New Nevada malpractice insurance firm gearing up

Monday, April 29, 2002 | 9:22 a.m.

CARSON CITY -- A company owned by Las Vegas physicians has taken a major step toward gaining state approval to start writing medical malpractice insurance to ease the crisis that has hit Southern Nevada doctors.

Keith Beagle, a spokesman for Nevada Mutual Insurance Co., said Las Vegas hospital operator Universal Health Services is wiring $1 million this week to the company. Combined with $1 million already received from Sunrise Hospital, that surpasses the $1.5 million capitalization level required by the state Insurance Division.

Beagle said 100 to 150 doctors have expressed interest in seeking coverage and he will start collecting their first-quarter premiums this week.

Beagle also expects Lake Mead Hospital and St. Rose Dominican Hospital to contribute to the capitalization. The goal is to amass $3 million to $4 million, he said.

Four existing malpractice insurers, including St. Paul Cos., have served notice they will leave Nevada. As a short-term solution, Gov. Kenny Guinn invoked emergency powers to establish a state-operated essential insurance system to cover doctors.

There have been predictions that up to 400 physicians, including those in high-risk specialties such as trauma surgeons, gynecologists and obstetricians, would pull out of Nevada or retire from practice because they could not obtain coverage or could not afford the escalating premiums.

Nevada Mutual would be the first private company to enter the market since the crisis erupted late last year with the announced pullout of St. Paul Cos.

In addition to the private doctors who have expressed interest in Nevada Mutual, Beagle said talks are under way for coverage of the 200 interns who work at University Medical Center.

Beagle said the rates for Nevada Mutual are higher than the new state system's. But he said the company will cover malpractice claims for past acts with the premiums.

Under the state's plan, the doctor would have to buy coverage from a private insurance company to cover any past acts of negligence or malpractice. That could cost anywhere from $75,000 to $150,000, in addition to the premiums assessed by the state system.

Beagle said a company called Trean of Minneapolis would administer the system and underwrite policies.

Final approval to start selling the policies could come as early as this week, Beagle said. Insurance Commissioner Alice Molasky-Arman has promised a quick turnaround on any application to offer new policies to the doctors.

Four groups applied to Molasky-Arman for permission to start soliciting money to meet the $1.5 million capitalization requirement and to start issuing quotes to doctors. Nevada Mutual was the first to gain approval.

Beagle said he "doubted there is enough room for multiple companies" to enter the medical malpractice market.

As of last Monday more than 100 doctors had applied for coverage from the state's essential malpractice insurance system.