INSURANCE RATES UP DRAMATICALLY
West Virginia doctors who say they pay too much for medical
malpractice coverage should count their blessings - they could be
living in Detroit, Fort Lauderdale or El Paso, where obstetricians pay
well over $100,000 a year for insurance.
Even so, a large rate hike by the state's largest malpractice
insurer last summer resulted in increased premium costs for many West
"Malpractice insurance rates in West Virginia are skyrocketing,"
Association. "The increases have only worsened a tough financial situation
doctors are already in."
Before the increase took effect, annual costs for medical
malpractice insurance ranged from $10,000 to $80,000 for some
between about $13,000 a year and $50,000 a year for other specialties
including family practice, orthopedic surgery and radiology.
Surgeons of all types pay more for insurance because of the greater
risk of harm to the patient.
"I know one surgeon who was paying $98,000 after the rate increase,"
Medical Assurance of West Virginia, which received a 35 percent rate
hike, insures about 1,000 of the state's 6,266 doctors. The company is
endorsed by the state Medical Association, which has about 1,700 active
physician members. Medical Assurance began doing business in the state in
Its parent company, Medical Assurance Inc., is based in Birmingham,
Ala. The company also insures doctors in Alabama and Ohio.
Medical Assurance is one of two insurers sharing half the state's
business. The second-largest company is the American Continental Insurance
Co., or AIG.
AIG has about 25 percent of the malpractice insurance market
granted AIG an average 55 percent increase in 1999.
The next largest company is St. Paul Fire and Marine Insurance Co., or
MICO. MICO has about 10 percent of the state's malpractice business
and imposed a 15 percent rate increase on its customers in 1999.
Several dozen smaller insurers write the remainder of premiums. One has
about 5 percent, with the rest carrying only minimal numbers.
West Virginia doctors in most specialties pay higher malpractice
rates than specialists in other states, according to an industry
organization that tracks rates.
"I don't like to do state comparisons based on averages - the rates can
vary so much from one doctor to another based on the doctor's
malpractice history," said Carol Golin, editor of Medical Liability
Monitor, a Chicago-based publication that tracks rates for
"But it does look like West Virginia had the highest rate increase of
any state last year."
The Medical Liability Monitor shows on average, an internist in West
Virginia pays $12,549 a year. The national average is $10,068.
Although it's apparent that insurance rates for doctors have risen
dramatically in the past two years, reasons for the increase are not
Doctors representing the Medical Association are quick to blame what
they call the "malpractice climate" in the state.
"Our judicial system in this state makes it easy for people to sue
doctors," Jenkins said.
Medical Assurance officials also point to West Virginia as being
different from other states in how the court system responds to medical
"In general, we see West Virginia as being a more costly and dangerous
place for insurance than other states," said Frank O'Neil, Medical
Assurance vice president for marketing.
However, compared to other states and the District of Columbia, West
Virginia ranked in the lower one-third in total award payments to
plaintiffs between 1990 and 1999.
The state ranked 35th in 1999, with No. 1 having the highest amount and
No. 51 the lowest, according to records compiled by the National
Practitioner Data Bank of the U.S. Department of Health and Human
Resources. Washington, D.C., has the highest median award, with
California, Idaho and Montana the lowest.
"We justified asking for a rate increase based on the increased
frequency and amount of awards we've seen in the state," O'Neil said.
Medical malpractice claims resolved between 1993 and 2000
paint a different picture. Frequency of claims, as well as the
amount of awards, have not increased in the past eight years. In fact,
they have decreased.
The Gazette examined medical malpractice records on file with
the state Board of Medicine. State law requires providers to report all
malpractice claims to the board and this information is
The number of malpractice claims dropped from 321 in 1995
to 301 in 1999. The average for the eight-year period remained steady at
about 300. These numbers include settlements, jury verdicts for the doctor
and patient, dismissed cases and cases that never made it to court.
In 1999, the Legislature amended the law, saying dismissed cases no
longer needed to be reported to the Board of Medicine. This law went into
effect in mid-1999, though more than 100 dismissals have been reported
Total amount of settlements and judgments also went down. In 1995,
$48.2 million was paid to plaintiffs, compared with $32.3 million in 2000.
The highest total amount paid between 1995 and 2000 was $50.7 million in
To justify a rate increase on doctors, insurance companies must show
the state insurance commission that they are losing money.
Hanley Clark was insurance commissioner when the agency approved the 35
percent overall rate hike for Medical Assurance. He says Medical Assurance
gave him a profitability report showing the company was losing money in
"My job is to make sure the state is adequately insured," said Clark,
who left his post Jan. 16, when Gov. Bob Wise appointed a new
"Part of that mission is helping insurance companies remain solvent."
Medical Assurance's statements show the amount spent on claims
is increasing, but they are also bringing in a greater amount from the
For the period between 1995 and 1999, West Virginia doctors paid the
company $71.8 million for malpractice insurance. For the same
period the company paid out $44.2 million in settlements and jury
verdicts. That amount includes defense costs, such as attorneys' fees and
the costs of expert witnesses.
"Even if cases don't go to trial, we still spend tens of thousands of
dollars," O'Neil said. "Defense lawyers are very costly."
According to the Insurance Commission, Medical Assurance spent $12.6
million in 1999 to resolve medical malpractice claims. Yet,
only $6.3 million was paid out in settlements and jury awards to
plaintiffs, according to Board of Medicine records. The other $6.3 million
went toward defense costs. "No administrative costs are included in those
loss figures, only our losses in terms of settlements, plaintiff's
verdicts and defense costs," O'Neil said.
Even more dramatic are numbers from 1995, the first year Medical
Assurance was in the state. A report filed with the insurance commission
Yet, claims data from the Board of Medicine showed the company paid
only $5,000 to plaintiffs.
The story is the same in 1996, when the company spent $8.6 million with
only $814,500 going to plaintiffs.
During 1997 and 1998 a greater percentage went to plaintiffs, with $2.7
million out of $5.8 million in 1997, and $5.7 million out of $8.4 in 1998,
paid in settlements and jury verdicts.
In the company's 1999 annual report, president and CEO A. Derrill Crowe
boasts that Medical Assurance leads the industry in the amount it spends
defending claims, and admits it may "seem extravagant."
O'Neil argues that a rate increase was necessary because
malpractice insurers must set aside extra money because
claims often take years to be resolved, and no one can predict how
much those claims will cost. As of Dec. 31, Medical Assurance had
$86 million in reserves to pay for future suits, he said.
According to Insurance Commission records showing the company's loss
record between 1995 and 1999, Medical Assurance has enough money in
reserves right now to cover claims for at least the next five years
- even if it doesn't take another penny from doctors.
Last week at a meeting with health care providers, new insurance
commissioner Jane Cline promised to review how her agency grants
permission for medical malpractice rate increases.
"The commission has been at fault in not reporting to the Legislature
on the health of the malpractice climate," she said. "We want
better review of rate filings and a better system to approve of rate
increases before they are enacted."
"The Price of Practice" continues Tuesday in The Charleston Gazette
with a look at some of the more damaging cases involving medical
malpractice, and what one state has done to deal with its own
To contact staff writer Martha Leonard, use e-mail or call 348-1254.