Doctors cite lower premiums as evidence of effectiveness

Friday, June 7, 2002 | 5:22 a.m.

WEEKEND EDITION: June 9, 2002

A problem with finding long-term solutions to Nevada's medical malpractice insurance dilemma is that doctors and lawyers sharply disagree on what has caused liability premiums to skyrocket.

Doctors say the best solution would be for Nevada to adopt a California tort reform law, the Medical Injury Compensation Reform Act. Lawyers, however, say California's law doesn't work and instead are calling for reform of Nevada's insurance industry.

Caught in the middle are Gov. Kenny Guinn and Nevada legislators, who will be called upon to find solutions.

Here are two views of the California law and the insurance liability dilemma as reported by the Las Vegas Sun's Steve Kanigher.

Proponents of medical malpractice tort reform in Nevada say a comparison of insurance premiums in Clark County and Southern California proves that California's Medical Injury Compensation Reform Act has worked as intended.

For evidence, they point to the liability premium rates that the insurance company Medical Insurance Exchange of California was charging as of last month for obstetricians who had been with it at least five years.

It was charging $141,760 a year for medical malpractice insurance in Clark County and $85,336 elsewhere in Nevada. But obstetricians were being charged only $45,472 in San Diego and $52,748 in Los Angeles.

This is why MICRA has been endorsed by such organizations as the Clark County Medical Society, Nevada State Medical Association and Clark County OB/GYN Society.

"MICRA should be enacted in its entirety," Dr. Raj Chanderraj, Clark County Medical Society president, said. "Otherwise, you won't have rate stabilization."

Passed in 1975, MICRA placed caps on noneconomic damages otherwise known as pain and suffering and also instituted numerous other civil-justice reforms that proponents say have stabilized rates and kept doctors in that state. Doctors blame multimillion-dollar jury verdicts and increasingly costly out-of-court settlements for the rise of insurance rates in Nevada.

Californians Allied for Patient Protection, a coalition of hospitals and medical associations that supports MICRA, said California's medical liability premiums rose by less than half the national average between 1976 and 1999.

"We experienced a crisis in the mid-1970s similar to what is going on now in Nevada," Danielle Walters, coalition executive vice president, coalition, said. "Medical malpractice rates were skyrocketing 200, 300, 400 percent. Carriers dropped out of the state or dramatically reduced their coverage. We had departments such as obstetrics that were closing down and trauma departments that didn't take cases.

"The choice we had was to provide access to care versus unlimited awards for noneconomic damages, which were not identifiable. Not a single dollar will take away a person's pain. What resulted with MICRA was a stabilization of our insurance industry. But even with MICRA, we're still very litigious. One out of five physicians is sued in California."

Dr. John Nowins, Clark County OB/GYN Society president, said medical malpractice insurance problems will not go away in Nevada unless MICRA is adopted.

"It would absolutely stabilize rates and probably reduce rates," Nowins said. "Lawyers and patients could still get a reasonable amount of money, but they couldn't spill coffee on their lap and get $2 million. MICRA is the best reform in the country, and it has stood the test of time. If we pass MICRA, a lot of insurance companies would come back here. It would open up the market, and rates would come down. You would then have a more stable liability market."

Dennis Coffin, manager at SCW Agency Group-Nevada Inc., which represents the malpractice insurer American Physicians Assurance Corp. in Las Vegas, said he would support MICRA because it would add predictability to the amount of money insurers can expect to pay in malpractice cases.

"It has helped stabilize California's prices all these years," Coffin said. "Insurance companies hate unpredictability and you have it here in Nevada because you don't know what the damage awards will be. If you have predictability, you know what to charge in premiums. Right now it's guesswork."

Nevada's medical community has been pressing Gov. Kenny Guinn to come up with solutions as quickly as possible, especially since many obstetricians, surgeons and others who perform high-risk medical procedures will experience much higher premiums beginning this summer.

"It's a serious issue that the governor is addressing, but let's not whip expectant mothers into a frenzy," Guinn spokesman Greg Bortolin said. "His opinion is developing, but it's a work in progress. He has said he's in favor of tort reform and caps. But the crux of what we have seen on this whole issue is that it will take time to build consensus."

The reason physicians want Nevada lawmakers to adopt MICRA in its entirety is that other states that passed only portions of the law have done so unsuccessfully, they say.

In last month's County Line newsletter published by the Clark County Medical Society, Dr. Weldon "Don" Havins compared MICRA to Nevada law. Havins, the medical society's chief executive officer and special counsel, was in a unique position to write the article because he is both a physician and a lawyer. Among the differences he found:

Although not noted by Havins, MICRA supporters say that a plaintiff in California pockets $106,500 more than a Nevada plaintiff for every $1 million awarded because less money goes to attorneys.

Although not noted by Havins, the effect of that provision means insurance companies in California can more easily spread out the payments they must make to the plaintiff. In Nevada, insurers must take more of a hit up front.

Bortolin said Guinn is studying MICRA, but has not yet decided to support it. However, even if the governor agrees to support MICRA, it isn't likely he would press for a vote on that issue if he calls a special legislative session on medical malpractice reforms, he said.

"Why would we call a special session over something that will certainly be challenged in court and won't produce an immediate resolution?" Bortolin said.

Las Vegas attorney Jim Wadhams, a Nevada insurance industry lobbyist, said he believes his clients also would support MICRA in this state.

"MICRA has, I think, been proven in California and other states that have adopted similar laws to have stabilized rates," Wadhams said. "But this is a multifaceted problem, and the civil justice system is only part of it.

"The market after Sept. 11 has made it difficult to do business. Insurance companies have had to spend an awful lot of money and many of them shrunk so they don't have the ability to take on the same risk that they took on before Sept. 11. If they can't be comfortable that they will make money here, they won't come here. We need to stabilize the market to bring more competition to Nevada."