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MEDICAL ASSOC., INSURANCE FIRM MAKE SECRET DEAL

 

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

 

  • ecret.
  •  

     

    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 secret deal 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

     

  • ecret deal further requires the association to include any
  •  

    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

     

  • tate in which we operate," CEO and Dr. A. Derrill Crowe wrote. "Despite
  •  

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

     

  • hare at any cost, we will not hesitate to raise prices if our rate
  •  

    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

  • aid.
  •  

     

    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,

     

  • aid it was "not her money" and "it was not like you could lose your house
  •  

    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

     

  • uit in July 1998.
  •  

     

    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

     

  • ot to sue Medical Assurance when she signed her policy with them.
  •  

     

    That policy includes a clause requiring doctors to submit disputes to

     

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

     

  • igned the policy. Her lawyer in the suit against the insurer, Patrick
  •  

    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 secret deal, the association

     

    publicly lists Medical Assurance as its preferred carrier. Jenkins

     

  • aid he believed most doctors disagree with Pizarro's assessment of
  •  

    Medical Assurance.

     

     

    "I think that the medical community embraces this aggressive

     

    defense policy," he

  • aid.
  •  

     

    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

     

  • aid.
  •  

     

    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

  • aid.
  • "It's

     

  • omething that I'd rather not tell our competitors."
  •  

     

    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

     

  • aid.
  • "As far as I know, the association develops those talking points and

     

    their literature on their own."

     

     

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

     

     


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