State firm won’t cut doctors’ insurance rates

Tuesday, Aug. 13, 2002 | 11:19 a.m.

A nonprofit company formed last spring by the state to help provide medical malpractice insurance for physicians who have difficulty obtaining affordable coverage has decided not to lower rates, at least in the near future.

The Medical Liability Association of Nevada board met in Las Vegas Monday to discuss the tort reform legislation passed by state lawmakers two weeks ago in special session and signed into law last week by Gov. Kenny Guinn. The aim of the legislation was to curb skyrocketing medical liability premiums and keep doctors from leaving the state.

Board chairman Robert Byrd said the association decided against an immediate reduction in rates because of uncertainties as to whether the law, which takes effect Oct. 1, will hold up constitutionally.

"We don't know where this law is going," Byrd said. "We're pleased with the bill but it needs to stand constitutional muster. We need to see what happens over the next year or two."

Dr. John Nowins, president of the Clark County OB/GYN Society, said he expects that Clark County will continue to lose one to two obstetricians a month as long as medical liability insurance remains high. He said 26 county obstetricians have either closed their practices or taken early retirement this year, leaving 90 to deliver more than 23,000 babies a year.

"The tort reform that was passed was definitely a very good thing but it's a long-term solution, not a short-term solution," Nowins said. "Most of these insurance companies will have to become profitable before they do any discounts at all. We probably won't see an effect for two to three years."

Nowins said his premiums will rise from $35,000 to $107,994 in October if he delivers 125 or more babies a year, which he plans to do. Included in that total are babies that he delivers at no charge for indigent mothers. Part of the problem is that insufficient reimbursements from insurers makes it difficult for obstetricians to turn a profit, he said.

"In order for us to offset the cost I'll have to do high volume," Nowins said. "But some doctors who do that will end up going bankrupt."

Byrd held out hope that the association may lower rates later this year, saying anything is possible. The association, which insures 249 doctors, will hold its next board meeting next month.

But uncertainties make it difficult for insurers to know how much to charge for premiums because of potential loopholes in the law, which set caps on damages for pain and suffering.

"Our expectation is that we'll have more probability to set rates but the severity and frequency of malpractice cases still needs to be reduced," Byrd said.

The association decided to issue dividends to physicians if too much money has been collected in premiums. But Byrd said such action may not occur for two to three years.

By then, Byrd said he hopes that rates will have gone down substantially and that there would be more competition in Nevada among insurers. In that event, the plan is for the association to eventually dissolve.

Medical liability insurance rates rose as much as 300 percent this year for high-risk specialties such as obstetrics and neurosurgery. Doctors blamed the increases on high-cost medical malpractice lawsuits. Lawyers attributed the problem to mismanagement on the part of the insurance industry.