There are a number of reasons why the West Virginia Medical

Association has teamed up with an insurance company, Medical

Assurance, to allege that meritless malpractice claims are driving up

insurance rates for doctors.

More than 690,000 reasons, actually. And they're supposed to be

Medical Assurance has paid the state Medical Association

at least $115,000 a year since 1995, or an estimated $690,000 to date, as

part of a confidential agreement.

This secretdeal requires association members to lobby

legislators on the company's behalf - as they did during last week's White

Coat Day at the Legislature, and the catered legislative reception the

evening before.

As part of this agreement, Medical Assurance offers individual

doctors reasons to lobby. Association members can reap a share of the $208

million company's annual profits, as well as a series of breaks on their

premiums - provided they buy their policies from Medical Assurance.

In exchange for such perks, association members "shall assist

Medical Assurance, as requested," with fact-finding projects, while

the two groups "shall cooperate and assist each other in monitoring

proposed legislation and administrative regulations in West Virginia," the

agreement says.

There's more to the price tag. No other insurance company can

advertise or otherwise promote itself at association meetings or in its

journal, brochures and other publications, according to the agreement. The

articles or advertisements from Medical Assurance in its

publications when requested.

Medical Assurance has provided the information for the "talking

points" that association members have wielded when talking to reporters

and lawmakers. The points blame the insurer's rising rates on "the

frequency and severity" of mostly "meritless" lawsuits.

Few if any of the "talking points" are supported, however, by a Gazette

analysis of malpractice claims resolved in the last eight years, as

reported to the state Board of Medicine.

Medical Assurance has barred association members from disclosing

the agreement or its terms. The agreement, which is stamped "confidential"

across each page, can be shared with association members only on a

"need-to-know" basis, it says.

The Gazette obtained a copy after it was listed as an exhibit in a

December filing from Medical Assurance to the U.S. Securities and

Exchange Commission.

As a business that sells stock to the public, Medical Assurance

is required to file such documents with the SEC. The insurance

giant's annual report to stockholders may shed more light on the current

"crisis" campaign.

Medical Assurance's report called low insurance premiums

"a disservice in the long run to insureds, investors and employees."

"We are also continually reviewing the adequacy of our rates in every

the rampant cost-cutting by shortsighted insurers seeking to gain market

reviews reveal the necessity of higher premiums."

Association members have also cited the talking points to allege that

West Virginia has among the highest costs racked up by an insurer to

defend a doctor against a malpractice claim. These tort costs force

insurers like Medical Assurance to raise the rates they charge

doctors, association members contend.

But Medical Assurance actually wants the highest tort costs of

any insurance company, according to the annual SEC report.

"In 1999 we continued to lead our industry in spending on the cost of

claims," Crowe boasts. "At first glance this may seem extravagant, but

take the time to understand the long-term benefits and you understand why

we are committed to the aggressive defense of claims."

As for those benefits, Crowe wrote, "We win more cases, discourage

frivolous lawsuits and build policyholder loyalty."

"Aggressive defense of claims"

There are a number of reasons why the West Virginia Medical

Association has teamed up with an insurance company, Medical

Assurance, to allege that meritless malpractice claims are driving up

insurance rates for doctors.

More than 690,000 reasons, actually. And they're supposed to be

Medical Assurance has paid the state Medical Association

at least $115,000 a year since 1995, or an estimated $690,000 to date, as

part of a confidential agreement.

This secretdeal requires association members to lobby

legislators on the company's behalf - as they did during last week's White

Coat Day at the Legislature, and the catered legislative reception the

evening before.

As part of this agreement, Medical Assurance offers individual

doctors reasons to lobby. Association members can reap a share of the $208

million company's annual profits, as well as a series of breaks on their

premiums - provided they buy their policies from Medical Assurance.

In exchange for such perks, association members "shall assist

Medical Assurance, as requested," with fact-finding projects, while

the two groups "shall cooperate and assist each other in monitoring

proposed legislation and administrative regulations in West Virginia," the

agreement says.

There's more to the price tag. No other insurance company can

advertise or otherwise promote itself at association meetings or in its

journal, brochures and other publications, according to the agreement. The

articles or advertisements from Medical Assurance in its

publications when requested.

Medical Assurance has provided the information for the "talking

points" that association members have wielded when talking to reporters

and lawmakers. The points blame the insurer's rising rates on "the

frequency and severity" of mostly "meritless" lawsuits.

Few if any of the "talking points" are supported, however, by a Gazette

analysis of malpractice claims resolved in the last eight years, as

reported to the state Board of Medicine.

Medical Assurance has barred association members from disclosing

the agreement or its terms. The agreement, which is stamped "confidential"

across each page, can be shared with association members only on a

"need-to-know" basis, it says.

The Gazette obtained a copy after it was listed as an exhibit in a

December filing from Medical Assurance to the U.S. Securities and

Exchange Commission.

As a business that sells stock to the public, Medical Assurance

is required to file such documents with the SEC. The insurance

giant's annual report to stockholders may shed more light on the current

"crisis" campaign.

Medical Assurance's report called low insurance premiums

"a disservice in the long run to insureds, investors and employees."

"We are also continually reviewing the adequacy of our rates in every

the rampant cost-cutting by shortsighted insurers seeking to gain market

reviews reveal the necessity of higher premiums."

Association members have also cited the talking points to allege that

West Virginia has among the highest costs racked up by an insurer to

defend a doctor against a malpractice claim. These tort costs force

insurers like Medical Assurance to raise the rates they charge

doctors, association members contend.

But Medical Assurance actually wants the highest tort costs of

any insurance company, according to the annual SEC report.

"In 1999 we continued to lead our industry in spending on the cost of

claims," Crowe boasts. "At first glance this may seem extravagant, but

take the time to understand the long-term benefits and you understand why

we are committed to the aggressive defense of claims."

As for those benefits, Crowe wrote, "We win more cases, discourage

frivolous lawsuits and build policyholder loyalty."

"Aggressive defense of claims"

Dr. Evangeline C. Pizarro does not understand any benefit, long-term or

otherwise, from Medical Assurance's "aggressive defense of claims."

Pizarro has quit her Wheeling practice and lives in fear of losing her

house because of that defensive stance, a lawsuit she filed against the

insurance company

Pizarro alleges that Medical Assurance ignored her when she

repeatedly asked the insurer to settle a malpractice claim filed against

her.

The family suing Pizarro offered to settle the case for $300,000 - well

within the $1 million policy she had with Medical Assurance. But

the insurer refused; its "aggressive defense of claims" includes an

avoidance of settlement.

Pizarro's lawyer, provided by Medical Assurance, told her not to

worry about the rejected settlement offer. The lawyer, William A. Davis,

or anything," the suit alleges.

Pizarro's case went to trial in August. The Belmont County, Ohio, jury

returned a $7.5 million verdict against her. The judge in the case may

award the family even more: Their lawyers allege that because

Medical Assurance refused to try and settle the case in "good

faith," the family deserves interest dating back to when they first filed

Pizarro agrees in her suit that Medical Assurance "failed to act

in good faith." She sued after Medical Assurance balked at honoring

her insurance policy and pledging to pay the jury award.

Medical Assurance has asked a judge to dismiss Pizarro's

lawsuit. Their defense: Pizarro may not have known it, but she promised

That policy includes a clause requiring doctors to submit disputes to

binding arbitration. Pizarro says she knew nothing of the clause when she

Cassidy of Wheeling, questions how many other doctors realize they signed

this right away when they decided to do business with Medical

Assurance.

"They have not had any direct influence"

West Virginia Medical Association Director Evan Jenkins said he

knew little of Pizarro's allegations when he met with Gazette editors and

a reporter last month. Jenkins also said he did not know whether his

members knew they had signed binding arbitration clauses when they bought

insurance from Medical Assurance.

In addition to their secretdeal, the association

publicly lists Medical Assurance as its preferred carrier. Jenkins

Medical Assurance.

"I think that the medical community embraces this aggressive

defense policy," he

Jenkins did not return a half-dozen phone messages left last week

requesting comment on the secret agreement. Dr. John Holloway, the

group's president, said Friday that he did not know how much money

Medical Assurance has provided.

Holloway also said the association's legislative committee, and not

Medical Assurance, has crafted its lobbying agenda.

"Obviously, we've had lots of conversations with them about the

liability climate, but they have not had any direct influence." Holloway

Frank O'Neil, a vice president of Medical Assurance at its

Alabama headquarters, would not say how much money has been paid to the

association. "Our agreement on that is confidential," he

O'Neil did say that Medical Assurance expected to share no

profits with West Virginia doctors this year, citing premium-loss ratio

figures. He agreed with Holloway on the insurer's sway over the

association.

"We help supply information to the association when requested," he

their literature on their own."

To contact staff writer Lawrence Messina, use e-mail or call 348-4869.