Editorial: Tort reform may not be a cure-all

Friday, Aug. 2, 2002 | 9:16 a.m.

Gov. Kenny Guinn and state lawmakers on Thursday reached an agreement on tort reform that has the potential to alleviate the medical malpractice insurance crisis that has hit Southern Nevada. The bill that the Legislature passed is a feasible plan that not only limits jury awards for pain and suffering to $350,000, but it's also legislation that recognizes not every malpractice case is the same. The bill, which Guinn is expected to sign into law next week, does allow for exceptions to the cap in cases where doctors make egregious errors.

It also is encouraging that the bipartisan bill that came out of the special session of the Legislature contains a provision pushed for by Assembly Democrats that requires medical errors to be reported to the state health division. The state would collect the information in an attempt to help correct the problems that led to those errors to begin with, a preventive measure that potentially can reduce medical malpractice and the lawsuits that follow.

The tort reform legislation that passed should provide insurers with the kind of predictability in jury awards that they say they need to provide lower malpractice rates, but unfortunately the insurance companies aren't guaranteeing that they will cut the doctor's malpractice premiums. If there is a weakness in the legislation it is that it doesn't include tougher regulation of the insurance industry.

Democrats in the Legislature wanted to include a requirement that insurers reduce rates following the passage of a cap on jury awards, but they gave up on that provision due to Guinn's opposition. Guinn feared that a mandatory rollback might result in insurance companies refusing to underwrite medical malpractice coverage in Nevada, a clear indication of the unbridled power the insurance companies wielded on this issue during the special session of the Legislature. At times it seemed as if the insurance industry was calling the shots, not the governor or the legislators.

Nevada's experience with skyrocketing malpractice insurance premiums isn't unique. Premiums for many types of insurance are escalating across the nation. And, as the New York Times reported Tuesday, 60 consumer groups from around the nation are forming a coalition to fight what they consider price gouging by insurers. The consumer groups believe state regulators should freeze the premiums on home insurance and medical malpractice insurance until they can adequately investigate why prices have increased so much within the past year.

Insurance companies did suffer financially following the Sept. 11 terrorist attacks, a setback owed in large part to their losses in the stock market. What isn't clear, though, is whether the insurance industry's losses, from bad investments and adverse jury awards, come anywhere close to the exorbitant increases in premiums they're now charging.

If medical malpractice rates in Nevada don't noticeably come down soon once the tort reform legislation is passed, it will increase the risk that more doctors will shut down their practices and leave the state, a situation that prompted the special session of the Legislature in the first place. Insurance lobbyists say the industry wants to see how the legislation works out first, and whether the cap on jury awards withstands a legal challenge to its constitutionality, before rates are lowered.

But the insurance companies, in a show of good faith, should immediately lower medical malpractice premiums. And no matter what the insurers do, the Legislature should put teeth back into insurance regulation when it meets again in regular session beginning in February. Only then will doctors and patients have the peace of mind that doctors' medical malpractice coverage can't be held hostage to the whims of insurance companies.