A $1.2 billion state-run fund that pays large medical malpractice awards has a surplus of $783 million, $406 million more than recommended, according to a state audit last month.
The large size of the Injured Patients and Families Compensation Fund illustrates how hard it is for injured patients to win cases against doctors in the state, attorneys say.
“There are fewer and fewer people every year recovering compensation and getting into the fund money,” said Mike End, a medical malpractice attorney in Milwaukee and former president of the Wisconsin Association for Justice, a trial lawyers group.
The Wisconsin Medical Society, which represents doctors, says the fund provides stability and must be large enough to cover unexpected claims.
“It’s there to cover not only the cases in the pipeline but the ones that are not even known yet,” said Mark Grapentine, a medical society lobbyist.
Doctors, hospitals and some other health care providers are required to pay into the fund, which covers malpractice awards of more than $1 million. Doctors must carry their own malpractice insurance up to that amount.
Wisconsin is one of at least 13 states with such funds.
After the fund’s value grew considerably in recent years, largely because of investment income, regulators started reducing doctors’ annual fees beginning in 2013-14. In 2014-15, doctors paid $1,311 to $8,653, depending on their type of practice.
Despite the reduced fees, the fund’s surplus in September was $783 million, $406.4 million more than the upper end of the range recommended last year by regulators, of $86.4 million to $376.6 million, according to the Legislative Audit Bureau report last month.
The audit recommended that the Office of the Commissioner of Insurance, which administers the fund, develop a plan to bring the surplus into the target range.
Ted Nickel, insurance commissioner, said the fees will be reduced again by 30 percent in 2016-17.
End said the fund’s total assets, which were $1.2 billion in June, are $345 million greater than the $855 million the fund has paid in 672 claims since it was created in 1975.
“That just blows me away,” End said.
Attorneys say injured patients in Wisconsin have a hard time getting compensation because of restrictions on who can sue, caps on damages and the fund. Wisconsin ranked 49th among states in malpractice payments per capita from 2004 to 2014, according to the National Practitioner Data Bank.
Parents in Wisconsin can’t sue if their adult children die from a medical error, and adult children can’t sue if their parents die in the same way — a prohibition found in few, if any, other states, attorneys say.
In other wrongful death cases, damages are capped at $500,000 for a child and $350,000 for an adult.
In other medical malpractice cases, non-economic damages, such as for pain and suffering, are capped at $750,000. Economic damages aren’t limited.
The cap on total damages for UW-Madison doctors is $250,000.
The fund gives doctors and insurers less incentive to settle cases because they don’t risk losing multimillion dollar awards, End said.
But Grapentine said the fund keeps malpractice liability predictable by protecting against uncertainties.
One uncertainty cited in the audit: a Milwaukee County judge’s refusal in 2014 to apply the $750,000 cap for a woman who won $16.5 million in non-economic damages from a jury. She lost all four limbs from an immune system reaction to an undetected infection. An appeal is pending.
The board of governors that oversees the fund “have a fiduciary responsibility to ensure that there are enough assets in the fund to cover those admittedly unquantifiable potential liabilities down the road,” Grapentine said.
“There should be more decreases in the annual fees,” he said. “But you can’t make it up in one year, nor should you try to.”