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Health Law Blog

A More Cost-Effective Way to Insure Canadian Doctors

October 8, 2015

Things aren’t always as they appear, looks can be deceiving, and all that glitters is not gold. Any and all of these phrases come to mind when considering the  Canadian Medical Protection Association (CMPA), a not-for-profit professional organization which provides Canada’s approximately 91,000 doctors with legal defense, liability protection and risk management education.

The Toronto Star recently ran a story (as did the Vancouver Sun in 2010 and the National Post in 2013) portraying the CMPA as an aggressive, deep pocketed legal defender of physicians accused of negligence and medical malpractice, as well as those who have breached some sort of regulatory requirement. According to these reports, the CMPA hires lawyers who are so determined in their mission to defend doctors that many Canadians “face low odds of success when patients with limited resources stand across from top lawyers paid by the CMPA’s $3.2-billion fund”. Adding insult to injury in this David and Goliath story is that not only are patients being pitted against legal heavyweights from a select handful of the country’s top law firms, lawyers who employ pit-bull-like strategies to win at all costs, these plaintiffs are also subsidizing those lawyers’ fees through taxpayer dollars. How? Because doctors pay the CMPA fees that are used for legal defense, then turn around and apply to be reimbursed for those fees by their provincial governments. In Ontario, for example, the province reimburses physicians for 81% of their CMPA membership fees

Portrayed this way, the CMPA is viewed as a de facto insurance provider, using taxpayer dollars to hire high-priced lawyers in order to defend “fat-cat” doctors. Looks can be deceiving however and despite looking like an insurance agency, the CMPA is not. Rather, it is a professional organization that is not regulated like an insurance agency. Furthermore, unlike real insurance agencies where an individual taking out a policy decides on the premium he or she is willing to pay, coverage is discretionary. In the world of insurance, the higher the premium, the more coverage an individual gets. If that coverage isn’t sufficient to cover a judgment against him or her, the policy holder is then held personally responsible. That is not the case with the CMPA. Unlike with an actual insurance provider, no matter how large the judgment, the CMPA will pay the full amount. If a doctor is found negligent in malpractice action, the plaintiff will be financially covered by the CMPA regardless of the size of the judgement and will never be left to try to collect the difference between the award made by the court and the coverage available under the insurance policy.

Lawyers who prosecute physicians for malpractice are concerned about the fairness of the system. This “concern” is somewhat disingenuous in view of the contingency fee arrangements  now available in every province. Some in the legal community, such as Dalhousie University law professor Elaine Gibson, have called for a sweeping overhaul of the system and a move to no-fault medical insurance system as a fix. But before venturing too far down the road to reform, these individuals should be careful what they wish for; no-fault insurance has serious flaws when applied to medical malpractice. The motor vehicle no-fault system has been a financial lottery for many motor vehicle lawyers who have a simple and cheap tribunal process to prosecute claims and complete paperwork. If a plaintiffs malpractice lawyer believes the case is worthy of pursuing, they do not ask patients (plaintiffs) to fund the litigation. The lawyer will fund it for the opportunity to share in the judgement that is ultimately awarded.

Politicians are also concerned. Provincial health critics for both the NDP and Conservatives are calling for greater transparency and accountability in terms of where the money is going and Health Minister Eric Hoskins says he is concerned about the financial sustainability of the program. Yet it was provincial politicians who created the situation in the first place when they agreed to subsidize physicians’ CMPA fees during contract talks with the Ontario Medical Association in 1987. At the time, the province agreed to reimburse doctors for a portion of their CMPA fees in lieu of increasing their compensation. It must have seemed like a reasonable compromise then but hindsight has proven it to be a poor decision. Since that deal was negotiated, physicians’ CMPA fees (and therefore, the government’s reimbursement costs) have increased significantly due to increased legal fees, rising settlements, an increase in the number of medical malpractice cases (due, in part, to 2002’s Bill 213 that allows lawyers to charge contingency fees), and the CMPA’s goal of overcoming a negative funding position. 

Clearly the situation is putting a strain on the public purse and sooner or later, something will have to give. A solution may lie in looking at what real insurers do to keep costs down and applying their model to the CMPA.

  • A Deductible Virtually every insurance policy has a deductible; the higher the deductible, the lower the premium a policy holder pays. This is a construct that could be adopted by the CMPA. Even a $500 deductible paid by each physician who avails him or herself to CMPA-provided legal defense could offset costs. 
  • No Reimbursement for Criminal Convictions In criminal proceedings, most insurers will only reimburse a policy holder if they are acquitted. Physicians who have committed criminal acts against their patients could be held responsible for paying their own legal fees. 
  • Forgo Coverage on Regulatory Cases That Don’t Go To Trial Some files, such as in hospital complains by nurses against physicians, for example, are regulatory in nature and do not involve a payout to a patient. If physicians covered their own legal costs on these cases and the CMPA did not get involved unless, say, the case goes to trial, there could be significant savings.

If the CMPA wants to look like an insurance provider and act like an insurance provider, then perhaps it’s time that it actually become one.

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