As reported in the 2002 Annual Report (p. 3 - 4), the total settlement amount may be incomplete because carriers report only known settlement amounts paid to the claimant. Specifically, p. 4 states: “Reports indicating involvement of other contributing parties may not have included the other contributing parties’ payments in the total settlement amount.” Respondents were asked to indicate “unknown” when they did not know amount paid by other parties. As an example, our calculations show that the amount paid by other insurers on behalf of other defendants was reported as “unknown” for 460 claims, and the corresponding dollar amount was recorded as zero.
Collateral sources14a, b, c1 - c6, long form onlyThe form asked whether workers’ compensation was available to the injured party (14a); whether the respondent was aware of any other collateral sources available to the injured party (14b); and for those indicating yes to 14b, to select those sources that were available from a list of collateral sources (medical insurance; disability insurance; social security disability/ supplementary security benefits; Medicare, Medicaid; sick leave; other). The values of these collateral sources are not reported. Furthermore, as reported in the 2002 Annual Report (p. 6), claimants were not required to make collateral source information available to insurers, so the data may not report all cases when collateral sources were available, leading to a lower than accurate value of the role of collateral sources. We therefore impute collateral sources offset using Florida data reporting percentage payments for corresponding collateral source categories and stratified by age and fatality. We calculate the share of economic loss offset by each of the five collateral sources reported in the data, then calculate the dollar value that applies to each claim, then take the average in each of the four categories. The collateral source offsets are as follows: 0.249, nonfatal < age 18; 0.281, nonfatal > age 18; 0.213, fatal < age 18; 0.199, fatal > age 18. Because age and injury type are not reported for short form claims, we use the same collateral source offset for all short form claims of 0.264, calculated as the weighted average for all nonfatal claims. We examine the comprehensiveness of the collateral source reporting in Texas and magnitude of possible underreporting by matching percentage payment reported in the Florida data to the presence of collateral sources reported in the Texas data. The categories reported in both the Texas data and the Florida data are Medicare/Medicaid, health insurance, and workers’ compensation. If the claimant in the Texas data had such coverage we assigned the percentage payment reported in the Florida data. The resulting average collateral source offset would be only 4.8 percent, a number far lower than calculated using the FL data. See note 5 above.
Legal expenses17a - 17dThe amount paid to outside defense counsel is reported in 17a, allocated expense for in-house counsel is reported in 17b, allocated loss adjustment expenses such as court costs and stenographers are reported in 17c, with the total allocated loss adjustment expense reported in 17d. As reported in the 2002 Annual TDI Report (p. 7), cost containment expenses are not reported on the closed claim forms and so the expenses incurred to settle the claim are understated.
Elapsed timeET1B1GElapsed time between date reported to insurer and date claim closed, calculated by TDI from 1b and 1g.