Texas Medical Mafia: Part 2

TMLT and TMA collude to put Texas physicians in "golden handcuffs."

When I finished residency in 2003 and moved to Texas, TMLT (Texas Medical Liability Trust) was essentially the only malpractice carrier available. Coverage required paying dues to the TMA (Texas Medical Association) which at the time did not bother me - TMA had a reputation for fighting on behalf of independent physicians against the government and insurance companies.

In recent years, the mission of TMA has shifted to embrace government-dictated pro-mandate public health policies that fail to respect the physician-patient relationship and free speech. I also discovered TMA is a member of “Shots Heard,” a group that specifically encourages the public to report misinformation-spreaders to the state medical boards. Shots Heard members have repeatedly harkened the public to report me to the Texas Medical Board.

Because I have a policy with TMLT, I am required to be a member of TMA. In 2023, I was obligated to pay an organization trying to get my license revoked $818 or else lose my malpractice insurance. I needed my malpractice insurance to defend myself against the Texas Medical Board, and thanks in part to the efforts of TMA, I quickly used up the entire $100,000 claim limits on my TMLT policy.

Once my policy was maxed out, I decided to shop around for a different carrier - mostly so I could drop my membership to TMA - and applied to MedPro, a company backed by Berkshire Hathaway. MedPro apparently has tried to get a share of the Texas market but has struggled against the weight of TMA-backed TMLT. An inside source told me TMA wanted to charge MedPro $1,000,000 to set up a booth at their last annual convention.

Unfortunately, MedPro rejected my application - no reason was given but presumably a consequence of all the negative publicity I’ve suffered during the pandemic. So for now, I am stuck as a dues-paying member of an organization that wants to take me down.

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Formation and Purpose of TMLT

TMLT was formed in 1979 to provide malpractice insurance to members of the TMA, which at the time included over 90% of Texas physicians. TMLT was essential because many malpractice insurance carriers were unwilling to operate in Texas. TMLT supported Texas physicians through difficult periods until 2003 when tort reform made Texas more competitive for malpractice insurers, leading to reduced rates and an influx of physicians back into previously underserved areas, such as the Rio Grande Valley and rural regions.

Changes in the Landscape

1. Over the past twenty years, the percentage of Texas physicians who are members of TMA has dropped to less than 50% and is continuing to decrease.

2. Large healthcare institutions increasingly self-insure or contract with insurers other than TMLT.

3. There has been a decline in the number of independent practitioners, who traditionally formed the core of TMLT’s clientele.

Current Environment and Structure of TMLT

1. TMLT is a medical liability trust governed by a Board of Trustees elected by its policyholders. Although trusts are generally not regulated by state insurance departments, TMLT voluntarily adheres to regulations applicable to commercial insurers.

2. To be eligible for TMLT insurance, physicians must be members of TMA, which currently costs over $1,000 annually.

3. TMA and TMLT often have overlapping leadership. For example, Dr. Joseph Valenti, current Chairman of the TMA Board, also serves as a paid Trustee for TMLT, creating potential conflicts of interest. Such conflicts include:

   • Physicians satisfied with their TMLT coverage but who wish to leave TMA due to disagreements must find new malpractice insurance, a situation referred to as “golden handcuffs” by both Dr. Valenti and TMA's EVP/CEO Michael Darrouzett.

   • Competitors like MedPro, despite paying large sums for exposure, have faced restrictions at TMA events, raising anti-competitive and potential antitrust concerns.

   • With TMA membership declining, the original intent of TMLT “to cover all Texas physicians” is no longer viable, exposing TMLT to potential legal challenges, especially given the lack of robust conflict-of-interest oversight in its governance.

     

4. Texas remains the most profitable medical malpractice market in the U.S., largely due to legislation that caps malpractice damages.

5. TMA exerts significant control over TMLT by tying TMA membership to malpractice coverage. The dual role of board members in both organizations exacerbates inherent conflicts of interest.

6. TMLT has offered significantly underpriced malpractice insurance through LoneStar RRG, resulting in ongoing financial losses. This raises questions about the use of policyholder funds, as these losses could otherwise translate into dividends for policyholders.

Concerns and Speculative Practices

1. Independent physicians face disproportionate pressure to maintain TMA membership to access TMLT insurance.

2. TMA interferes with competitor insurers, both covertly and overtly.

3. The process of electing TMLT Board members from TMA leaders may lack transparency and fairness, with past instances suggesting preferential treatment for TMA-affiliated candidates.

4. Financial arrangements, such as covering new members' TMA dues for two years, may manipulate membership figures and budgetary outcomes, potentially benefiting TMA leadership's KPIs and compensation. While possibly not illegal, these practices appear ethically questionable.

Specific Questions to Explore

1. Ownership and Profit Allocation: Who legally owns TMLT? Who benefits from its operational profits? What role do profit beneficiaries have in the management and oversight of TMLT? Are there mechanisms in place within governance documents or Texas law to allow beneficiaries to influence board decisions?

2. Policyholder Legal Standing: What are the legal rights of policyholders regarding potential mismanagement or malfeasance by TMLT’s board? How could ongoing financial losses from out-of-state operations, which reduce dividends for policyholders, constitute malpractice or fraud by the board?

3. TMA’s Control Over TMLT: How does TMA’s effective control over TMLT, through shared board membership and inherent conflicts of interest, align with Texas Department of Insurance regulations and Texas law?

4. Impact of Non-Profit Status: How does TMA’s and TMLT’s non-profit status influence these issues? Are there specific legal implications for both organizations based on their non-profit designations?

5. Antitrust Concerns: What are the legal implications concerning antitrust regulations related to tying TMLT insurance coverage to TMA membership?

6. Role of TMA Leadership: How do the actions of TMA’s CEO and senior staff align with these practices and potential conflicts of interest?

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Ways to Help

Please pass this information along to your state representative, state senator, Governor Abbott, and Attorney General Ken Paxton. An easy way to find your representatives and email them is through this government website.