Doctors’ insurance company weighed

Ed Koch and Cy Ryan

Tuesday, March 5, 2002 | 10:37 a.m.

The establishment of a doctor-operated malpractice insurance company can happen sooner than many expect, the state's insurance chief says.

At a hearing Monday in Carson City, Insurance Commissioner Alice Molasky-Arman rebuffed experts who have said it would take six months to two years to form a doctor-run insurance group.

If a group approached her with a "viable framework," she said, "I would approve that company for a license within days -- that's days, not months."

Dr. Raj Chanderraj, president of the Clark County Medical Society, said Southern Nevada doctors hope to have such a proposal ready in 90 days.

"Unfortunately that may be too late for some physicians," whose insurance policies expire before then, he said.

"I'm afraid we will see some attrition," agreed Larry Matheis, executive director of the Nevada State Medical Association, who said a doctor-run insurer could be operating by early summer. "It's up to the individual physicians if they feel the climate here will get better by then."

More than 40 witnesses offered sworn testimony Monday, raising many of the same issues that have been hashed out in news reports for weeks -- whether any more doctors are harming patients, whether attorneys are pushing meritless claims or whether insurance companies are soaking doctors with higher premiums.

Molasky-Arman, who must determine if there is a shortage of malpractice insurance available for doctors, indicated during the 6 1/2-hour hearing that physicians cannot find insurance as a result of the pullout announced in December by the St. Paul Cos., which covered 60 percent of the state's doctors.

Ironically St. Paul in 1996 bought out the state's doctor-run insurance company that was formed in the 1970s during a similar crisis.

The finding of a shortage would be the first step in allowing a doctor-run group to offer insurance. Written testimony will be accepted until Monday, she said, and a decision should come by early April.

Not to take action, Molasky-Arman said, would be "folly." But the more than 1,000 Las Vegas doctors who watched the video-teleconference at the Sawyer State Building were told that there is no quick fix to this problem.

"If we can put in place crisis controls, we will," she said. "We cannot accomplish this overnight."

Doctors, saying they are facing 300 to 400 percent increases in their premiums, reiterated during the hearing that skyrocketing malpractice insurance rates could result in their exodus from the state.

While the fight was waged in the hearing rooms, a large crowd of doctors and their supporters jammed into the Sawyer building lobby carrying signs that read: "SOS -- Save Our Surgeons" and "What Good is Insurance Without Doctors?"

"I was born and raised in Las Vegas and they will have to drag me kicking and screaming out of medicine here," Dr. Darin Swainston, an obstetrician and gynecologist, said outside the hearing. "But I won't work for free. Maybe I'll become a midwife. Some of them make better money than I do now."

To accommodate the throng, Insurance Counsel Don Aimar said three rooms were used in the Sawyer building and "the fire marshal wouldn't let us put any more in."

The hearing was requested by Gov. Kenny Guinn last month in response to escalating complaints about the cost of malpractice insurance, especially for specialists such as obstetricians and surgeons, who are are paying as much as $200,000 in annual premiums and expect renewal rates to go higher.

Frivolous cases are not the cause of the problem, as many doctors claim, because they are weeded out by a medical screening panel, Bill Bradley of the Nevada Trial Lawyers Association, said. He pointed a finger at insurance companies that are unwilling to settle at recommended amounts.

In one case, he said, the screening panel found negligence. At a pretrial conference, the district judge recommended a settlement of $900,000 that the injured person agreed to take. But the insurance companies offered only $100,000. The case went to trial and a jury awarded $3.4 million, Bradley said.

But while Bradley sang the praises of the Medical-Dental Legal Screening Panel that was created by the 1985 Legislature, several doctors and insurers recommended it be abolished as ineffective.

Dr. Ikram Khan, of the newly formed Nevada Medical Liability Physicians Task Force, called the screening panel "a failure," because if it finds a case meritless, that does not prevent the case from going to court.

Such lawsuits, he said, serve merely to pressure doctors and insurers into settling cases.

Since 1986 the screening panel, comprising three lawyers and three doctors, has found that 949 of 1,064 cases had no probable malpractice, yet 431 of them resulted in lawsuits anyway.

A study by the staff of the state Insurance Division found there were only two companies willing to expand their malpractice policy writing in Clark County, and they are small companies. Staff members said they would not be able to take up the slack left by the departure of St. Paul Cos.

Insurance companies told the commissioner they were losing money on malpractice coverage in Southern Nevada.

A representative of American Physicians Assurance Corp. said it paid out $1.71 in claims for each dollar it collected in premiums. The companies said that while they may continue to write some lines of coverage, they will not insure doctors who perform high-risk procedures.

Insurance agent Luigi Landini, president of Landini and Associates, Ltd., in Las Vegas said outside the hearing that he is interested in writing more malpractice policies: "Certainly, St. Paul leaving has opened up market. I want (to insure) more doctors. After all, I live here too. If physicians leave, people won't move here, growth will stop and that will hurt everyone."

No one questioned the value of good doctors in the community.

"We bring people back from the dead and that's no easy a task -- ask Jesus," University Medical Center trauma surgeon Dr. James Tate testified. "One day you may go into a hospital emergency room with a ruptured appendix and the only thing they will be able to tell you to do is call your lawyer."