Malpractice insurer to pay $17M in dividends

Posted April 14, 2010 at 4:08 p.m.

By Bruce Japsen |
ISMIE Mutual Insurance Company said this afternoon it will distribute
nearly $17 million in new dividends to eligible policyholders in what
it called “continuing improvements” in the state’s medical litigation
climate as well as “positive underwriting results” from 2005 through
2008 policy years.

Just how long such payments will continue, however, is unclear, says the
doctor-owned insurer. The reason: The Illinois Supreme Court’s February
decision to strike down the state’s medical malpractice law, saying
limits on damages awarded to victims of medical negligence are

“This dividend is the direct result of several years of comprehensive medical liability reforms,” said ISMIE chairman Dr. Harold Jensen.

The state high court’s much-anticipated ruling dealt a blow to doctors and hospital officials who say caps on damages are a way to tame rising health care costs. State lawmakers in 2005 passed legislation, which was signed into law by then-Gov. Rod Blagojevich, that established limits on pain and suffering and other non-economic damages of $500,000 in cases against doctors and $1 million against hospitals. Illinois followed other states, such as California, that capped damages years ago.

The court said the law violates the state’s separation-of-powers clause between the branches of government by allowing lawmakers to interfere with a jury’s right to determine damages. “The crux of our analysis is whether the statute unduly infringes upon the inherent power of the judiciary,” the majority opinion said.

“In the wake of the law’s overturn, the days of stable premiums and yearly renewal dividends, we fear, may be numbered,” Jensen said today.

Trial lawyers and consumer groups, however, say dividends paid by mutual insurance companies are not all related to the size and number of claims paid. They also are attributable to investments such as the stock market, which has recovered in the last year.

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One comment:

  1. Jeremy Engdahl-Johnson April 16, 2010 at 10:57 a.m.

    Today’s medical professional liability system is too adversarial and too expensive. There are alternatives. More at