MEDICAL MALPRACTICE

Sunday, March 07, 2004

Backers of a $250,000 cap on awards for pain and suffering in medical malpractice lawsuits claim most medical malpractice insurers have fled Pennsylvania, making it nearly impossible for doctors to obtain coverage.

Now, those on the opposite side of the debate can point to 17 new medical malpractice insurers in Pennsylvania as proof of a healthy market for malpractice carriers.

As often happens in Pennsylvania's heated debate over a cap on damages, the truth is somewhere in the middle.

It's true that 17 new insurers recently obtained approval from the state Insurance Department to sell coverage in Pennsylvania. But only eight are traditional insurance companies. Nine are risk-retention groups involving doctors or hospitals that self-insure.

Some of the newcomers have a very narrow focus, such as insuring only dental surgeons, and one said it has no immediate plans to cover doctors or hospitals in the state.

Others say they have big plans in Pennsylvania.

"Our goal is to become the premier writer for Pennsylvania doctors. We want to establish ourselves as the company that's going to defend doctors, file countersuits when doctors are sued on a frivolous basis and lower premiums," said Joseph Brady, vice president of Professional Casualty Association.

Brady said the King of Prussia insurer already covers more than 400 Pennsylvania doctors and hopes to write $10 million worth of premiums by the end of the year.

Another newcomer, Pennsylvania Healthcare Providers Insurance Exchange, began covering doctors early last year and now insures more than 700, said Tom Gaudiosi, president and CEO of the Harrisburg-based company.

Gaudiosi, a longtime insurance executive, said the Pennsylvania medical malpractice market is "improving. It's becoming more competitive," and recent tort reforms are making a difference.

One of the risk-retention groups, Central Pennsylvania Risk Retention Group, covers only doctors within nine central Pennsylvania counties, where doctors and hospitals rarely lose malpractice cases. The group insured 325 doctors as of late last year, and organizers predicted it would cover 500 by Jan. 1.

Still, a doctor representing the Pennsylvania Medical Society recently told a state Senate committee that the number of malpractice insurers in Pennsylvania consists of "technically, three insurers, but only two that are really doing anything."

State Deputy Insurance Commissioner Randy Rohrbaugh said that's "misleading."

According to Insurance Department records, eight insurers wrote more than $20 million in premiums in 2002, the most recent year for which figures are available, and 13 wrote more than $10 million. More than 80 malpractice insurers collected premiums from health-care providers in the state.

However, only a few of those are seeking new business, Rohrbaugh said.

The state's largest malpractice insurer, Pennsylvania Medical Society Liability Insurance Co., wrote $62 million in premiums in 2002 and is writing new business, but only for doctors who join physician practices or hospitals already insured by PMSLIC, spokeswoman Anna Lavertue said.

Rohrbaugh said insurers have become highly selective about whom they cover and have dropped doctors who have been sued often. Doctors viewed by insurers as having poor records have trouble finding coverage, he said.

The Pennsylvania Professional Joint Liability Authority, a state-run insurer designed for doctors with poor records who can't obtain commercial coverage, covered about 2,000 doctors last year, up from 227 in 1999, he said.

But Rohrbaugh regards the new entries as evidence that the availability of coverage has increased. He also said the risk-retention groups, rather than being a bad sign, show the market is evolving to meet changing needs.

Some of the groups involve medical practices or hospitals with strong quality-control programs who believe that, by joining forces with providers with similar standards, they can effectively manage risk and keep payouts at a reasonable level.

Rohrbaugh believes this approach also leads to improved medical care and patient safety.

But the presence of the new insurers hasn't lowered premiums. While premiums might be leveling off, Rohrbaugh doesn't expect them to drop significantly.

PMSLIC, which raised premiums 54 percent in 2003, increased them 15.1 percent this year, Lavertue said.

Gaudiosi, the insurance company executive, served on Gov. Ed Rendell's task force that studied medical malpractice. He said insurers, doctors and lawyers all contributed to the crisis.

During the 1990s, when insurers could get high returns on their investments, they slashed premiums to unsound levels and took on ques tionable risks as they sought to increase market share. High premiums of recent years are partly due to the need to catch up, he said.

Malpractice suits often name doctors with only a flimsy connection to the case. But in their efforts to get out of the suit, Gaudiosi said, doctors often blame other doctors, thus playing into the hands of lawyers.

Also, doctors are commonly sued for "bad outcomes," or cases where the patient didn't get an optimum result, but it wasn't the doctor's fault.

"The public has to understand bad outcomes don't necessarily mean malpractice," he said. "My own mother died of a bad outcome, but I never thought to sue."

Brady said he believes the Professional Casualty Association can succeed in Pennsylvania with a strategy of strong risk management and aggressive defense of doctors, rather than settling cases.

He said tort reforms, particularly the one that prevents malpractice lawyers from moving cases to Philadelphia courts that tend to favor alleged victims, have made Pennsylvania more viable.

He also said publicity surrounding the malpractice crisis will lead to more reasonable verdicts, because potential jurors have learned that excessive awards are a drain on the health-care system and "line the pockets" of lawyers.