Medical school rejects Guinn insurance plan

Jennifer Knight

Monday, June 3, 2002 | 11:05 a.m.

Nevada School of Medicine officials are saying, "thanks, but no thanks" to the governor's newly revised medical malpractice coverage and are expected to select a private insurance carrier this week.

Facing a loss of coverage by the end of the month, officials will pick one of three private insurance carriers to cover medical residents and the 250 full-time and 150 part-time physicians working for the University of Nevada School of Medicine. Coverage is estimated at $2.1 million a year, said Jon Hansen, a risk manager for the University and Community College System of Nevada

School of Medicine officials are not even considering the state-sponsored plan that Gov. Kenny Guinn announced last week was being revised to include coverage for both current and prior acts of malpractice.

That change eliminated the need for expensive "tail coverage" to cover claims for acts that occurred before the new coverage took effect.

The governor has said he had hoped the medical school would come under the state umbrella, noting the plan had been created in part to help the school.

Now the medical school must rely on the governor to support the estimated $1 million in increased premiums it will pay a private carrier.

University officials said they didn't even get a price quote from the state plan, because a 1967 state law initially made it illegal for the School of Medicine to participate in a plan that risky -- premiums could have doubled.

Another last-minute adjustment announced by state insurance officials Friday -- one that would remove that obstacle -- came too late, university officials said.

Hansen said he received a call Friday afternoon from state officials telling him that the board of directors for the Medical Liability Association of Nevada voted May 21 to offer a risk-free fixed cost malpractice insurance plan, but neglected to tell anyone about it. That change would have made it legal for the School of Medicine to sign up.

"They have not told anyone about (the changes) until now," Hansen said. "By the time we got a quote from the state, our current (malpractice) coverage would probably run out."

The plan as it was understood last week would have charged doctors a reduced premium, roughly 18 percent less than the going rate for current and prior acts combined. But if the insurance company paid out too much in malpractice claims and lost money, a doctor could potentially be charged a second premium, Bruce Heffner, chief insurance assistant for the Nevada Insurance Commissioners Office, said.

Heffner said the new plan would charge doctors 10 percent more for malpractice insurance if they wanted to guarantee a fixed cost for the year.

As chairman of the state Board of Examiners, which must approve state expenses before they go to the legislative Interim Finance Committee, Guinn will have a final say on the school's coverage.

School officials will seek his support without knowing whether insurance with the state could have been cheaper.

"I think the element to consider here is that the Board of Examiners all expect every state agency to investigate all options and make wise financial decisions," Greg Bortolin, Guinn's spokesman, said. "If they have cut a deal to save money, I'm sure they would get the blessing of everyone involved."

But there has been talk in the insurance commissioner's office that the school may be over-insuring itself.

"As table conversation, we have questioned the amount of coverage they get, yes," Heffner said.

The concern is that since the School of Medicine is a state agency immune from paying out settlement claims larger than $50,000 per incident, that is all the coverage it needs, Heffner said.

But the teaching doctors also work for hospitals and accept health insurance, which require any physicians and physicians groups to carry a $1 million per incident policy, Lisa Davis, chief operating officer of the medical school, said.

In addition, she said, while the $50,000 immunity cap gets the school a reduced rate, it is misleading.

The immunity cap does not protect the state multiple claims from a single incident -- each one potentially costing $50,000, Hansen said.

For example, if a father of three children dies because of malpractice, all three children could file claims $50,000 apiece, or $150,000. If two doctors were involved, that could be a claim of $300,000 on a single death, Davis said.

"The thing is, if you ask the insurance department they will tell you that (the state plan) is meant to be a stopgap until you get to more solid ground," Hansen said. "We now have more solid ground."