By Troy Torres
The cost of malpractice insurance - one of the main points doctors offered in opposing Bill No. 112 - actually is tax deductible, according to the director of the Department of Revenue and Taxation.
Bill No. 112, authored by Speaker Therese Terlaje, will make it possible for poor and middle class victims of medical malpractice to bring legitimate claims before a mediator or a jury. Throughout the rest of the nation, medical providers like doctors take out medical malpractice insurance to mitigate their personal financial risk in case of malpractice claims from their patients.
While some Guam doctors pay for that insurance, others testified at a July 7 public hearing on Bill No. 112 that the insurance is cost prohibitive. The current Medical Malpractice Mandatory Arbitration Act, which requires patients to fork out between $40,000 to $60,000 in upfront costs for simply starting the arbitration process, has provided doctors on Guam the barrier necessary to practice without fear of being sued by other-than-rich patients.
"Insurance is covered here," director of revenue and taxation Dafne Shimizu said in response to Kandit's question, "Is medical malpractice insurance covered as tax deductible on Guam?"
Guam's tax code mirrors the Internal Revenue Code, according to the Organic Act of Guam. This means, among other things, what is tax deductible to the federal government is tax deductible to the government of Guam.
According to the Internal Revenue Service, "Generally, you can deduct the ordinary and necessary cost of insurance as a business expense, if it is for your trade, business, or profession."
The IRS further states, "To be deductible, a business expense must be both ordinary and necessary. An ordinary expense is one that is common and accepted in your trade or business. A necessary expense is one that is helpful and appropriate for your trade or business. An expense does not have to be indispensable to be considered necessary."
The MMMA Act, which was preceded by a law created in the 1970s but struck down as unconstitutional in 1990, was enacted in 1991 primarily to attract doctors to Guam at a time, when malpractice insurance was either unavailable through most carriers, or too costly.
The landscape has since changed in the last 30 years. Insurance industry experts, however, fear the enactment of Bill No. 112, as written, may cause insurance underwriters to suspend coverage to Guam because of increased risk of liability on the part of several doctors.
And that may be where the silver lining is located: Which doctors, if exposed to the reach of poor and middle class patients to the justice system, will find themselves uninsurable? Why? Are we willing to continue licensing them? And can medical providers compromise on a version of Bill No. 112 that will provide the disenfranchised access to the justice system without increasing risks for the good doctors around us?
