Doctors eye their own malpractice insurance company

Wednesday, Jan. 30, 2002 | 10:04 a.m.

CARSON CITY -- Nevada doctors are exploring setting up their own company to provide medical malpractice coverage as the state insurance commissioner set hearings to explore rising rates and a loss of coverage.

Larry Matheis, executive director of the Nevada State Medical Association, said some doctors have talked about instituting a company "of last resort" to provide insurance, at least for the short-term.

St. Paul Cos., which provides malpractice coverage to 1,300, or 40 percent, of the state's doctors, is pulling out of Nevada. Other insurers have notified doctors their rates will increase 300 to 500 percent. The company cited heavy losses, saying it paid out $1.88 in malpractice claims for every $1 it collected in Nevada.

Insurers have cited heavy losses in Nevada stemming from the state's lack of liability limits.

Matheis said when doctors formed a similar underwriting association in the mid-1970s, the market stabilized. The Nevada Medical Liability Co. operated for 15 years, until it was purchased by St. Paul.

His immediate goal this year, he said, is to keep doctors practicing and to stop them from leaving the state.

Meanwhile, calling it "the worst crisis we have seen in a decade," state Insurance Commissioner Alice Molasky-Arman set a hearing for March 4 to examine the problems.

Andrea Woods, a spokeswoman for St. Paul, said Nevada has one of the worst loss ratios in the nation.

Molasky-Arman was critical of St. Paul, noting that when the company bought Nevada Medical Liability Co. six years ago it promised a long-term commitment to Nevada.

"I don't consider six years a long term," she said.

St. Paul's pullout leaves 11 companies providing malpractice insurance in Nevada.

Gov. Kenny Guinn met with a group of physicians last week in Las Vegas, and he's convinced there is a "looming crisis that could endanger our citizens."

Guinn said he wants "each and every medical malpractice insurance carrier authorized to do business in the state of Nevada to provide testimony regarding their market intentions, practices in rating and underwriting, and their loss experience in the state."

During the initial phases of an investigation into the issue, Molasky-Arman said she found some doctors have not been treated fairly by companies that have not followed their own rules in determining rates and who to insure.

She has learned that some doctors are getting their policies from surplus line companies, which fall under the jurisdiction of the state. Some of these firms deal in high-risk policies and are not required to be licensed, meaning they have no cap on rates.

But some of the licensed companies may be quoting premiums that are higher than approved by the insurance division, Molasky-Arman said.

Matheis praised Guinn, Molasky-Arman and legislative leaders, especially Assembly Majority Leader Barbara Buckley, D-Las Vegas, who has asked legislative staff whether anything can be done in the off-session to solve the problem.

"We may have to call for a special session (of the Legislature)," said Matheis. "But we're trying for an interim fix."

While physicians are talking about leaving Nevada, Molasky-Arman said other states -- West Virginia, Pennsylvania and Mississippi, for example -- are facing similar dilemmas.

Molasky-Arman urges physicians who have problems to call her office for help (486-4009 in Las Vegas).

Molasky-Arman's office has started to gather information on the reports of malpractice claims and judgments; the premium setting practices and how long the companies intend to remain in the state. "I also want to know the expenses and fees paid defense attorneys," she said.

The March 4 hearing will be held in Carson City and televised to Las Vegas.