Alabama Medical Malpractice Insurance Primer

Malpractice Insurance Basics

  • 5 companies comprise almost 90% of the market.
  • Number of Physicians: 10,549.
  • Indemnity Payments: $14,032,600 (2011)

Tort Reform

In 1987 Alabama adopted a $400,000 cap on non-economic damages, but in 1991 that law was ruled unconstitutional by the Alabama Supreme Court. This is a trend that we have seen repeated in numerous states across the country over the last few decades, with Missouri and Florida being recent examples. Interestingly enough, however, compared to its neighbors Louisiana and Mississippi, the Alabama court system has a higher rate of ruling in favor of defendants.

1200px-Alabama_Capitol

Alabama Capitol” by JsweidaOwn work. Licensed under CC BY-SA 3.0 via Wikimedia Commons.

Statute of Limitations

In Alabama, medical malpractice claims must be brought within 2 years of the date of injury. If the injury was not discovered immediately, then a plaintiff has 6 months from the discovery date or the date that the injury should reasonably have been discovered. After 4 years from the date of the action that allegedly gave rise to the injury, no action can be filed regardless of the date of discovery. If the case involves a minor, actions must be brought within 4 years of the negligent act unless the minor is less than 4 years of age, in which case an action may be filed at any time before the child’s 8th birthday.

Coverage for all medical specialties in Alabama.

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Liability Limits

Alabama’s typical liability limits for medical malpractice insurance are $1M per occurrence and $3M aggregate per policy period (1 year). The $1M/$3M limit is fairly standard across the U.S. In some states, especially in rural areas, physicians are allowed to carry lower limits, but most are not comfortable with doing so. The argument for lower limits is that in the case of a lawsuit attorneys will only go after the amount of the policy limit, so the higher the limit the more money they will sue for. But in today’s litigious environment the $1M/$3M limit is recommended.

Summary of the Alabama Medical Malpractice Insurance Market

Alabama has 31 professional liability insurance providers within the state. One carrier, Pro Assurance, which is headquartered in Birmingham dominates the market with approximately 60% of the market share, but another four companies make up another 30%. This represents healthy diversity in the market and good competition.

There have been recent attempts to re-institute a cap on non-economic damages in Alabama, but they have yet to be successful. However, the state does have some factors in place that help protect healthcare providers. For instance, expert witnesses have to be licensed in the same specialty as the defendant and have to have practiced in that specialty for at least a year prior to testifying in a malpractice case. Likewise, Alabama courts are known for conservatism in deciding malpractice disputes, as evidenced by a paid claim rate of just 5 per 1000.

With some of the lowest malpractice rates in the nation and a growing number of professional liability insurance providers, Alabama offers an excellent liability environment for physicians.