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
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
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
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
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
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
Pizarro alleges that Medical Assurance ignored her when she
repeatedly asked the insurer to settle a malpractice claim filed against
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
"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
"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
"We help supply information to the association when requested," he
"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.