E
MALPRACTICE PREMIUMS IN 1992:
RESULTS OF A NATIONAL SURVEY OF DENTISTS
DOUGLAS A. CONRAD, M.H.A., M.B.A., PH.D.; CORALYN WHITNEY, PH.D.; PETER MILGROM, D.D.S.;
DAVID O'HARA, M.A.; RUTH AMMONS, J.D.; LOUIS FISET, D.D.S.; WILLIAM VESNESKI, J.D.
On other articles in this se-
ries, we presented the results of
a mail survey describing the in-
cidence of self-reported com-
plaints and malpractice claims
filed against general dentists
nationwide from 1988 to 1992,
as well as data on the insurance
marketplace.1'2 In this report,
we present results on the insur-
ance premiums paid by U.S.
dentists.
The malpractice liability sys-
tem is likely to affect the level
of premiums. It aims to compen-
sate people injured as a result
of negligence by health care
providers and to provide incen-
tives that discourage negligent
practice. Premiums are the cur-
rency through which liability
rules are translated into eco-
nomic incentives for quality
care in dental practice. The
laws governing this process
have been the subject of intense
national debate.
Premiums may be directly in-
fluenced by the extent and type
of coverage selected. More exten-
sive coverage costs more. The oc-
currence of a prior claim also
may influence the cost of mal-
practice insurance. Less obvious
determinants of premiums are
the size and organization of the
practice, the dentist's age or
number of years in practice, the
location of the practice and the
According to a 1992 national
survey, more than 95 percent of
general dentists in the United
States purchased malpractice in-
surance. The authors evaluated
the survey findings to identify
factors that had the greatest ef-
fect on dentists' insurance pre-
mium costs. Premiums were
higher for dentists who had been
the subject of previous com-
plaints or claims, as well as for
those who owned their prac-
tices. States with fewer lawyers
had lower premiums. Finally,
state limits on use of dental hy-
gienists, number of offices and
the extent of water fluoridation
also affected premium levels.
dentist's gender. The extent of
water fluoridation may influence
premiums indirectly by shifting
the mix of problems the dentist
faces and thus influencing tlle
overall demand for dental ser-
vices. State characteristics, such
as the lawyer-to-population ratio
and laws governing the use of
dental auxiliaries, also may af-
fect premiums.
Recent research also sug-
gests that several state legal
provisions are related to physi-
cians', and perhaps dentists', in-
surance premiums. Among
these are shorter basic statutes
of limitation and shorter
statutes from date of discovery,
mandatory use of any type of
pretrial screening panel (see
sidebar, "Legal Provisions by
Category"), caps on total dam-
age awards or on punitive or
non-economic damages and re-
strictions on the doctrine of
joint and several liability (side-
bar).3'4
There has been no research
in the area of dental malprac-
tice premiums. Thus, an empir-
ical analysis of the extent to
which practice characteristics,
claims experience and legal
provisions influence the level of
coverage a dentist obtains is
warranted. The primary focus
of this study was determining
whether
- the comprehensiveness of
malpractice policy coverage
and previous claim experience
are major determinants of pre-
miums;
- tort reform provisions of
state law lowers premiums;
- premiums are lower in
states with fewer lawyers.
Other factors-such as the
type of practice, the dentist's
JADA, Vol. 126, July 1995 1045
 .i-
Renw.-
number of years in practice
and the state's fluoridation sta-
tus-are included in the analy-
ses to increase understanding
of the implications of our find-
ings for various forms of prac-
1046 JADA, Vol. 126, July 1995
tice and enhance the study's
relevance.
METHODS
Sample. Dentists in private
practice in 1992, either part-
time or full-time, were targeted
for this study. Names were
drawn from the 1991-1992
American Dental,Asociation
Distribution of Dentists, a cen-
sus of dentists in the United
 TRENDS

purchased and
whether the
policy provided
m ;: ; ;g:premium ad-
justments
tlit101.4; 0based on claims
10.8 experience or
individual be-
64.5 havior. Seven-
20.4 ty-seven per-
14.5 ~cent (n=3,048)
of <the
0 fx dentists
Legavlo :5van-
D'0 Af
1.0.40 ,lsurveyed
ltyseve re-
perl-
141.7 sponded to the
28.9 ~questionnaire.'
10/0 abs. We up-
dated a 1991
8.3 ~study of the
malpractice
9 7
0)1.7 laws in the
Unite tates.
71.1 LEXIS (Mead
17.9 Data Central),
11.0 a computer-ac-
cessible legal
22.3 database, was
25.7 used to deter-
27.2 mine if any of
;
24.8 tt 0 tthe citations
previously list-
ed for each
state had been
amended,
States. These were merged with type of practice (solo, partner, added or repealed. We also re-
the ADA Master Membership employee); the number of years viewed appellate court decisions
File to eliminate those who did in practice; gender; location by germane to medical and dental
not meet eligibility criteria (for- census division; number of malpractice. Finally, we evalu-
eign residents, full-time stu- other full-time dentists in the ated laws specifically governing
dents and retired or deceased practice; number of patients vis- the use of auxiliary personnel
dentists). A list of 114,814 gener- iting each dentist per week; and (hygienists and assistants) in
al dentists in private practice re- the proportion of patients with dentistry, the number of dental
mained, from which 4,278 den- commercial insurance, capita- offices one dentist can operate,
tists were chosen randomly to be tion plan coverage, Medicaid or the licensing of foreign-trained
surveyed. This group was repre- no insurance. The claims and personnel and the population-
sentative of dentists profiled in malpractice information includ- to-lawyer ratio.
the ADA census (Table 1).1 ed whether the dentist had a Medical malpractice law is
Questionnaire. We con- history of any liability com- negligence-based; that is, mal-
structed a survey instrument to plaints or filed claims, the type practice liability is conditioned
collect data on dentist-specific of insurance purchased (occur- on proving that an injury was
information and malpractice ex- rence vs. claims made), the level caused by the provider's level of
perience. Dentist-specific prac- of the dentist's malpractice pre- care. Our legal analysis identi-
tice information included the mium, the limits of liability fied 15 malpractice provisions of

JADA, Vol. 126, July 1995 1047

T1ENDS
l
TABLE 2
particular relevance, nine of
which are detailed in Table 2.
(Editor's note: A complete re-
port is available from Dr. Mil-
grom.) These legal provisions
can be grouped into the follow-
ing categories:
- those that affect the probabil-
ity of a claim's being made by a
patient;
- those that affect the probabil-
ity of the patient's winning pay-
ment;
- those that influence the aver-
age amount of the payment
awarded for a successful claim.
The legal provisions were de-
termined for each state and for
the District of Columbia. Table
2 presents the distribution of
nine of these provisions by state
as of August 1992.
Each legal provision was
1048 JADA, Vol. 126, July 1995
coded in the pro-dentist direc-
tion and scored as present (score
=1) or absent (score=0). Four
provisions under statutes of lim-
itations and two pretrial screen-
ing panel provisions (sidebar)
(mandatory use of panels and
admissibility of panel findings
at trial) were included, making
a total of 19 provisions to be an-
alyzed. The time limits of the
statute-of-limitation variables
were recoded into dichotomous
variables. Limit lengths in gen-
eral were coded as present or
absent. Limit lengths from dis-
covery were classified into the
categories of "less than three
years or not applicable"
(score=1) vs. "three years" (score
=0). Time limits from act were
classified into categories of "two
years or less, or statute not ap-
plicable" (score=1) vs. "more
than two years" (score=0). Re-
pose limit (sidebar) is included
under statutes of limitations.
Statistical analysis. The
dependent variable of interest
was the individual dentist's
malpractice premium for 1992.
This measure was based on a
survey question that asked den-
tists to indicate their premiums
according to range categories
(for example, $2,000 to $2,499).
Each dentist's premium was
converted to a continuous mea-
sure by recoding each category's
value to the midpoint of its in-
terval (for example, $2,250 for
the preceding example and
$3,500 for the "$3,000 or more"
category).
The determinants of premi-
ums evaluated consisted of
 TREND S

MO
M MT
O NONW N NJ MNV NVI OH Ok ORA ft SO SDb TN TX UTV V WA VA %W WY

Yxxx.&V
3yx:X
X XX :
X x
x x xX Xx xxx Vx xxx
x ~~x x xx xx x

__xx xx xx
xx x x x x-x x x x xx
x ~x x x x xx x

xx xxA Xx x xxx x xx xx x xx x

x ~~x x x xx xx
xx x~xxx x xx x x x x xx x xx x
x x~x x x x x x x x x x

xxx x ;0x xx X x x x x x x

practice and personal character-
istics (specified above), malprac-
tice insurance characteristics,
claims data, state legal provi-
sions, state population-to-
lawyer ratio, other state laws
governing dentistry and the
percentage of the state popula-
tion drinking fluoridated water.
We assessed the key determi-
nants of premiums by evaluat-
ing the relationship between
premiums and determinants in
two basic steps. First, we exam-
ined differences in average pre-
miums for subgroups in the
population for each determinant
hypothesized (referred to as
"univariate analyses"). For ex-
ample, we examined the aver-
age premiums paid by dentists
in solo, partnership and em-
ployee practice arrangements.
We did this for practice charac-
teristics, for insurance charac-
teristics (such as policy limits)
and for the legal characteristics
of the state in which the dentist
practiced.
For determinants that were
not grouped, such as the popu-
lation-to-lawyer ratio, we exam-
ined the correlation between
each determinant and premi-
ums and calculated the average
premium expected for various
values of these determinants.
For example, for the population-
to-lawyer ratio we calculated
the average premiums expected
assuming 250, 500 and 750 resi-
dents per lawyer. This analysis
is relatively easy to understand
in that it is similar to the way
the liability insurers present
their premiums to dentists. In
other words, there is a different
premium level depending on the
type of practice, location or level
of coverage required.
However, the nature of
statistics is such that the more
dentists we surveyed, the more
statistically significant determi-
nants of premiums were identi-
fied, even though some differ-
ences were small in actual
dollars. To establish important
differences, a correlation of at
least 0.1 between premium and
a determinant was required to
be considered both statistically
and practically important. This
correlation corresponds to at
least a 10 percent difference in
premiums between two groups.
Determinants meeting this cri-
teria are discussed later in the
article.

JADA, Vol. 126, July 1995 1049

-III [ND S

TABLE 3 lows for two or

more determi-
nants to be
evaluated to-
UYiGO gether in the
determination
of premiums.
This analysis
adjusts for the
35.3 correlations
60.0 among all t e
4.7 determinants
and premiums
and provi es a
better picture of
1 ;;; Qr+thejoint rela-
25.0 tionship of the
18.7 determinants.
15.4 ~It also identifies
11.3 ~the determi-
12.7 nants that are
still related to
premiums paid,
1.9 after one con-
7.0 f trols for the
6.7*sr t ea factors.
other
6.7

~~In multiple
regresslion, the
58.9
9.6 ~strength of the
relationships
4.5 among the fac-
tors is described
4.9 in terms of the
0* multiple corre-
1.2.1 lation coeffi-
9.9 ~cient, denoted
17.1 R2 , which can
S6.3 t range from 0
(no relation-
shi ) to 1 (per-
fect relation-
ship). In simple
linear regres-
sion, this is
On the other hand, many of typically specified in a ratio, equivalent to the square of the
the practice characteristics may such as 1-to-3 or 1-to-2, which correlation coefficient. Thus, the
be strongly related to each makes these two pieces of infor- correlation of at least 0. 1 is
other and it is useful to under- mation highly correlated. Thus, equivalent to R2 values of at
stand the relative importance of we probably don't need to know least 0.01. Determinants meet-
these characteristics as deter- both limits to predict premiums. ing this criteria are presented in
minants of premium. For exam- The second way to view the the figure. Unless otherwise in-
ple, per-incident policy limits data, then, is through the use of dicated, multiple regression re-
and per-year policy limits are multiple regression, which al- sults are based on the model

1050 JADA, Vol. 126, July 1995


containing all potential deter-
minants considered.' (Tables
with the regression results are
available from Dr. Milgrom.)
Given the large sample size,
many of the determinants con-
sidered are statistically sig-
nificant-and many at the
P<0.0001 level. These highly
statistically significant determi-
nants also correspond to those
considered to be of practical sig-
nificance as well. Because of
this, we make the distinction
between the results that are
both practically and statistical-
ly significant and those that are
statistically significant at the
usual P=0.05 level. Thus, it
should be assumed, unless oth-
erwise indicated, that the
P-value of a significant result is
less than 0.0001. Only the
P-values less than 0.05 but
greater than 0.0001 are report-
ed in the text.
RESULTS
Malpractice insurance. Table
3 presents the premium levels
and other characteristics of in-
surance for the dentists in the
study. The average premium
paid in 1992 was $1,825
(SD=$930). Sixty-one percent of
the dentists paid less than
$2,000 per year for malpractice
insurance. The most common
coverage purchased had limits
of $1 million for any one inci-
dent and $3 million or more for
all incidents during a policy pe-
riod. Seventy-three percent pur-
chased limits in a 1-3 ratio.
About 60 percent purchased
claims-made coverage and the
remainder reported buying oc-
currence-based insurance. Few
dentists (129, or 4.6 percent) re-
ported not purchasing any in-
surance.
Personal and practice
characteristics. In the uni-
variate analyses, we examined
the premium for each subgroup
separately. Location by census
division was one of the
strongest determinants of pre-
miums, accounting for 18 per-
cent of the variability in premi-
ums (Table 4). Premiums were
the highest in the Northeast
($2,367) and the lowest in the
North Central region ($1,458).
Dentists in partnerships paid
higher premiums than solo or
employee dentists (R2 = 0.01).
Premiums increased as either
the proportion of patients with
Location by census
division was one of the
strongest determinants
of premiums.
commercial insurance increased
(P=0.002) or as the proportion
of patients with capitation
plans increased (P=0.003).
Capitation had a small im-
pact on premiums, increasing
premiums by an average $27 if
a practice carried the average of
6 percent of patients on such
plans. For commercial insur-
ance plans, premiums increased
moderately as the percentage of
patients with such coverage in-
creased. For example, practices
with 80 percent commercially
insured patients paid $148
more in premiums than did
practices with 40 percent com-
mercially insured patients.
There were no statistically sig-
nificant differences in premi-
ums resulting from dentists'
gender, years in practice, num-
ber of patient visits per week,
number of other full-time den-
tists in practice or the interac-
tion between type of practice
and number of other full-time
dentists.
TRENDS
In the multiple regression,
the only significant practice
characteristic was the interac-
tion between the type of prac-
tice and the number of full-time
dentists (P=0.02). Employee
dentists had significantly lower
premiums than dentist owners,
but these were not due to lower
coverage. The employee den-
tists' premiums decreased by
$110 for each additional full-
time dentist in the practice.
Census division and patient in-
surance coverage were no
longer significant.
Investigation of hypothe-
ses. We examined the findings
for information confirming or
refuting our hypotheses-that
the extent of malpractice cover-
age and previous claim experi-
ence are major determinants of
premiums, that tort reform pro-
visions of state law lowers pre-
miums and that premiums are
lower in states with fewer
lawyers.
Coverage and previous claims
experience. Higher per-incident
policy limits were a slightly
stronger predictor of signifi-
cantly higher premiums than
the higher per-year limits; pre-
miums in these cases were $473
and $463 higher, respectively.
Premiums for claims-made in-
surance cost $368 more than oc-
currence-based coverage (Table
4). Policies that provided premi-
um adjustments based on prior
claims history or participation
in loss prevention programs
cost significantly less than poli-
cies that did not provide such
adjustments ($152, P=0.002).
Malpractice premiums were
significantly higher for dentists
against whom a complaint had
been lodged within the past five
years, even if no formal legal
claim had been filed. Incidents
that actually resulted in a for-
JADA, Vol. 126, July 1995 1051
. l Tnrilno
H>Nilk
- I IILIIUd-

TABLE 4

Riaw

1052 JADA, Vol. 126, July 1995


mal claim also resulted in even
higher premiums (Table 4).
In the multiple regression,
premiums for claims-made and
occurrence-based policies were
not significantly different. Poli-
cies that provided premium ad-
justments based on prior claims
or participation in loss preven-
tion programs did not cost any
more or less than policies that
did not provide such adjust-
ments. The higher per-incident
limit was a significant determi-
nant of premiums (Figure). Due
to the strong correlation be-
tween the two limits (r=0.85),
the per-year limit was no longer
a significant predictor.
Regarding claims, the multi-
ple regression results were sim-
ilar to the univariate analysis.
Malpractice premiums were
still significantly higher for
dentists who had had a com-
plaint lodged against them
(P=0.04), and incidents that ac-
tually resulted in a formal claim
resulted in even higher premi-
ums (P=0.03). Taken together,
practice characteristics, insur-
ance coverage attributes and
claims experience accounted for
25 percent of the variation in
premiums paid for malpractice
insurance.
Tort reform and the number
of lawyers. The population-to-
lawyer ratio was the single
strongest determinant of premi-
ums (R2=0.22). Malpractice pre-
miums were lower if the popula-
tion had less access to lawyers
(higher ratios, fewer lawyers)
(Table 4). Several of the individ-
ual states' legal provisions were
significantly related to premi-
ums. The two single strongest
determinants were the require-
ments of binding arbitration
and the allowance of the collat-
eral source rule (sidebar). The
presence of these statutes re-
TRENDS
Figure. Significant determinants of premiums from multiple regression.
Values given represent the increase or decrease in premium costs for
the presence of a categorical characteristic, and for the average sam-
ple response for the state population-to-lawyer ratio and the percent-
age of the state population drinking fluoridated water.
sulted in considerably higher ber of auxiliaries and the licens-
premiums for the dentists. Most ing of foreign dentists pay sig-
provisions had a positive rela- nificantly higher premiums
tionship with premium except than those in states without
shorter statute of limitations these laws (Table 4). Restric-
from act, expert witness require- tions on assistants' duties re-
ment and presumption of in- sulted in significantly lower
formed consent, which appear to premiums ($180 less), but the
lead to lower premiums (Table restrictions on dental hygien-
4). Those states with limits on ists' duties did not. When pre-
res ipsa (sidebar), limits on re- miums were related to state
covery of damages and a pre- data on the percentage of the
eminent state, rather than na- population drinking fluoridated
tional, standard of care also had water, the premiums decreased
lower premiums, but those spe- as the percent increased
cific reforms explained only 0.5 (R2=0.06, Table 4).
percent or less of the variability In the multiple regression,
in premiums. Frivolous suit state legal provisions and the
penalty, mandatory pretrial population-to-lawyer ratio ex-
screening panel, the admissibili- plained an additional 16 per-
ty of a pretrial screening panel's cent of the variation in premi-
findings at trial, statute of limi- ums after adjustment for the
tations from discovery, repose practice characteristics, claims
limits and ad damnum clause experience and malpractice in-
(sidebar) were not significantly surance coverage. As intended
related to premium. by state legislatures, several
Dentists practicing in states legal variables were associated
that enforce limits on the num- with significantly lower premi-
ber of offices, limits on the num- ums: shorter statutes of limita-
JADA, Vol. 126, July 1995 1053
1RENDS
tion, mandatory pretrial screen-
ing of the evidence in a given
case (P=0.02), frivolous suit
penalties and limits on joint
and several liability (P=0.01).
Poorer access of the population
to lawyers, as measured by the
population-to-lawyer ratio, was
related to lower malpractice
premiums (Figure).
However, contrary to expec-
tations, some liability rules
were associated with signifi-
cantly higher premiums in the
multiple regression analysis:
binding arbitration statutes,
certificate of merit (sidebar)
(P=0.003), admissibility of pre-
trial screening panel findings at
trial, expert witness require-
ments, prohibition of ad
damnum clauses and allowed
offsets for collateral sources
(sidebar).
Two of the state dental regu-
latory provisions had a signifi-
cant impact on premiums. Gen-
eral dentist malpractice
premiums were $223 higher
(P=0.004) in states that placed
restrictions on the performance
of expanded functions by hy-
gienists but not in those that
had restrictions on assistants.
Premiums were $700 higher in
states with limits on the num-
ber of offices allowed per den-
tist. The percentage of the
state's population that drank
fluoridated water was an even
stronger predictor in the multi-
ple regression model, with pre-
miums decreasing 1.6 times as
the percentage of the population
drinking fluoridated water in-
creased.
DISCUSSION
The actuarial experts at the
firms that provide liability in-
surance for general dentists de-
termine premiums within an in-
dividual state. They focus
1054 JADA, Vol. 126, July 1995
primarily on the frequency and
severity of the claims paid out
for dentists in relatively simple
risk classifications (such as
those who use IV sedation vs.
those who do not). Other factors
such as legal expenses, over-
head and reserves also influ-
ence the level of premium.2
Until recently, most carriers fo-
cused little attention on other
practice characteristics, which
may vary among dentists in a
single risk classification.
This study of premium deter-
minants is not an attempt to
replicate what is done in insur-
ance firms. In fact, it is differ-
ent in several ways. First, it
Only a dentist's status as
employee rather than
owner had a significant
effect on the level ofpre-
mium.
takes a national view. The sam-
ple is a representative group of
general practitioners from all
parts of the United States.
Thus, it is possible to examine
interstate differences in laws
governing malpractice and the
availability of lawyers to bring
complaints, an assessment that
would not be possible within a
single state. Second, it differen-
tiates between complaints made
and actual claims paid. Many
complaints are registered with
insurers that never result in ac-
tual payments being made. The
number of such complaints has
been increasing as a result of
practitioners' greater awareness
of liability issues. Finally, it in-
cludes practice characteristics,
which are not usually included
in understanding premiums.
Another aspect of this study
is markedly different from the
way premiums are actually set.
In each area (practice charac-
teristics, insurance characteris-
tics and legal aspects), the ef-
fects on premiums are
examined separately (univari-
ate analysis) and then collec-
tively (multiple regression). The
more complex collective form of
investigation allows the effects
of major variables-such as
past malpractice claims or
changes in statutes of limita-
tions-to be moderated or ad-
justed by the influence of other
significant factors as they actu-
ally are. This study focuses dis-
tinctly on the factors that
emerge as significant when the
influence of all other factors is
considered collectively. Because
premiums result from the inter-
play of multiple factors-char-
acteristics of the dentist and the
dental practice, their patients,
the local market and the state
legal environment-it is appro-
priate to emphasize the findings
that explicitly account for the
simultaneous effects of those
factors.
Personal and practice
characteristics. Surprisingly,
personal and practice character-
istics failed to stand out as
major determinants of premium
levels. So did practice locale.
Only a dentist's status as em-
ployee rather than owner had a
significant effect on the level of
premium, all other things being
equal, with premiums decreas-
ing for each additional dentist
in the practice.6
Investigation of hypothe-
ses. Coverage and previous
claims experience. In this study,
we examined whether the com-
prehensiveness of coverage and
previous claims experience
would be major determinants of
premium levels. As expected,
higher coverage was a primary

determinant of premium level.
However, other aspects of policy
coverage did not contribute to
any understanding of premium.
Claims-made and occurrence
policies were not significantly
different in cost. Similarly, pre-
mium adjustments, based on
prior malpractice claims or at-
tendance at claims prevention
seminars, had no significant ef-
fect. The latter is not surpris-
ing, in that risk prevention
seminars tend primarily to be
marketing tools.2 In contrast,
premiums were higher for both
dentists with complaints and
dentists with formal claims.
This is consistent with recent
findings in medicine, suggesting
that there are systematic differ-
ences in the risk of malpractice
claims across physicians and
that-to a moderate extent-
those differences are reflected
in premiums. Physicians with
small, seemingly insignificant
malpractice claims are more
likely to have a larger claim in
the future than are physicians
against whom no claims have
been made.7
Tort reform and number of
lawyers. As hypothesized, and
as is consistent with findings on
physician malpractice insur-
ance premiums, this study
found that four tort reforms
were associated with lower mal-
practice premiums for dentists:
frivolous suit penalty8; pretrial
screening (defined as mandato-
ry in our case and as either vol-
untary or mandatory in Zucker-
man and his colleagues' work8);
shortened statute of limitations
(defined as a shortening from
time of discovery or act in our
work and as any shortening of
the statute in Zuckerman and
colleagues' analysis8); and limits
on joint and several liability.9
Fewer lawyers available per
state resident also was related
to lower premium costs. Al-
though many claims are made
without a lawyer's intervention,
the larger, more successful
claims are initiated with an at-
torney's assistance.6
On the other hand, six tort
reforms appear to be related to
higher than expected premi-
ums: binding arbitration, cer-
tificate of merit, admissibility at
trial of screening panel find-
ings, expert witness require-
ments, prohibition of ad
damnum clauses and allowed or
required collateral source off-
sets to damage awards. Only
two of those six provisions, arbi-
tration10 and collateral source
offsets,9'10 were included in earli-
er studies of physician malprac-
tice premiums. Both the physi-
cian studies9'10 and the results
reported here show higher pre-
miums unexpectedly associated
with these particular "reforms."
The high degree of consistency
between the results of this
study and the physician mal-
practice premium studies sup-
ports the validity of these find-
ings. It also implies that there
is a general systematic linkage
between medical and dental
malpractice premiums and the
underlying tort liability rules.
No one has given a definitive
explanation for the higher pre-
miums associ-
ated with cer-
tain liability
rules. Never-
theless, it may
be that certain
rules, while
Dr. Miigrom is a nominally as-
fessor, Department of. sociated with
Dental Public Health tort reforms
Sciences, SM-35p,
University of Wash- presumed to be
ington, Seattle, Wash. favorable to
98195. Address
reprint requests toDr. dentists, actu-
Milgrom. ally have had
TIENDS
perverse effects. These may
have added to the total cost of
claims per dentist either by in-
creasing the frequency and
severity of claims or by raising
the costs of reporting, filing and
resolving disputed claims. Bind-
ing arbitration statutes, re-
quirements of a certificate of
merit, expert witness require-
ments and prohibition of ad
damnum are examples of rules
that might increase transaction
and adjustment costs. These
costs will be shifted back to den-
tists in the form of increased
premiums.
A second explanation might
be that these liability rules are
themselves a response to high
premiums in the first place. A
cross-sectional study such as
this may speciously infer that
high premiums are caused by
specific liability rules when, in
fact, the causation runs in the
other direction. This explana-
tion seems less compelling,
however, since tort reform has
slowed considerably in the five
years from 1988 through 1992
so the tie between premiums
and law should have ap-
proached a steady state. A sec-
ond multivariate model was es-
timated that accounted for this
simultaneity (two-way causa-
tion) in the determination of
premiums and laws. For rea-
sons of brevity, the results are
not presented here, but the
qualitative pattern of the re-
sults was not different. This
strengthens our belief that the
positive coefficients are not a
reflection of higher premiums
instead of the other way
around.
A third possibility is that cer-
tain tort reforms intended to
ameliorate physicians' and den-
tists' concerns about premium
prices are more prevalent in
JADA, Vol. 126, July 1995 1055
1RENDS
states whose legal climate is
otherwise more highly regulat-
ed and pro-patient. The exis-
tence of reforms in such a state,
therefore, might be a proxy for
other, unmeasured factors in
the state's regulatory system
that lead to higher premiums.
Support for this view comes
from the results of a national
survey of insurers indicating
that certain states have anti-
business regulatory procedures.2
The final area of the modeling
exercise included state dental
practice act provisions and the
extent of water fluoridation. All
other things being equal, limits
on expanded duties of hygienists
and number of offices allowed
per dentist pushed premiums
higher. These provisions may de-
crease the size of the dental
market; previous work has
shown that smaller markets are
likely to have less competition
among insurers.2 In contrast, as
water fluoridation increases,
premiums decrease markedly.
We interpret this to mean that
demand and case severity are
lower in these areas and that
this results in lower risk.
CONCLUSIONS
All other things being equal, in-
creased coverage and a history
of claims are among the best
predictors of the price of profes-
sional liability insurance. Prac-
tice characteristics have rela-
1056 JADA, Vol. 126, July 1995
tively less effect on premium
variation. On the other hand,
this study has shown that pa-
tients' access to the legal sys-
tem and state laws governing
tort liability procedures can sys-
tematically increase or decrease
premium costs. Dental and
medical associations have lob-
bied hard for changes in the tort
law governing medical malprac-
tice litigation. Some tort law
provisions do appear to have
lightened the load of malprac-
tice premiums on general den-
tists.
On the other hand, while dif-
ferences in the statutory legal
environment will significantly
shape premium levels, the ef-
fects are not always in the di-
rection one would expect. Thus,
advocacy of tort reform, if ulti-
mately successful, might pro-
duce unintended consequences
in terms of malpractice premi-
ums, particularly when those
reforms address binding arbi-
tration, admissibility of pretrial
screening panel findings at
trial, expert witness require-
ments, prohibition of ad
damnum clauses and collateral
source offsets. .
Dr. Conrad is a professor, departments of
Health Services and Dental Public Health
Sciences, University of Washington, Seattle.
Dr. Whitney is a research assistant profes-
sor, departments of Biostatistics and Dental
Public Health Sciences, University of Wash-
ington, Seattle.
Dr. O'Hara is a research associate, Depart-
ment of Dental Public Health Sciences, Uni-
versity of Washington, Seattle.
Dr. Ammons is a research associate, De-
partment of Dental Public Health Sciences,
University of Washington, Seattle.
Dr. Fiset is a research associate professor,
Department of Dental Public Health Sciences,
University of Washington, Seattle.
Mr. Vesneski is an attorney in private prac-
tice, Olympia, Wash.
The opinions expressed or implied are
strictly those of the authors and do not neces-
sarily reflect the opinions or policies of the
American Dental Association or its sub-
sidiaries.
This study was supported by Grant No. 5 R01
HS/DE 06554 from the Agency for Health Care
Policy and Research, U.S. Public Health Service.
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