Guinn funds doctors’ insurance

Wednesday, March 13, 2002 | 11:18 a.m.

In an effort to stem a growing health-care crisis, Gov. Kenny Guinn today unveiled a plan to provide medical malpractice insurance to doctors in Nevada.

"We are building a bridge to get us across a deadly crevice," Guinn said after Nevada Insurance Commissioner Alice Molasky-Arman announced her finding that the state has a shortage of medical malpractice insurance.

Guinn said a special state underwriting association has been created to assure the availability of insurance for doctors who have faced spiraling costs due to several insurance companies pulling out of the state.

The new Nevada Essential Insurance Association is to be up and running by April 15, and will be funded by $250,000 from the state emergency account, Guinn said.

The account generally is used to repair damage from flood and other natural disasters.

An impassioned Guinn told reporters at a news conference that the current situation is as bad or worse than any flood, and that if he had to spend taxpayer money to protect the public, "I will damn well do it."

"This is intended to bring calm to thousands of Clark County residents ... and ensure the health and welfare of our people."

Many doctors in high-risk specialties -- trauma physicians, heart surgeons and OB-GYNs -- have not been able to obtain insurance at any price since the St. Paul Cos., the state's largest provider of medical malpractice coverage, announced in December that it was getting out of that market.

Scores of doctors have said they have been told their premiums will triple or quadruple from the remaining insurers in the state, and many doctors have said they plan to retire or leave Nevada.

Guinn said an OB-GYN paid about $58,500 for malpractice coverage last year and would have paid St. Paul about $95,000 this year for the same coverage. Because of the pullout, many doctors would have had to find out-of-state providers at a cost nearing $155,000.

Under Guinn's plan, Nevada doctors would pay $32,300 annually and will pay $105,000 over an unspecified period of time to cover past events.

Guinn said the state can afford to do this, because it will be in the business for only a short period -- at least until the next Legislature meets in February -- and the state does not have to worry about turning a profit.

The association will provide basic medical malpractice insurance to qualifying doctors and other medical professionals who meet certain underwriting standards. A board of directors appointed by the Molasky-Arman will head the association.

If another plan is presented to him, Guinn said, he will consider it. Doctors have worked on creating their own association to provide coverage.

The governor said he would work with the 2003 Legislature on "reform that will provide stable and reliable medical malpractice insurance well into the future."

A legislative subcommittee was told Tuesday that Nevada has little choice but to get into the medical malpractice insurance underwriting business until a doctors' mutual insurance company can be developed and funded.

"The state provides welfare for people who cannot make it, maybe we will have to provide such help for high-risk docs," said State Sen. Mike Schneider, D-Las Vegas, chairman of a subcommittee studying competition between government and business. "I never thought we'd see welfare recipients and doctors getting the same help from the state."

The sparsely attended subcommittee meeting at the Sawyer State Office Building came between last week's high-profile, packed-house hearing on the malpractice crisis by Nevada Insurance Commissioner Alice Molasky-Arman and today's announcement.

The subcommittee is one of two legislative panels that will be discussing malpractice insurance. A special committee, chaired by Sen. Ann O'Connell, R-Las Vegas, was created this month to study the issue.

"I think the state should at this point come in and at least provide insurance for the 240 to 250 doctors who cannot get coverage to tide them over" until a mutual insurance company can be funded, Dr. Raj Chanderraj, president of the Clark County Medical Society, told the subcommittee. "They need state action now or they will lose their livelihoods."

Bill Welch, president of the Nevada Hospital Association, told the subcommittee that since the crisis began, 91 local physicians have either retired, taken leaves of absence or quit practicing. He said estimates are that 35 to 40 percent of the area's OB-GYNs could either leave the community or that field.

"Our emergency rooms will become birthing centers with women who have had no prenatal care," Welch said.

Las Vegas attorney Gerald Gillock, repeating what attorneys have maintained, said litigation has not driven up the cost of insurance, but rather poor management by the insurance companies has been the culprit.

"In my practice, I will never take a case until a doctor reviews it" and believes malpractice exists, Gillock told the subcommittee. Insurers have hurt themselves by failing to settle, he said.

Gillock said that, in recent years, $8 million in settlement offers were rejected by insurers in cases that went to trial and were won by plaintiffs for a total $16 million.

James Wadhams of the American Insurance Association and Nevada Independent Insurance Agents warned the subcommittee that while doctors can form their own company, they can't necessarily keep malpractice premiums low in the existing market.

"Availability is one thing, affordability is another," said Wadhams, who in the mid-1970s was Nevada's insurance commissioner.