Physicians Working for Physicians - TMLT

2009 

Annual Report 

Annual 

Report 

Physicians working for Physicians 

2009

T 

he Governing Board and Staff of Texas Medical Liability Trust are pleased to present the 2009 annual 

report to policyholders. Along with information outlining the financial strength of the Trust, we 

Texas Medical Liability Trust 

901 MoPac Expressway South 

Building V, Suite 500 

Austin, Texas 78746-5942 

Mailing Address 

Texas Medical Liability Trust 

P.O. Box 160140 

Austin, Texas 78716-0140 

Phone 

800-580-8658 

512-425-5800 

(f) 512-328-5637 

Email 

sales@tmlt.org 

Web address 

www.tmlt.org 

submit for your review the executive narratives from each department highlighting the important 

accomplishments of the departmental teams in service to TMLT policyholders. Additionally, the article 

on page 10 chronicles the steps to protect Texas tort reform undertaken by the Trust executive leadership 

and their representatives at the national level. Our mission at TMLT is to be on the leading edge 

of industry change to provide a standard for coverage and service to our policyholders by which all 

others are compared. We embrace this mission wholeheartedly and look forward to serving you 

in years to come. 

TABLE OF CONTENTS 

Chairman’s Message 2 

President’s Message 4 

Claim Operations 6 

TMLT is the only health care liability 

claim trust created and endorsed by 

the Texas Medical Association 

Risk Management 8 

Endorsed by: 

Bexar County Medical Society 

The Trust and Health Care Legislation 10 

Underwriting Services 12 

Dallas County Medical Society 

Harris County Medical Society 

Lubbock-Crosby-Garza County Medical Society 

Tarrant County Medical Society 

The Texas Academy of Family Physicians 

The Texas Orthopaedic Association 

Travis County Medical Society 

TMLT is a Gold Corporate Affiliate of the 

Texas Medical Group Management Association 

Sales and Marketing 14 

Support Services 16 

Message from the CFO 18 

Financials 19 

2009 | TMLT Annual Report 1

Dave W. Kittrell, MD 

Chairman 

Chairman’s Message 

TMLT 2009 Board of Governors 


Board position: Chairman 

Specialty: Obstetrician-gynecologist 

Practice location: San Antonio 

Medical school: The University of Texas Medical Branch at 

Galveston, 1975 

Internship and residency: Scott and White - Temple, 1975-79 

Policyholder since: 1979 

Donald R. Butts, MD 

Specialty: Colorectal Surgery 

Practice location: Houston 



Internship and residency: Hermann Hospital Houston, 1962-63; 

1965-69; 1969-70 


W hen I was first elected to the TMLT Governing Board 

in 1989, I could not foresee that my journey on the board 

would total 18 years of service. Only those physicians 

who have been privileged to serve on TMLT’s governing 

boards over the past 30 years understand the commitment 

and dedication—and time—required to advance 

and protect the best interests of Texas physicians in the 

medical liability arena. 

During my years on the governing board, I have worked 

alongside many knowledgeable physician board 

members to seek solutions to medical liability problems 

that, in our estimation, would be beneficial for Texas 

physicians. I have served on special committees both at 

TMLT and at TMA. I have worked closely with the TMLT 

staff on a variety of projects and have developed an 

appreciation for the complexities of the Texas legislative 

process. These collaborations have not always been 

easy. These experiences have at times been surprising, 

frustrating and full of struggle, as well as very gratifying. 

Through it all, the leadership of the board and management 

teams at TMLT has been effective at keeping the 

Trust successfully working for Texas doctors for more 

than 30 years. 

Your 2009 governing board was active in a number 

of important areas. We voted to approve a 24% dividend 

for 2010 policyholders accompanied by a 1% rate 

reduction for TMLT-insured physicians practicing in all 

specialties across the state. Significantly, this decision 

demonstrates our commitment as a not-for-profit organization 

to declare dividends and lower rates when it is 

financially prudent to do so. In reviewing TMLT’s policy 

language, the board voted to improve the benefits of the 

Medefense endorsement as well as the premises liability 

endorsement. Details of these changes were mailed to 

all policyholders and highlighted in the newsletter, 

TMLT at Work. Important changes to our payment 

options were implemented in the fourth quarter to 

provide policyholders with greater convenience and 

choice. Additionally, the board made changes to TMLT’s 

Memorial Scholarship Program which increased student 

participation in the program from 33 to 112 applicants. 

When we became concerned that proposed federal 

health care legislation could impact our hard won state 

tort reforms, we approved hiring a Washington lobby 

team to give Texas physicians another voice in the 

conversation. The center spread article in this publication 

details our efforts in this area. 

Meeting of the TMLT Board of Governors 

The TMLT governing boards I have served with over the 

years have comprised intelligent, caring, courageous 

men and women. I am honored that TMLT policyholders 

have continued to place their faith in me by electing me 

to the board. I firmly believe that the decisions we have 

made have been good for Texas physicians and have 

fulfilled the purpose of the Trust. 2010 will be my final 

year of service to TMLT before I retire from the governing 

board. I am proud to have had a long, positive association 

with TMLT and to have had the opportunity to serve 

the physicians of Texas during a very interesting time in 

the history of medicine. 


Chairman 

Robert I. Parks, Jr., MD 

Board position: Vice Chairman 

Specialty: Anesthesiologist 

Practice location: Dallas 

Medical school: The University of Texas Southwestern 

Medical School, 1972 

Internship: Baylor University Medical Center-Dallas, 1972; 

Parkland Memorial Hospital, 1973 

Residency: Parkland Memorial Hospital, 1973-75 


Stuart D. McDonald, MD 

Board position: Secretary-Treasurer 

Specialty: Pulmonary & Critical Care 

Practice location: Fort Worth 

Medical school: The University of Texas Southwestern 

Medical School, 1987 

Residency and fellowship: University of Alabama at 

Birmingham, 1993 


Alan C. Baum, MD 

Specialty: Ophthalmology 

Practice location: Houston 



Internship and residency: The University of Texas Medical 

School Houston Hermann Eye Center, 1972 


Cristie Columbus, MD 

Specialty: Infectious Diseases 

Practice location: Dallas 

Medical school: The University of Texas Southwestern Medical 

School, 1988 

Internship, residency, and fellowship: Baylor University Medical 

Center - Dallas, 1988-1991; 1991-1993 


Arthur F. Evans, MD 

Specialty: Neurosurgery 

Practice location: Lindale 

Medical school: Baylor College of Medicine, 1969 

Internship and residency: Ben Taub/VA Hospital Houston, 1969; 

Baylor Hospital Houston, 1976 


David G. Joseph, MD 

Specialty: Family Practice 

Practice location: Austin 

Medical school: The University of Texas Health 

Science Center at San Antonio, 1987 

Internship and residency: Brackenridge Hospital - Austin, 

1987-90 


Jimmy L. Strong, MD 

Specialty: Pediatrics 

Practice location: Abilene 

Medical school: Baylor College of Medicine, 1981 

Internship and residency: Baylor Affiliated Hospitals Houston, 1984 


2 TMLT Annual Report | 2009 2009 | TMLT Annual Report 3

Bob R. Fields 

President & CEO 

President’s Message 

2 

009 was another year of major challenges and accomplishments 

for TMLT. We began the year working with 

the Texas Medical Association (TMA) and the Texas 

Alliance for Patient Access (TAPA) to protect the hard 

won tort reforms and damage caps of 2003. Although 

our adversaries in the Texas Trial Lawyers Association 

made many attempts to attack Texas tort reforms, 

we were ultimately successful in protecting all of the 

reforms that have dropped the cost of medical liability 

insurance by 50% since 2003 for TMLT insured policyholders. 

Great credit for this success also goes to the 

members of our TMLT lobby team who worked long 

hours conveying the successes of these important 

reforms and secured the support of many key legislators. 

Included among this group is Governor Rick Perry, 

who has proven to be a staunch ally and friend of the 

medical community. 

TMLT departments were productive during the year. 

Claim operations was successful in defending 22 of 27 

cases taken to trial. Total trial losses incurred by TMLT 

amounted to less than $1 million, one of the lowest 

trial loss years ever recorded. Our underwriters made 

many personal renewal visits to numerous large groups 

in the state leading to our outstanding 93.5% retention 

of policyholders. Risk management representatives 

conducted 1,895 practice reviews for physicians and 

15,351 physicians participated in at least one of the 107 

medical education opportunities TMLT offered throughout 

the year. In addition, TMLT conducted two separate 

data studies showing that TMLT policyholders are less 

likely to have claims filed against them after undergoing 

our risk management education. 

The Trust was created to provide the highest quality 

service at the lowest possible cost to TMA members. 

In 2009, rates were again reduced by an average of 

4.7% and another large dividend of 22.5% was applied 

to policies renewing during the year. In spite of reducing 

the cost of medical 

liability insurance 

in 2009, we were 

successful in increasing 

policyholder surplus 

to over $300 million, 

making TMLT one of the 

most financially stable 

insurers in the market. 

We will continue to do 

everything possible to 

keep the cost of liability 

insurance as low as 

possible for TMLT policyholders 

in the future. 

TMLT has always 

believed in supporting 

and working with 

members of organized 

medicine, such as the 

TMA, county medical 

societies, and specialty 

TMLT’s 30th anniversary celebration 

medical societies. We provide financial support for 

physicians’ education, legislative activities, and disaster 

relief. More than any other medical liability carrier selling 

insurance in Texas, TMLT is far and away the greatest 

supporter of organized medicine benefiting all physicians 

in the state. 

During the last half of 2009, TMLT hired federal 

lobbyists and worked with our friends at the 

TMA and TAPA to educate members of the Texas 

delegation in Washington, DC about the benefits 

of the medical liability reforms achieved in 2003. 

We formed a coalition with California carriers and 

drafted language for amendments to the federal 

health care reform bill. We asked US representatives 

from Texas to include this language in the 

federal legislation. Regrettably, most of the key 

legislators needed to protect these reforms for 

doctors voted for passage of the landmark bill 

without any language preventing expansion of 

liability against doctors, a danger which we feel 

exists in the new legislation. However, the battle 

to protect doctors in the ensuing establishment 

of federal medical standards and use of those 

standards in trials against doctors has just begun. 

Our efforts will not cease until we have achieved 

protections for physicians in this federal legislation. 

TMLT is not just about selling insurance to 

doctors, we are about protecting and defending 

doctors at all levels and in all venues. 

As we reflect back on 2009, I am exceedingly 

proud of our TMLT team—including staff, board 

members, lobbyists, consultants, and defense 

attorneys. We accomplished many important 

goals that benefited policyholders and continued 

improving access to medical care for their patients. 

We look forward to having even more success in 

2010 and we thank all of our policyholders for their 

business and support. 

2009 Executive Team (L-R): Dana Leidig, Vice President, Communications & Advertising; John Alexander, Sr. Vice President, Underwriting 

Services; Jill McLain, Sr. Vice President, Claim Operations; Bob R. Fields, President and CEO; Don Chow, Sr. Vice 

President, Sales & Marketing; Jane Holeman, Vice President, Risk Management; Treg Russell, Vice President, 

Management Information Systems; Ray Demel, Sr. Vice President, Chief Financial Officer; Gail Nichols, 

Vice President, Human Resources & Administrative Services 

4 TMLT Annual Report | 2009 2009 | TMLT Annual Report 5 

Bob R. Fields 

President & CEO

Jill McLain 

Sr. Vice President, Claim Operations 

Claim Operations 

W 

ith the inception of debate on national health care issues, TMLT 

faced new challenges to our continuing efforts to protect 2003 Texas Tort 

Reform. The importance of maintaining these reforms intact is proven 

by the continued positive effects which emanated from that legislation. 

Claims intake is approximately half of the amount we experienced in 

the years prior to tort reform. In fact, claim intake numbers remain low 

despite a steady increase over the years in our policyholder base. In 

the years before tort reform, between 22 and 26 physicians out of 100 

were sued each year for medical malpractice, not counting mass litigation. 

In the last 2 years, frequency has stabilized at a rate of 8.4% or 

less. The huge reduction in the number of nonmeritorious cases being 

filed has resulted in substantial savings of defense costs, which have 

been passed along to physicians by reducing medical liability insurance 

premiums to manageable levels. This has encouraged physicians 

to stay in practice in Texas, attracted new physicians into the state, and 

motivated physicians to stay in practice longer, instead of opting for 

early retirement. 

Because the law now clearly defines the elements of damages, all 

parties have the ability to more accurately evaluate cases, enabling 

easier resolution of disputes. TMLT has not changed its philosophy 

of defending physicians who have met the standard of care in treating 

their patients; however, current law often allows us to reasonably 

resolve meritorious cases earlier, for fair value. Plaintiffs still have 

the ability to recover all of their economic damages, as well as up to 

$750,000 in noneconomic damages in multi-party cases. Physicians 

can feel greater confidence in their ability to seek justice in the 

courts without having to face the fear of limitless and unpredictable 

damage awards. 

Since cases can more readily be evaluated and disputes resolved 

earlier, it is less often necessary to go through the expensive and 

time-consuming process of a jury trial. In the 4 years prior to tort 

reform, TMLT tried an average of 80 cases per year on behalf of our 

policyholders with a win ratio of 85%. In the last two years, we have 

averaged 25 cases taken to trial with a win ratio of 86%. 

TMLT continues to honor its commitment to defend doctors who practice 

good medicine. In 2009, we closed 84 out of 100 cases without any 

indemnity payment. It is always our goal to preserve the good records 

of deserving physicians. Additionally, we do not want to provide any 

incentive to attorneys to file cases without having evidence that the 

physician failed to meet the standard of care. By resisting paying 

nonmeritorious claims, we accomplish both goals. While our closedwithout-indemnity 

percentage is slightly less than in some previous 

years, this can be attributed to vastly reduced claim filings. 

Physician participation in decision-making is an integral part of the 

Trust’s philosophy. The claim staff meets three times a year with 

our Claim Review Committee (CRC), which is composed of the nine 

members of the governing board and approximately twenty other 

physicians from varying specialties. The purpose of these meetings is 

to discuss the medical issues in some of our most serious and complex 

cases. The information shared in these sessions is very helpful in 

furthering our staff’s medical understanding of the cases reviewed. 

Jill McLain and Chair of the TMLT Claim Review Committee Dr. David Joseph 

confer about a case. 

With fewer cases to manage, TMLT claim staff have been able to 

provide even greater personal customer service to our policyholders. 

Working closely with our insureds and defense teams, we concentrate 

not only on implementing effective defense strategies and techniques, 

but also on making sure that important information is timely communicated 

to all involved. Because policyholder satisfaction is of prime 

importance to us, claim satisfaction surveys are sent out on every 

closed file. In 2009, the claim department achieved a 99% satisfaction 

rate on the questionnaires returned. 

Clearly, it is one of TMLT’s top priorities to make sure the gains achieved 

by effective tort reform are not diminished, and we work continuously 

toward that goal. This year, having become aware of possible threats 

to state reforms which could be a backlash of the proposed health 

care reforms being discussed in Washington, DC, I worked closely with 

CEO Bob Fields, Governmental and Regulatory Affairs Liaison Theo Van 

Eeten, defense counsel experienced in legislative matters, and retained 

Claim Review Committee (CRC) meeting 

lobbyists to propose and fight for language in the various bills which 

would make it clear that nothing in those bills was intended to create 

new causes of action against physicians or to preempt state reforms. 

That battle is ongoing, and we will continue to fight it. In addition, 

we are working with state legislators, keeping them informed of the 

benefits tort reform has provided not only to physicians, but to all the 

citizens of Texas in the form of improved access to health care. 

Investigations by the Texas Medical Board (TMB) are continuing to 

trend upward. We encourage our insured physicians to retain counsel 

early when faced with a TMB complaint, and to take advantage of the 

Medefense Endorsement on their policy to help them with the legal 

costs of defending themselves in these actions. In 2009, our Medefense 

claim intake was over five times greater than it was in 2004, and that 

trend continues. The Medefense benefit takes some of the financial 

burden off of physicians as they work through the stressful investigation 

process. In addition to providing financial assistance, we can help 

physicians choose an attorney who is knowledgeable in 

defending physicians before the TMB. With RAC audits 

looming, TMLT modified the Medefense Endorsement 

language to clarify coverage for those as well as EMTA- 

LA, HIPAA, and Stark actions. In addition, as an added 

benefit, TMLT has agreed to waive the Medefense coinsurance 

clause for physicians who choose an attorney 

from TMLT’s approved panel. 

We certainly face challenges in the future. Health 

care reform legislation could dramatically impact our 

physicians in many ways. We will stay active and on the 

forefront of both national and state politics in an effort 

to protect the interests of our policyholders, keeping a 

watchful eye on developing trends. It is more important 

than ever to make sure our government officials and 

the public know the inestimable value tort reform has 

brought to the citizens of Texas. We will continue in our 

mission to be the leader in the medical liability industry 

in Texas. 


Jane Holeman 

Vice President, Risk Management 

Risk Management 

T 

MLT not only defends claims but also assists physicians in preventing 

them by providing industry-leading risk management services. 

Recognizing the challenges facing our policyholders in managing 

medical practices, we continued to improve and enhance opportunities 

in 2009 to assist in mitigating liability risks and promoting a safe 

environment for patients. Our philosophy has remained unchanged in 

the 30 years of TMLT history. We believe participation in risk management 

programs has a positive impact on both physicians and patients. 

Integrating risk management techniques enhances patient safety, helps 

minimize risks and promotes defensibility in claims and lawsuits. 

Education 

Completion of the reaccreditation process for the Accreditation Council 

for Continuing Medical Education (ACCME) was an exciting accomplishment 

for the Risk Management Department in 2009. The lengthy, 

arduous process began in late 2008 with compilation of required 

documentation. The ACCME decision was based on review of the selfstudy 

report, evidence of performance-in-practice, and the accreditation 

interview in June. In December, we received notification that Accreditation 

with Commendation was awarded for 6 years as a provider of 

continuing medical education (CME) for physicians. TMLT is the first 

professional medical liability carrier in Texas to achieve commendation 

status, and one of only 10% of all providers surveyed under the new 

criteria to be recognized in this way. Dr. Murray Kopelow, Chief Executive 

of ACCME, stated in his letter: 

“The ACCME congratulates you and commends your organization for 

not only meeting ACCME’s accreditation requirements, but for demonstrating 

that yours is a learning organization and a change agent for 

the physicians you serve. You have demonstrated an engagement with 

your environment in support of physician learning and change that is a 

part of a system for quality improvement.” 

This ongoing accreditation provides TMLT the flexibility to develop and 

present courses of interest on a variety of risk management topics to 

policyholders. Attendance at the 2009 fall seminar series far surpassed 

that of previous years with 1,072 physicians attending Legal Update 

2009: Facing Risks in Your Practice. This represents the largest 

attendance at a fall seminar series to date. 

Electronic learning options continue to be popular with policyholders. 

In an effort to offer new opportunities, two new online courses 

were added in 2009. In June, 10 Things That Get Physicians Sued was 

added and Physician CME Collection, a new compilation of three 1-hour 

Reporter articles, was available in December. There were 1,276 online 

CME course completions in 2009. Additionally, changes to the online 

CME testing process were implemented to monitor and improve test 

scores. Physicians now have access to course content while completing 

the test, question randomization was eliminated, and test question 

placement was edited to correspond with content. 

The risk management staff consults daily with policyholders on a 

variety of situations occurring in their practices where the potential 

for risk exposure exists. The most common question identified in 2008 

related to termination of the physician-patient relationship. In response, 

a new one-hour CME course, Complexities in Beginning and Ending the 

Physician-Patient Relationship: When to Call It Quits, was developed. 

Jane Holemen addresses the Risk Management Committee comprising RMC 

Chairman Dr. Jimmy Strong, Dr. Don Butts, and Dr. Cristie Columbus. 

This newly-developed course was presented to 6 groups in 2009 with 

very positive feedback received. 

Continuing the outcomes measurement project initiated in 2008, 

the Risk Management Department analyzed data to determine the 

relationship between physicians participating in CME courses with 

claims experience. The results were favorable indicating physicians 

who participate in CME courses have fewer claims following course 

completions. As defined by the parameters of the study, during the 

period January 1, 2004 through January 1, 2008, there was a 14% 

decrease in claim activity. 

Practice Reviews 

The practice review is a comprehensive service, designed to assist 

physicians and their staff in determining risk exposures. The professional 

risk management staff completed practice reviews for 1,895 

physicians, approximately 12% of policyholders in 2009. This number 

comprised 172 group practice reviews for a total of 1,432 physicians 

and 463 physicians in individual practices. Risk management representatives 

met one-on-one with physicians summarizing the outcome of 

the review. The dialogue and exchange of ideas, coupled with improved 

internal workflow and electronic transmission of information, resulted 

in a 99% response rate to review recommendations. 

Customer service has been enhanced by offering policyholders the 

opportunity to contact risk management staff via the TMLT website to 

request practice reviews, initiate a consultation with a risk management 

representative, and inquire about CME courses. 

Providing timely notification to policyholders regarding pertinent health 

care issues, the risk management staff drafted risk alerts regarding 

Cordarone and TNF Inhibitors, and legislation impacting regulation 

of laser hair removal facilities. These were published in the Reporter 

newsletter and posted on the TMLT website. Additionally, Risk Management 

Guide, Health Information Release Booklet and Informed Consent: 

Physician’s Guide were revised and are currently available to physicians 

on the TMLT website. 

With the rapidly changing and evolving nature of health care, risk 

management staff took an active role in identifying bills passed in 

the 2009 legislative session impacting the delivery of health care for 

our policyholders. Bills were passed affecting the certification and 

regulation of pain management clinics, emergency care facilities, 

and laser hair removal facilities. Knowledge of these bills and the 

associated regulatory issues provides a sound basis for our risk 

management professionals to recognize situations in which a physician 

may be in violation of Texas laws and regulations, and to assist 

in mitigating their risks. 

Recognizing the value of the risk management practice review, a 

general surgeon from Dallas commented, “Extremely helpful. Provides 

insight into how to potentially avoid problems before they may occur. 

Even if changes do not need to be made, the review is an excellent 

source of information to continue to improve patient care and my 

practice. Barbara Rose is a wonderful reviewer and teacher!” 

Risk management seminar registration 


I 

The Trust and Health Care 

n June 2009, TMLT received calls from federal legislators 

regarding disturbing proposed legislation in Washington, 

DC. We were informed that certain groups might 

use this legislation to undermine existing tort reforms 

and caps in various states, especially those in Texas and 

California that have helped stabilize medical liability 

premiums and quelled the numbers of nonmeritorious 

lawsuits in those states. 

Over the next few weeks, a review of proposed House 

Bill 3200 showed that this federal legislation could 

preempt existing state laws and caps. Passage of this 

legislation would establish new standards of care and 

could increase liability exposure for physicians in over 

two dozen different sections of the bill, with possibly 

more to come as the 1,990-page original proposal 

was amended. 

The TMLT Governing Board immediately recognized 

the dangers of this proposed legislation and authorized 

TMLT President and CEO Bob Fields and his staff to 

engage in this debate with the goal of protecting the 

Texas reforms. Since 2003, these hard won reforms have 

been effective in attracting more physicians to the state, 

in reducing and stabilizing medical liability rates, in 

reducing the numbers of nonmeritorious lawsuits, and 

in increasing patients’ access to health care. 

In late July, Mr. Fields met with the president of the 

American Medical Association, a practicing physician 

from Texas who has benefited from the 2003 Texas tort 

reform measures. Mr. Fields approached him to express 

TMLT’s concerns over House Bill 3200; however, he was 

advised that the AMA had essentially already endorsed 

the proposed federal legislation without securing any 

amendments to protect state laws and caps. Without 

AMA’s strong participation, it would be difficult for 

TMLT and others to join the debate at the national level. 

Texas is a Republican-governed state and Washington, 

DC is in Democratic hands. Democratic Congressman 

Henry Waxman was the original author of the House Bill. 

However, the TMLT team was determined to find a way 

to be heard on these issues considered to be vital to 

Texas physicians. 

TMLT takes action 

To gain a better understanding of how to advance our 

issue in Washington, TMLT retained Jim Turner and 

David Pore, lobbyists on the federal level. Mr. Turner is a 

former four-term US Congressman from Texas. Securing 

additional like-minded organizations to work with TMLT 

at the national level was key. A coalition of California 

medical professional organizations, who themselves had 

an interest in protecting California’s MICRA reforms, was 

contacted to solicit their participation, as was the Texas 

Alliance for Patient Access (TAPA). TAPA helps protect 

Texas patients’ access to health care. The Texas Medical 

Association also offered their strong support. 

A team of TMLT defense and appellate attorneys, including 

Mike Wallach from Fort Worth and Brent Cooper 

from Dallas, reviewed the language of the legislation 

and drafted alternative language. This team spent a 

great deal of time and effort contacting influential 

legislators and medical liability carriers in other states 

to seek their support. 

Mr. Fields traveled to Washington, DC with physicians 

Dr. Bill Green of Houston, Dr. Sheldon Gross from San 

Antonio, and Dr. Don Risinger from Waco. This group, 

together with the federal lobbyists, visited various Texas 

congressmen and presented them with draft language to 

be included in any proposed federal health care legislation. 

One of those legislators was Congressman Henry 

Cuellar, a Democrat from Texas, and a long-time friend 

of the medical community. 

Legislation 

The debate raged as opposition mounted and eventually 

resulted in language that protected physicians in 

only five areas of the 1,990-page bill. Later, when the 

Senate produced its 2,074-page version of the federal 

health care bill, plus a subsequent 42-page amendment, 

the Senate proposed that the US Government Accountability 

Office (GAO) only study 14 areas of the legislation 

to see if it indeed created new causes of action against 

physicians. Neither the House nor the Senate legislative 

proposals provided adequate protection for physicians. 

The danger that state tort reforms and liability caps 

could be preempted and physician liability expanded 

through legislative, judicial, or regulatory means was left 

in place. It appeared that the only solution to the problem 

was the global amendment that TMLT had offered 

and supported all along. Such an amendment would 

contain language protecting physicians from new causes 

of action, would prevent preempting of state reforms 

and liability caps, and would apply globally to the entire 

bill, not just a few selected portions. 

In early November 2009, Mr. Fields, TMLT board 

members Dr. Arthur Evans and Dr. Don Butts, and TAPA 

chairman Dr. Howard Marcus, made a presentation in 

Houston to the AMA House of Delegates. They wanted 

to again alert the AMA of the threats to existing state 

tort reforms and liability caps posed by pending federal 

health care legislation. By mid-January, six months after 

the initial requests, the AMA finally agreed, in writing, to 

TMLT’s position and stated their support for our requested 

amendment. 

Could the impending dangers be halted? 

The proposed legislation appeared to be headed for 

passage. The physicians of Texas needed to protect the 

reforms that have brought thousands of new doctors to 

the state significantly increasing access to health care 

for thousands of Texas patients. TMLT representatives 

talked to Democratic US Representative Henry Cuellar 

again, as he had been a key supporter of health care 

when he was a Texas state legislator earlier in his public 

career. He drafted a revised global amendment stating 

that nothing in the federal health care proposal could 

“modify or impair state law governing legal standards 

or procedures used in medical malpractice cases, 

including the authority of a state to make or implement 

such law.” The amendment gained support from fellow 

Texas Democrats Gene Green and Charles Gonzalez. 

TMLT favored more effective language, but was advised 

that it would be too difficult to convince House leadership 

to incorporate any stronger changes. However, 

there was reason to believe that the amendment would 

be incorporated before the bill was passed. Then there 

were unexpected developments, which would result 

in the health care bill being passed without any of the 

proposed global amendments. 

The change in the political landscape occurred when the 

voters in Massachusetts elected Republican Scott Brown 

to former Democratic Senator Ted Kennedy’s seat resulting 

in the Senate losing its Democratic 60-seat super 

majority. This gave the Republicans in the Senate a 

crucial 41st vote, which would allow them to temporarily 

change the direction of the proposed health care legislation. 

In essence, if the House altered any of the federal 

health care bill, as passed by the Senate, the changed 

bill would have to go back to the Senate for their approval. 

That approval would virtually be impossible to attain, 

as the Senate no longer had the required 60 votes after 

Senator Brown’s election. If the Democrats were to pass 

health care reform, the only option remaining was for 

the House to pass the exact same language bill as had 

already been passed by the Senate. If both houses of 

Congress passed the bill, it would become law. 

For a while it appeared that the proposed health care 

legislation was at a dead end, as a number of Representatives 

had issues with various aspects of the Senate 

bill. However, a promise was made that any passed 

legislation would be amended and improved by 

subsequent legislation. As a result of this promise, on 

March 23, 2010 the House voted 219 to 212 to pass the 

Senate version of the bill, which became law upon the 

President’s signature. 

All twenty Republican US Representatives from 

Texas voted against the bill, joined by one Democrat, 

Congressman Chet Edwards (District 17). The remaining 

11 Democrats voted in favor of the bill, including 

Congressmen Cuellar, Green, and Gonzalez, who, at 

TMLT’s request, had urged the Democratic leadership 

to include language protecting doctors in the final bill. 

TMLT was greatly disappointed in the passage of this bill 

without protective language, given the potential dangers 

of this legislation for the Texas medical community. 

The promise to amend the passed health care bill was 

kept to some extent. A “reconciliation” bill was drafted 

for this purpose. A reconciliation bill can only contain 

items that supposedly have a budgetary impact. This 

method was employed as such a bill could be passed 

with a simple majority of 51 Senate votes. However, 

items not related to the budget were excluded from the 

amendment and, therefore, none of the badly needed 

protections for physicians and other health care providers 

were included. There are no protections in the bill to 

prevent introduction into evidence against a physician of 

any violations of future bureaucratically created medical 

standards. TMLT believes there should be clear language 

in the bill to prevent the Department of Health and 

Human Services (HHS) from enacting rules applying to 

future federal health care payments that could preempt 

state tort reforms and caps—caps that have proven so 

valuable to health care providers and patients alike. 

Is the battle over? 

TMLT and its allies will continue fighting to protect 

doctors and to protect against potential expanded liability 

and preemption of state reforms and caps. There is 

no known timeframe for the federal “cleanup bill” which 

was previously promised by congressional leadership. 

That bill may be difficult to pass now that Democrats no 

longer have a filibuster proof majority in the Senate. It 

has been made public that a well-known lawyer hostile 

to the insurance industry has already been named a 

leader in the area of insurance oversight in the Department 

of Health and Human Services. Regardless, TMLT 

will be looking for any opportunity to incorporate 

language into the law to protect our health care providers 

from increased exposure and liability. It may still be 

possible to gain some protections during the creation of 

new rules and regulations by the HHS. Fortunately, we 

have been advised by Congressman Cuellar that he will 

work tirelessly to pass the needed legislation. The hopes 

and livelihood of thousands of Texas doctors depend on 

his success. 

On the state level, TMLT is gearing up again for a state 

legislative session which will begin in January 2011. As 

in the past, trial attorneys and other opponents of tort 

reform can be expected to introduce legislation to weaken 

or abolish important parts of the 2003 state legislation. 

TMLT will work with TAPA, the TMA, and a host of 

other entities in an attempt to prevent the undermining 

of tort reforms and to continue to protect physicians 

from nonmeritorious claims. 

Texas Medical Liability Trust is more than just an insurance 

carrier. The Trust has devoted more effort and 

resources to tort reform in Texas than all other carriers 

combined. TMLT has also done more on the federal level 

than any other Texas based carrier. These efforts have 

been made in order to protect the medical community— 

and especially TMLT policyholders—from unwarranted 

nonmeritorious litigation. At TMLT, we believe that our 

responsibility goes beyond just providing you with 

insurance coverage. We believe that Texas physicians 

and health care providers deserve a stable, predictable, 

and fair legal climate. The TMLT Board of Governors and 

staff are committed to taking this responsibility seriously 

and are pledged to protect your best interests. 


John Alexander 

Sr. Vice President, Underwriting Services 

Underwriting Services 

T 

MLT’s underwriting operation had another remarkable year in 2009 

highlighted by expanded coverages, responsible premiums, and 

personalized customer service. TMLT’s official year-end policy count 

reached 15,386, reflecting a net increase of 400 or 2.7%. We retained 

93.5% of existing policies. 

Premium rates at TMLT trended lower by an overall average of 4.7% in 

2009. This followed a reduction in 2008 of 6.5%. For 2010, rates will be 

reduced by 1%. Taken together, rates have decreased 12% in the most 

recent three years. Policies renewing with TMLT receive the added 

bonus of a dividend, applicable as a credit to the following year’s 

premium invoice. The dividend was 22% in 2008, 22.5% in 2009 and 

for 2010, the dividend on renewals will be 24% of the prior year’s 

policy premium. The lasting effects of the 2003 Texas tort reform 

measures have produced genuine stability in the frequency and 

severity of claims and have made these extraordinary reductions in 

premium possible. 

Physicians with TMLT choose policy limits of $500,000 or less over 

80% of the time. In addition, most policyholders are on a claims-made 

coverage form, with only 11% on an occurrence form. Discount 

opportunities available to TMLT insureds are numerous. The most 

commonly earned discounts include those for favorable loss experience, 

practice review, and risk management CME courses, many of 

which are developed by TMLT’s risk management staff. In 2009, 

these three types of discounts alone amounted to more than $26 

million in savings. 

Within TMLT’s underwriting department, there are eleven licensed 

underwriters responsible for the selection of new, insured members 

and setting renewal terms for existing policyholders. These professionals 

are supported by a highly responsive and enthusiastic team 

of service specialists and underwriting technicians who assist the underwriters 

in delivering consistent, dependable, and accurate service. 

A large component of this service includes timeliness in the issuance 

of new and renewal policies. In 2009, 98% of new business policies 

were issued within 15 days of the receipt of all application materials 

and 96% of the renewal policies were issued 30 days prior to the 

renewal date. 

Through the efforts of the customer service team and TMLT’s newly 

implemented call center, customers were quickly and easily connected 

to representatives knowledgeable in answering billing and policy 

questions. More than 26,000 telephone calls were efficiently handled 

by the underwriting department during the year. In addition, account 

service representatives and underwriters made scheduled visits to 368 

groups consisting of more than 4,600 insured physicians. 

TMLT’s governing board of physicians is active in the underwriting 

operation through the Underwriting Review Committee (URC). 

Composed of five of the nine board members and chaired by 

Dr. Robert Parks, this committee evaluates and approves proposed 

underwriting actions on policies with claim and underwriting concerns. 

The medical knowledge and first hand clinical experience 

of this committee help uphold TMLT’s underwriting standards. 

Today’s highly competitive medical liability market has significantly 

impacted the pricing, terms, and conditions of coverage. Physicians 

should be cautious when considering offers to switch their professional 

liability coverage to another carrier. TMLT’s underwriting department 

has noticed an increase in physicians joining hospital insurance 

programs, sometimes referred to as 501(a)’s. We recommend the 

details of the coverage provided by these plans be carefully examined 

and compared to the TMLT policy. For example, does the new policy 

contain a “consent to settle” clause? If so, does the coverage include 

the right to limit such consent to a certain dollar amount? In the event 

of a lawsuit, will the physician’s defense be controlled by the hospital? 

Finally, a physician should be familiar with the provisions and requirements 

applicable at the time of separation from the hospital’s plan. 

Will a reporting endorsement (tail coverage) with an additional set of 

limits be made available to the physician? 

For 2010, the underwriting department plans to implement a simpler 

method for processing hospital verification and credentialing requests. 

Policyholders will be invited to “opt in” to the new program 

and permit TMLT to release policy and claim history information 

directly to the requesting party. This will expedite the re-credentialing 

process, eliminate numerous duplicate requests, and cut down on the 

use of paper and postage. 

Also effective in 2010 is an enhancement to the TMLT Medefense 

coverage endorsement. The form includes a 10% co-insurance clause 

per insured event, but this clause can now be waived if an attorney is 

selected from a panel provided by TMLT. Furthermore, the definition of 

a disciplinary proceeding has been expanded to include proceedings 

against the Named Insured alleging violations of the EMTALA, HIPAA, 

and Stark laws. Coverage for proceedings instituted by the US Department 

of Health and Human Services is clarified to include the Centers 

for Medicare and Medicaid Services alleging the Named Insured has 

performed medical services in violation of guidelines (Recovery Audit 

Contractor program). 

More Texas physicians choose TMLT to defend their professional 

reputations and protect their financial assets than any other medical 

liability provider. The staff of the underwriting department takes great 

pride in this fact and we stand ready to meet the needs of our policyholders 

with service beyond compare. We appreciate your business 

and look forward to another successful year in 2010. 

John Alexander and URC Chairman Robert I. Parks, Jr., MD 

Underwriting Review Committee (URC) at work 


Don Chow 

Sr. Vice President, Sales and Marketing 

Sales and Marketing 

I 

n 2009, a significant contributing factor to TMLT’s net growth was 

new business. For the year, over 1,300 policies were written generating 

an annualized premium base of $7.3 million. Further analysis 

illustrates much of the new business emanated from physicians in 

solo practice as well as those joining existing groups. Combined, 

the two categories represented nearly 87% of new policy issues. 

The numbers of physicians joining existing groups continues to 

increase, accounting for 40% of total new production during the year. 

This is consistent with the migration of physicians to Texas to practice 

medicine. That figure exceeds 14,000 since the passage of tort reform. 

There continues to be a strong focus toward developing new 

business involving physicians in group practice; however, competitive 

pressures have caused the number of opportunities to decrease. 

Compared to 2008, that figure is down 27% and 55% since 2005. The 

corresponding impact on results has been significant, accounting for 

13% of new issues in 2009 compared to 24% a few years ago. Medical 

professional liability carriers continue to be aggressive in their efforts 

to retain this business, employing pricing strategies to assure that 

outcome. Tort reform has taken away much of the pain and anxiety 

of the hard market years. Consequently, prospective buyers are not 

experiencing the need to explore alternatives in the market. Those 

that do are not seriously considering a change. However, one of our 

primary objectives is to cultivate relationships with those prospective 

opportunities. Eventually, when the market hardens, we will be well 

positioned to respond. 

The soft market has now completed its third year of impacting the 

medical professional liability industry in Texas. The dramatic increase 

in the number of carriers and corresponding drop in rates during this 

period has served to perpetuate the current environment. Carriers 

that did not exist prior to 2004 have maintained an aggressive posture 

while seeking to increase market share often at the expense of established 

carriers. 

TMLT has managed to compete successfully and has been fortunate 

to continue its path of steady and profitable growth. Since 2004, our 

policy base has increased over 25%, albeit moderating during the past 

three years. For those physicians seeking a carrier offering more than 

just a “low rate,” TMLT has continued to demonstrate its commitment 

to the physicians of Texas. For over thirty years, TMLT has offered a 

high quality product backed by a promise to fulfill our obligations on 

a consistent basis while exceeding expectations. Our value added 

TexMed 2009 

proposition and strategic partnerships with organized medicine and 

selected agents have been instrumental in our success. 

We value the exclusive endorsements we have worked so hard to 

earn each and every day. Our shared objectives with the Texas Medical 

Association and county medical societies allow us to work in harmony 

to find solutions to emerging problems and opportunities. We rely on 

each other for information, to analyze data, and to develop solutions 

that will facilitate a strong and loyal constituency. 

The dynamics of a changing health care environment and the challenges 

posed to physicians seeking to practice medicine efficiently 

and effectively are creating potential new threats. Economic forces are 

clearly influencing how physicians will decide to practice medicine. 

Non-profit health corporations (NPHCs) – formerly known as 501(a) 

organizations – are emerging as potential threats since it could impact 

TMA’s ability to attract and sustain membership; similarly, TMLT may 

be preempted from opportunities to insure physicians choosing this 

route. The same dynamics apply to larger group practices as they seek 

economies of scale through acquisition of smaller practices. Efforts are 

under way to collaborate and find solutions. 

On a more local basis, TMLT sales staff are working closely with many 

of the county medical societies to identify opportunities for membership 

and policyholder growth. By combining resources, we seek to 

enhance opportunities for success. TMLT also supports a number of 

county and specialty societies through participation in many programs 

and events for member physicians. Our sponsorship is important for 

the societies to generate non-dues revenues that help fund the many 

programs offered to member physicians. The financial investment 

complements and reinforces the relationships that have been cultivated 

for many years. Every effort is made to leverage those relationships 

and corresponding endorsements when developing new business. 

Our strategic partnerships with selected agents have positioned TMLT 

to increase its penetration of potential policyholders in the state. 

Currently, agents represent approximately 18% of total premium 

volume and are significant contributors in the development of new 

business. Over the past five years, their contribution to new business 

revenues has exceeded 31%. Although results for 2009 did not meet 

expectations, we remain optimistic on a longer term perspective. We 

feel the relationships developed over the past twelve years have been 

productive and have helped to solidify TMLT’s position as a primary 

carrier of choice. 

The challenge of operating in a soft market is to be patient and recognize 

that the opportunities to develop new business will not be easy 

to find. The appetite for new business remains strong and we make 

every effort to differentiate TMLT from the rest of the pack. It may not 

resonate with every opportunity, but we remain vigilant in our efforts 

to attract physicians who understand the value proposition offered 

by TMLT. 

2009 TMLT medical conference exhibit 


Support Services 

T 

Gail Nichols 

Vice President, 

Human Resources & 

Administrative Services 

he Human Resources & Administrative Services 

Department includes a staff of nine individuals dedicated 

to providing a quality working environment, outstanding 

employee benefits, and support services that assist 

TMLT in attracting and retaining employees of the highest 

caliber. Job satisfaction at TMLT was reflected in an 

excellent overall employee retention rate in 2009 of 97%. 

During 2009, the Human Resources team focused a 

great amount of time on researching, negotiating, and 

converting to a new web-based payroll processing 

system, as well as a benefits tracking application. This 

new system will allow us to manage current and historical 

HR data, as well as benefits information, at the speed 

of the Internet and we will have much more functionality 

than before. As we become more adept at using these 

new systems, HR will be able to develop customized 

reports, allow all employees to view and update their 

personal information and make benefit changes via 

web-based self-service rather than paper-based 

transactions, as well as provide management staff direct 

on-line access to pertinent information regarding their 

staff members. 

To further improve efficiency and take advantage of new 

web-based technology, HR also began implementing 

an electronic time-keeping solution to replace paper 

timesheets and manual data entry of vacation, sick, and 

other types of leave. A small test group representing 

each department was asked to participate in a pilot 

project during the last part of the year. While continuing 

to complete paper timesheets, this pilot group also 

learned how to report their leave and overtime on-line, 

and their supervisors began learning to approve and 

submit the data to HR. Plans are to implement this 

new system in 2010. 

Another major initiative undertaken in 2009 was the 

selection of a new broker and an administrator for 

our employee retirement plans. The ability to provide 

education in the areas of investing, retirement planning, 

estate planning, and other financial topics was one of 

the criteria in the interviewing process. A selection was 

made and efforts began in earnest to convert the plan 

documents and educate the staff as to the benefits of 

participation and the importance of saving for the future. 

The year also brought several honors which recognized 

TMLT’s benefits programs and wellness efforts. 

In May, the Austin Business Journal awarded us 7th 

place among the top 20 medium-sized entrants in their 

Best Places to Work in Central Texas contest. At our 

all employee Town Hall meeting in June, the United 

HealthCare Central Texas Medical Director presented 

TMLT with an APEX award in recognition of exceptionally 

innovative health care benefit strategies, and an 

article appeared late in the year in UHC’s hub magazine, 

distributed nationwide. One of our proudest moments of 

TMLT receives the APEX award 

the year was watching our Senior HR Generalist, Angela 

Bitzer, receive recognition at the Austin Business Journal’s 

Healthcare Heroes awards presentation in August 

for her achievements in building a quality wellness 

program at TMLT. 

TMLT’s reception, mailroom, and purchasing staff 

worked diligently in 2009 to provide a quality level of 

service to all internal customers as well as to all policyholders. 

Our reception team is committed to appropriately 

and efficiently directing each policyholder to the 

correct department. Administrative Services staff posted 

over 150,000 pieces of outgoing mail in 2009, maintained 

sufficient quantities of office supplies for staff 

while always seeking out cost-savings, ensured that our 

office equipment was functioning properly, and coordinated 

with the building’s property manager to update, 

distribute, and provide training on emergency evacuation 

procedures. 

A 

Dana Leidig 


Communications & 

Advertising 

t TMLT, our governing board and executive management 

support excellence in communication throughout 

the organization. The Communications & Advertising 

Department was successful in achieving its 2009 

communication objectives within the approved budget. 

Our communication staff collaborated with teams from 

each department to help design the most effective 

communication plans for key strategies. These included 

a redesigned web site, www.tmlt.org; the award-winning 

internal web site, iTMLT; the print and electronic advertising 

campaigns; the Reporter and other newsletters; 

marketing collaterals and exhibit materials; and special 

projects such as the scholarship program, the Team 

of the Year employee recognition program, and the 

community service program. 

We collaborated with the governing board on the TMLT 

Memorial Scholarship Program which completed its 

fifth year of conferring medical student scholarships in 

2009. To increase the number of scholarship applicants, 

this program was modified. Four $10,000 scholarships 

were offered to students at any of the nine Texas medical 

schools. The candidate field was broadened to include 

second, third, and fourth year students. As a result, 

applicant numbers increased from 33 in 2008 to 112 in 

2009. Awards were based on assessing financial need, 

academic performance, and an original patient safety 

essay based on a closed claim. Four scholarships were 

awarded. Information about 2009 recipients and the 

scholarship program is available at www.tmlt.org. 

The 2009 work of TMLT’s small team of professional 

communicators was recognized in several communication 

evaluation programs this year. The American 

Medical Writers Association recognized Laura Brockway 

with the Eric W. Martin Award in the professional 

audience category for the Reporter article, “The diversion 

dilemma.” This same article earned a Bronze Quill 

award from the International Association of Business 

Communicators (IABC) in the technical/science writing 

category. Additionally, the Reporter article, “You’ve 

been criticized online” by William Malamon received 

an International Technical Publication Award from the 

Society of Technical Communication as well as an Award 

of Merit from the Society of Technical Communication 

– Lone Star Chapter. TMLT’s messages on hold recordings 

are written and produced internally with voicing 

by TMLT employees. These recordings also received a 

2009 IABC Bronze Quill award. In graphic design, the 

TMIC dental campaign designed by Karen Ow received 

the Communicator Award of Distinction and the Apex 

Award of Excellence. We continue to be committed to 

timely, effective communication with our policyholders, 

organized medicine, the legislature, and other business 

associates. 

S 

Treg Russell 


Management 

Information Systems 

ome of our major areas of focus during 2009 were 

to control information technology expenditures, reduce 

the number of outstanding work requests to our department, 

and make it easier for our physicians to do business 

with TMLT. Substantial impact was made in each of 

these areas over the course of the year. 

By carefully managing our workload with Ebix, the 

vendor of our Infinity insurance processing system, 

we saved $100,000 over the expenses planned for the 

year. We also capitalized on last year’s effort to develop 

in-house expertise in this system. As a result of that 

emphasis, we were able to complete 30% of the Infinity 

system work requests internally. This equated to 69 

projects that did not have to be outsourced and resulted 

in an estimated $230,000 in savings to TMLT. 

We made substantial progress towards reducing the 

backlog of projects during 2009. The year began with 165 

active requests to enhance our insurance processing 

system alone. Nearly that number of new requests came 

in during the year. We completed 232 projects in this 

area reducing the year-end backlog to 90! In addition, 

we completed all outstanding and subsequent requests 

related to our imaging and workflow systems. 

Perhaps more noteworthy this year is the work done to 

make it easier for our policyholders to do business with 

us. One of the most popular new conveniences was the 

expansion of our credit card payments options. Whether 

you choose to pay online or sign up for recurring 

payments, we now support the use of American Express, 

Visa, and MasterCard to meet your payment needs. 

We worked closely with our Communications & Advertising 

Department to redesign our website to make it 

easier to use. This team expanded the functionality of 

the Members Only section as we continued our effort 

to make this new area available to all policyholders. 

Some features you can expect to see in the near future 

are the ability to fill out your renewal application online 

and the ability for a group administrator to answer your 

insurance questions by accessing appropriate information 

on your behalf. 

We also provided an electronic voting option to policyholders 

for the election of the 2010 board members. The 

board asked us to look for ways to increase policyholder 

participation and reduce ballot confusion. As a result of 

reviewing the election process and selecting a vendor to 

conduct the electronic voting for us, we were able to see 

30% of the voting completed via the Internet. 

As we look forward to the coming year, we will continue 

the efforts to be cost efficient and make conducting 

business with us a simple and positive experience. 

We will also be working to provide additional payment 

options to you, apply technology to optimize internal 

workflow where valuable, and continue our ongoing 

effort to keep our systems current to support TMLT and 

policyholder needs well into the future. 


Ray Demel 

Message from the CFO 

Sr. Vice President, Chief Financial Officer 

Condensed Consolidated Financial Information 

(Unaudited, In Thousands) 

December 31 

2009 2008 

$683,632 $666,974 

243,125 267,044 

159,886 168,851 

313,949 275,075 

T 

MLT had a very successful 2009 with another year of 

strong profitability. Our financial condition continues 

to improve as reflected in the accompanying summary 

financial data for 2009 and 2008. Our 2009 results are 

especially pleasing because we did not panic from the 

turmoil in the financial markets that started in 2008 

and carried over to the first quarter of 2009. As a result, 

we did not incur substantial realized capital losses 

during 2009. Total assets and surplus continue to grow 

to all time highs. Surplus grew to $314 million at the 

end of 2009 and net income for 2009 was $23 million 

compared to $31 million for 2008. Our financial strength 

has afforded us the flexibility to distribute a $36 million 

dividend to our policyholders as they renew – this is the 

fifth consecutive year that we have given a policyholder 

dividend. We also lowered our rates in 2009 for the sixth 

consecutive year. 

TMLT’s investment in fixed maturity securities, common 

stocks, and cash total $496 million and represent 73% 

of our total assets. Our overall investment strategy is to 

focus on maximizing current income from our investment 

portfolio while maintaining safety, duration targets 

and portfolio diversification. Our investment portfolio 

continues to be composed primarily of high quality 

investment grade fixed maturity securities. At December 

31, 2009 we held fixed maturity securities with pretax 

net unrealized gains of $12.7 million as compared to 

pretax net unrealized losses of $2.7 million at December 

31, 2008. The improvement is primarily due to a 

reduction of credit spreads, offset somewhat by the 

impact of slightly higher market interest rates. Also at 

December 31, 2009 our investment in common stocks 

had an unrealized gain of $3.8 million as compared to 

an unrealized loss of $6.8 million at December 31, 2008. 

This total swing in unrealized gain added $26 million 

of pretax surplus to our 2009 balance sheet. The Trust 

did incur realized capital losses of $5.5 million in 2009 

mainly from the sale of a portion of our common stock 

investments in the first quarter. We did not have any 

material write-downs of our investments in 2009 as we 

did in 2008. By remaining calm and not over-reacting 

to the negative conditions of the financial markets, the 

market values of our investments were able to recover 

as the financial markets improved after the first quarter 

of 2009. 

The decline in direct written premiums in 2009 was 

primarily the result of decreases in average policy 

premiums, which are partially offset by our strong 

retention of 93.5%. Net premiums written and earned 

decreased substantially in 2009 primarily due to the fact 

that we did not commute a portion of our reinsurance 

coverage as we did in 2008, which reduced reinsurance 

expense for 2008. We anticipate that the medical professional 

liability pricing environment will remain highly 

competitive in 2010 and competitors will continue to 

lower rates. 

Improvements in loss trends have allowed us to reduce 

rates in recent years and to provide policyholder dividends. 

This improves policyholder retention but decreases 

our average premiums. While we reflect changes in 

loss cost trends in our pricing, we have chosen not to 

aggressively compete on price alone. Thus, we have lost 

some current and potential insureds due to aggressive, 

price-based competition mostly from insurers that are 

willing to write coverage at rates that we believe will not 

be sustainable. 

Loss and loss adjustment expenses were $25 million in 

2009 compared to $61 million in 2008. Throughout 2009 

we continued to experience better than expected loss 

trends; as a result, we recognized $50 million of favorable 

loss reserve development in 2009. Also in 2008, 

because overall interest rates were lower, we lowered 

the reserve discount rate which increased overall 

reserves by $8 million. We are currently operating under 

soft market conditions, with significant competition 

and premium rates continuing to moderate downward 

following several years of overall favorable claim trends. 

While we currently expect claim frequency to remain 

below levels seen in 2003 and prior years, an upward 

trend is possible. There is a great deal of uncertainty 

inherent in the estimation of medical professional liability 

loss reserves and we remain committed to careful 

reserving practices. 

We believe that TMLT is the premier provider of medical 

professional liability insurance in Texas. We believe 

an emerging competitive threat to the medical liability 

market is alternative risk transfer structures such as 

risk retention groups, captive insurers and other selfinsurance 

vehicles. Larger physician groups and other 

health care providers may consider these alternative risk 

structures in the future as their organizations grow both 

in size and in the insurance premiums they pay. 

Our policyholders value TMLT’s financial strength, our 

commitment to the physicians of Texas, our history of 

prudent underwriting, and excellent customer service. In 

these areas, we believe we outperform our competitors. 

We are committed to protect the financial strength and 

integrity of TMLT. Our intent is to always be there for our 

policyholders. 

Board members Dr. Alan Baum and Dr. Arthur Evans 

Financial Highlights 

Total Assets 

Reserve for Losses 

Direct Premiums Written 

Policyholders’ Surplus 

Balance Sheets 

Assets 

Fixed Maturity Securities 

Equity Securities 

Cash and Short-Term Investments 

Premiums Receivable 

Reinsurance Receivable 

Other Assets 

Total Assets 

Liabilities 

Reserve For Losses 

Unearned Premiums 

Policyholder Dividends Payable 

Other Liabilities 

Total Liabilities 

Policyholders’ Surplus 

Total Liabilities and Policyholders’ Surplus 

Income Statements 

Net Premiums Earned 

Net Investment Income 

Realized Gain (Loss) on Investments 

Other Revenue (Expense) 

Total Revenues 

Losses and Loss Adjustment Expenses 

Policyholder Dividends 

Other Operating Expenses 

Total Expenses 

Income Before Income Tax 

Income Tax Expense 

Net Income 

$438,580 $398,702 

28,034 29,443 

29,956 43,487 

50,730 50,536 

74,153 61,200 

62,179 83,606 

$683,632 $666,974 

$243,125 $267,044 

76,632 78,706 

34,503 32,949 

15,423 13,200 

369,683 391,899 

313,949 275,075 

$683,632 $666,974 

Year Ended December 31 

2009 2008 

$115,089 $162,609 

17,567 19,549 

(5,539) (9,529) 

(407) 1,665 

126,710 174,294 

24,972 60,955 

35,563 34,118 

33,891 34,848 

94,426 129,921 

32,284 44,373 

9,266 13,316 

$23,018 $31,057 

The foregoing unaudited condensed consolidated 

financial information has been derived from the 

audited consolidated financial statements. These 

statements are available upon request. 


OUR VISION 

TMLT is the most respected and preferred provider of medical professional liability coverage and related products in Texas. 

Through the efforts of our team of qualified professionals and physician insureds, we sustain TMLT’s premier position in 

quality of coverage, service, market share, and financial integrity. 

OUR PURPOSE 

Our purpose is to make a positive impact on the quality of health care for Texans by educating, protecting, and defending 

physicians. We provide peace of mind to our policyholders and a supportive work environment for our team members. 

OUR MISSION 

Our mission is to be on the leading edge of industry change to provide a standard of coverage and service to our 

policyholders by which all others are compared.

Physicians Working for Physicians - TMLT

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