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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

 

Virginia doctors.

 

 

"Malpractice insurance rates in West Virginia are skyrocketing,"

 

  • aid Evan Jenkins, director of the West Virginia State Medical
  •  

    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

     

  • pecialties such as gynecology or neurosurgery. Annual premiums ranged
  •  

    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,"

     

  • aid Wheeling plastic surgeon Phil Polack.
  •  

     

    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

     

    1995.

     

     

    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

     

  • hare in the state, according to the Insurance Commission. The commission
  •  

    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

     

    malpractice insurance.

     

     

    "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

     

    clear.

     

     

    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

     

    malpractice cases.

     

     

    "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

     

    public.

     

     

    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

     

  • ince then.
  •  

     

    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

     

    1997.

     

     

    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

     

    the state.

     

     

    "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

     

    commissioner.

     

     

    "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

     

    doctors.

     

     

    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

     

  • hows the company paid $8.6 million to resolve claims that year.
  •  

    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

     

    malpractice debate.

     

     

    To contact staff writer Martha Leonard, use e-mail or call 348-1254.

     

     


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