Malpractice Insurance Evolution:
MedPro Group’s 125-Year Legacy
The Origins of Medical Malpractice
The concept of medical malpractice (also known as healthcare liability) has existed since ancient times — most notably in ideas emphasized in Hammurabi’s Code from 1754 BC Babylonia. As outlined in a New York Times article, the code detailed specific legal consequences for medical negligence.
Later came the introduction of the Hippocratic Oath, and with it, an implied baseline for the standard of medical care. To this day, physicians partake in the Oath, promising to “first, do no harm.”
The first recorded medical malpractice case occurred in 1374, when a legal case was brought against an English physician for failure to remedy an injured hand. The case was eventually dismissed, but it provided a foundational precedent for the future of medical malpractice law: physicians could be held liable for negligent care. However, there would be no liability for the physician if proper treatment was given, regardless of the outcome.
Medical Malpractice in the United States
Soon after the United States gained independence, the first recorded U.S. medical malpractice case occurred in 1794. The plaintiff ultimately won the case and was awarded £40 in damages.
The following century saw a dramatic rise in the number of U.S. medical malpractice cases in what became known as America’s first medical malpractice crisis from 1835-1865. According to an article published in the National Library of Medicine, one New York surgeon claimed that nine out of every ten local physicians had faced charges of malpractice by the mid-1800s.
Why did medical malpractice lawsuits increase so radically in the 19th century? The answer can be found in the historical circumstances of the time, including multiple devastating wars, the lack of modern knowledge of infection prevention, and the normalization of amputation as a treatment for many orthopedic afflictions. All of this led to a dramatic rise in malpractices cases during the mid-1800s. In fact, Abraham Lincoln himself worked as a medical malpractice attorney prior to his presidency.
During the Malpractice Crisis, many doctors feared the loss of their reputations and livelihoods due to growing numbers of malpractice lawsuits. Thus, at the end of the 19th century, it became clear that legal protection against malpractice claims, in an organized and coordinated fashion, was necessary to safeguard the reputations and careers of physicians in the United States.
The First Healthcare Liability Insurer
The nation’s first company to defend healthcare providers against medical malpractice claims was MedPro Group’s predecessor company, Physicians’ Guarantee Company. Founded in 1899 by two Fort Wayne physicians, Alpheus P. Buchman and Miles F. Porter, the company offered pre-paid legal service for malpractice litigation defense. The goal of the company was to aid and protect the medical profession against malpractice claims by being the leading legal expert on medical malpractice in the country.
A few years later in 1902, Physicians’ Guarantee Company became Physician’s Defense Company. In 1907, two men named Byron H. Somers and Charles M. Niezer left the company to start The Medical Protective Company (Medical Protective).
In 1909, Medical Protective reorganized as an insurance company and became the nation’s first insurance company to offer medical malpractice insurance (also known as healthcare liability insurance). They provided broad coverage for professional services, defense outside limits, and insured’s consent to settle required. It was also the first insurance company to specialize exclusively in medical malpractice insurance. In 1913, Medical Protective acquired Physicians’ Defense Company. Medical Protective was led by Byron Somers’s family until the late 1990s.
MedPro Throughout the Years
By the late 1920s, Medical Protective (MedPro) had become the largest insurer of medical providers in the nation, insuring an estimated 30% of physicians and surgeons. The 1930s saw the expansion of their policy coverage as well as the company’s creation of the first “medmal bible” for the medical malpractice insurance industry called “Brief on Malpractice Law.” It set the standard for the industry and was influential in how malpractice cases were defended.
Throughout the 1940s, MedPro continued to insure doctors, including physicians and dentists participating in World War II military service. By this time, the company had defended over 50,000 claims. In the 1950s, MedPro began insuring residents and interns, emphasizing its focus on the future of healthcare.
Beginning in the mid 1960’s, malpractice claims and lawsuits became more prevalent and in the early 1970’s the number of claims surged. In 1974 alone, Cook County, Illinois experienced a 71% increase in filed malpractice lawsuits. Similar trends occurred across the United States. Increases in filed claims and lawsuits led to an industry crisis in the 1970s and ‘80s. Medical Protective was one of few insurance providers to survive the crisis.
In 1998, General Electric recognized Medical Protective’s lasting innovation and acquired the company. Seven years later in 2005, GE began plans to step away from insurance. Medical Protective was then purchased by Warren Buffett’s Berkshire Hathaway — one of the most trusted names in the business world –– adding another chapter to MedPro’s story of leadership and reliability.
Of the acquisition, Buffett noted in an Insurance Journal article, “For more than 100 years, Medical Protective has been the ‘gold standard’ in protecting and defending the assets and reputations of healthcare providers.”
Under Berkshire’s ownership, MedPro quickly expanded, acquiring Princeton Insurance, the largest medical malpractice insurer in New Jersey, in 2011 and PLICO, the leading medical malpractice insurer in Oklahoma, in 2015.
Additionally, Consolidated Health Plans (CHP) was acquired by Berkshire Hathaway in 2011. In 2019, CHP was renamed Wellfleet, and its two affiliated companies were renamed to Wellfleet Insurance Company and Wellfleet New York Insurance Company, respectively.
In 2015, Medical Protective rebranded to MedPro Group — a representation of continual growth and innovation in the insurance industry. Together, the MedPro family has established and maintained high standards of excellence, recognizing that collective strength and resources enhance the ability to serve insureds.
Since 1899, MedPro has maintained the status of industry leader in medical malpractice insurance. MedPro has more experience than any other carrier, handling over half a million claims since its founding. Consistently earning financial strength ratings of A++ (AM Best) and AA+ (Standard & Poor’s), MedPro also holds a 90% national trial win rate and an 80% rate of claims closed without payment.
Over the past 125 years, MedPro Group has remained steadfast in our commitment to our earliest mission: protecting the reputations of healthcare providers. MedPro’s remarkable journey reflects a narrative of unwavering dedication to our insureds – the very individuals who devote their lives to the well-being of others. In safeguarding those who protect us, MedPro ensures that medical professionals can focus on their vital work, secure in the knowledge that we’ll be there when they need us most.
For latest AM Best rating, access ambest.com. All data is derived from MedPro Group records and calculations; claims data range is 2013-2022 unless otherwise indicated. MedPro Group is the marketing name used to refer to the insurance operations of The Medical Protective Company, Princeton Insurance Company, PLICO, Inc. and MedPro RRG Risk Retention Group. All insurance products are administered by MedPro Group and underwritten by these and other Berkshire Hathaway affiliates, including National Fire & Marine Insurance Company. Product availability is based upon business and/or regulatory approval and may differ among companies. © MedPro Group Inc. All Rights Reserved. July 2024.