Regulators Hesitate On Medical Malpractice Proposal

“It does a poor job of analysis,” he said. “For example, it doesnt cite which particular specializations have particular claims costs. So, what the report does is take a very broad approach to a problem that requires a much more precise analysis.”

Hunter argued that medical malpractice problems actually stem from insurance-related issues, “one of which is the economic cycle of the insurance companies, where every 10 to 15 years theres a hard market where rates essentially doublethats the problem.”

Hunter also told the market conditions working group members that the report failed to discuss “the pyramid of doctors.”

“The problem is that its not bad if your rate doubles if you happen to be a general practitioner in Virginia and are paying $2,000 for insurance,” he said. “But if you are an ob/gyn or a neurosurgeon and are paying 25 times the general practitioner, you are starting at $50,000 or $75,000, and the hard market would double that to $100,000 or $150,000.”

This can be especially burdensome now because, unlike in previous insurance cycles, doctors have much more difficulty passing those costs back to Medicare or HMOs, Hunter said.

He also told regulators that they shouldnt be talking about tort reformbut if they do, they should at least have a balanced presentation that illustrates the negative side of tort reform for consumers.

Hunter argued the reports tort reform proposals had a consistent anti-consumer bias, with no “quid pro quo” for consumers. For example, he cited that while Michigans auto insurance reform eliminated the right to sue through a no-fault system, it repealed limits on accident victims rehabilitation services. The NAIC report, on the other hand, proposes to “take away the rights of victims and give them nothing in return.”

The NAIC reports proposals, he added, “would be just a very bad deal for people who are consumers of medical care. If a doctor makes a mistake, why should you have a limit on what you can get? It doesnt make sense.”

Birnbaum also noted at the working group session that the draft report ignores medical malpractice insurers lackluster investment income, which he suggested has been a major contributing factor in soaring premium rates. “The report is inaccurate in a number of waysit doesnt analyze how a reduction in investment income had a major impact on insurers revenues,” he said.

Also speaking at the working group session was Ruth Bernstein, a representative of the Association of Trial Lawyers of America in Washington, D.C., who disputed the reports claims that the current tort system needs to be fixed.

She told regulators that jury awards are subject to judicial and appellate review and often are reduced. Bernstein also remarked that the distinction between economic and non-economic damages is discriminatory, because it puts victims with no incomeincluding children and nonworking womenat a disadvantage when getting economic damages in jury awards.

After a lengthy and wide-ranging debate at the session, Montemayor decided not to bring the report to a vote at the meeting. The group will now work on revising the draft report with an eye toward possibly adopting a revised version later this year.

Michael Ha is an assistant editor of NUs Property & Casualty edition.

Reproduced from National Underwriter Edition, April 16, 2004. Copyright 2004 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.