Coalition wants insurance probe in malpractice crisis

BY CHRISTOPHER J. KELLY / STAFF WRITER 05/17/2003

It's the insurance companies, stupid! A coalition of Pennsylvania consumer organizations is calling on the state Legislature to establish a commission to investigate insurance industry practices they say led to the medical malpractice insurance crisis. "We hope that the Republican leadership in Harrisburg will want to make a sincere effort to get to the bottom of what has caused this crisis," said Paul R. Lyon, executive director of the Committee for Justice For All. The group was joined by Citizens for Consumer Justice, the Pennsylvania Public Interest Research Group and the People's Medical Society at a Friday rally at the Radisson at Lackawanna Station. The four organizations are opposed to caps on damages for victims of medical malpractice. The Legislature is considering a $250,000 cap on noneconomic damages. The groups say the crisis has not been caused by an explosion in lawsuits, but an implosion of insurance company profits in a slumping economy. Numerous studies and newspaper articles have identified the economic "cycle" of the insurance industry as the cause of the crisis, said Beth McConnell, state director of PennPIRG, a nonprofit public advocacy group with 8,000 members across the state. In a strong economy, insurers cut premiums to artificially low levels to increase market share and boost investment income, Ms. McConnell said. When the economy weakens, she said, investment income drops, reserves are insufficient to pay claims and insurers raise premiums dramatically. "This is not the first time this has happened," she said. "We had almost identical malpractice insurance crises in the mid-'70s and mid-'80s, and those were blamed on an explosion in lawsuits. How is it possible that an explosion in lawsuits coincided perfectly with an economic downturn three times in the last 30 years?" Ms. McConnell answered her own question, quoting a recent study that shows malpractice premiums have fluctuated in concert with the economy over the past 30 years. The actuarial study of insurance industry statistics was conducted by J. Robert Hunter, an adviser to President Ford during the malpractice premium crisis of the 1970s. Lauren Townsend, executive director of Citizens for Consumer Justice, blasted what she said is a lack of oversight by state regulators. "It's an outrage that the insurance-funded majority in Harrisburg wants to make victims pay for insurance companies' mistakes by limiting their rights to recovery in malpractice cases," she said. "Caps have done nothing to lower premiums in other states and they won't work in Pennsylvania." State Auditor General Robert P. Casey Jr. was scheduled to speak, but business in Harrisburg kept him from attending. In a letter read by Mr. Lyon to the 250 people who made the rally, Mr. Casey added his voice to the opposition against caps on damages. "An arbitrary $250,000 limit on damage awards will deprive seriously injured patients of their right to be fairly compensated for their injuries and it will also put a one-size-fits-all price tag on human life," Mr. Casey wrote. After talking to people across the state, Mr. Casey wrote, "I have found very little support for measures that take away a family's right to be compensated for damages or that limit jury verdicts in our commonwealth." Juries should be trusted to make decisions in individual malpractice cases, Mr. Lyon said. If caps are put in place, he warned, the insurance lobby will eventually push to extend them to all liability cases.

İScranton Times Tribune 2004