How Does Malpractice Insurance Work, And Who Pays For It?

The vast majority of doctors in Canada are insured by one organization, the Canadian Medical Protective Association. Most members of the public would be surprised to learn what CMPA insurance coverage actually covers. And it is the public through their taxes who pays the premiums on behalf of doctors.

While the number of claims filed against physicians continues a downward trend, defence costs continue to increase, at a rate much greater than general inflation. At the same time, CMPA is announcing large rate increases. And the biggest driver of increasing premiums is the cost of defence legal services, not payouts to victims of medical negligence and malpractice.

In fact, the ever increasing legal costs are being driven by the legal assistance given to doctors who have complaints to the regulatory authorities against them, or who are in trouble over hospital privileges.

An example of legal assistance to a doctor with a Royal College of Physicians and Surgeons for Newfoundland and Labrador complaint is the recent high profile case of Dr. Christo Taylor. All of Dr. Taylor’s legal defence costs in dealing with complaints of incompetence and conduct deserving of sanction, to which he ultimately pleaded guilty, were paid by his CMPA insurance coverage – in reality, by the taxpayer.

Why should the public’s money by used to provide a free legal defence to doctors who foul up with their regulatory body or get into trouble with their hospital?

Every responsible professional who serves the public should carry adequate insurance to respond to damage caused by professional errors and omissions. Since 1996 in Newfoundland and Labrador, the College has required physicians and surgeons to carry such insurance. And properly so.

Doctors are not rendering services in a market economy where they can pass on costs of insurance to the consumer patient. It is fair that provincial governments pay the reasonable costs of errors and omissions insurance. But making the taxpayer pay the insurance bill for the defence of discipline complaints and hospital privileges conflicts is another matter again.

Knowledgeable plaintiff medical malpractice lawyers take the view that doctors should have to pay out of their own pockets for this, not the public. And if doctors were paying for this themselves, a lot less money would be poured willy-nilly into it, and the cost pressures currently being passed on to the public would abate.

And if members of the public understood the issue, they too would wonder why they subsidize doctors for lavish defences to complaints. Policy makers in the provincial government should pay attention and take action.