Editorial: Doc-run insurance holds hope

Thursday, March 7, 2002 | 8:53 a.m.

The St. Paul Cos., the dominant carrier of medical malpractice insurance in Southern Nevada, decided in December to stop offering this coverage nationwide. At the same time other insurance companies began to dramatically raise their rates for malpractice insurance in Nevada -- 300 percent to 400 percent in some cases -- putting a terrible squeeze on doctors. Still other insurance companies have said that they'll stop underwriting this line of coverage altogether. A few doctors have said the high rates have resulted in them leaving Southern Nevada, and others have said that the situation will force them to stop practicing medicine.

In response to the brewing crisis, the state insurance commissioner held a hearing this week to see what could be done to help doctors who have been hit with the high rates. The most significant, and potentially lasting, thing to come out of the hearings was Insurance Commissioner Alice Molasky-Arman's commitment to help doctors move quickly to set up a doctor-operated malpractice insurance company. If a doctor-led group came to her with a "viable framework," she said, "I would approve that company for a license within days." Ironically the state did have a doctor-operated malpractice insurance company that was started in the mid-1970s when a similar medical malpractice insurance crisis developed. But in 1996 St. Paul purchased the doctor-run insurance company -- and here we are again.

Doctors and insurance companies have blamed the rate hikes on an increase in the number of malpractice cases filed by patients, and they have called for caps on jury awards. But the rate hikes appear to be driven in large part by market forces. Trial lawyers have noted that the sluggish economy has led to some of the insurers' losses. And as the Wall Street Journal reported in December, St. Paul and other insurance companies were engaged in price wars during much of the 1990s, and lost money in the process. So many insurers opted to get out of this line of insurance. For those that are staying in, they're raising their rates.

Even if the doctors put together a medical malpractice insurance company that offers them better rates, it's likely that they and the insurance companies still will press the 2003 Legislature to put a cap on jury awards. But legislators should be wary of limiting a physician's accountability and curtailing an individual's right to recover damages if he is harmed and faces lifelong pain.

Besides, there are checks in place that limit the filing of frivolous lawsuits. In Nevada, before a medical malpractice lawsuit can be filed, it must first be routed through a screening panel. That panel, which is made up of three doctors and three lawyers, votes on the merits of a lawsuit before it can go to court. If the panel rules against the patient, he can still file a lawsuit. If the patient loses, however, he is responsible for all court costs, creating a disincentive to file a spurious claim.

Easy solutions aren't easy to come by when dealing with tough medical issues, whether it's getting coverage for the millions of uninsured Americans, solving the nursing shortage or, in this case, ensuring that doctors have affordable malpractice insurance coverage. But the creation of a physician-run insurance plan is a good first step in keeping our doctors here and ensuring that we provide quality health care for Southern Nevadans.