Hospitals backing new state medical insurer

Wednesday, April 24, 2002 | 11:13 a.m.

CARSON CITY -- A new private company to write medical malpractice insurance to ease the crisis facing some Southern Nevada doctors should be ready to sell policies by May 1, a legislative committee was told Tuesday.

Keith Beagle of Nevada Mutual Insurance Co. said that Sunrise Hospital has contributed $1 million toward the required $1.5 million capitalization of the firm. Other hospitals and hospital operators, such as St. Rose Dominican, Lake Mead and Universal Health Services, have also pledged to support the new company. Universal owns the Valley Health System.

"We need to get $1.5 million to get a certificate (to do business)," Beagle said. "We hope to have it by this weekend." The company, being formed by doctors, hopes to have quick approval from state Insurance Commissioner Alice Molasky-Arman.

Despite the creation by Gov. Kenny Guinn of a state-backed insurance system to cover doctors, there were dire predictions to the committee that the health system of Clark County remains in danger without more affordable malpractice insurance.

The mutual company was the first private firm approved by Molasky-Arman to start soliciting money to start a new company.

Larry Matheis, executive director of the Nevada State Medical Association, said four companies have already left the state and he didn't see a rush by out-of-state firms to locate in Nevada to write malpractice policies.

Beagle's announcement about the progress of the mutual company was the only bright spot in the committee's discussion of the plight of Southern Nevada physicians who are losing their insurance coverage.

Matheis praised Guinn for creating the state-backed Medical Liability Association of Nevada to start writing insurance. But he said that would not stabilize the market.

He predicted at least 100 physicians would pull out of their practice and the number could be 250 to 300. The problem, he said, is those who are leaving are in specialized areas, such as trauma, obstetrics and gynecology.

The problem facing doctors who join the state system is they must pay "tail" coverage to their former insurance company. That premium covers them for claims for past mistakes they may have made on patients.

One official said this tail coverage could be anywhere from $80,000 to $200,000. Guinn says he has convinced St. Paul Cos., which is pulling out of Nevada, to allow the doctors to pay that in installments.

The state system published its rates and its underwriting guidelines Monday.

At this point, there's no agreement between doctors, insurance companies and trial lawyers on what steps must be taken to resolve the crisis.

Matheis said he didn't have any "silver bullet" to solve the problem and keep doctors in Nevada. For instance, he said physicians could go to Los Angeles and pay one-half of what they are paying in medical malpractice premiums in Nevada. And the cost in San Francisco, he said, would be one-third of the Nevada rate.

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