Official: New malpractice insurers not solving crisis

Chris Jones

Wednesday, May 1, 2002 | 11:17 a.m.

The introduction of one or more proposed private medical malpractice insurers would have little short-term affect on the state's new essential insurance program, Nevada's top insurance regulator said Tuesday.

Still, Insurance Commissioner Alice A. Molasky-Arman said the state would consider transferring control of its newly formed Medical Liability Association of Nevada (MLAN) to a private company if such an arrangement would benefit the state's medical personnel.

"The association's board of directors is going to have to gauge the effectiveness of any new insurer before it makes any decisions, but there is always the possibility of another insurer assuming (MLAN's) business," Molasky-Arman said. "It's too soon to guess when that could happen, but it's something we would definitely consider."

A spokesman from one of Nevada's newly proposed medical malpractice insurers said his company is currently focused on getting its license to operate, although it would consider taking on MLAN's business at a later date.

"Right now we're running hard and fast to be the first new company out of the shoot," said Keith Beagle, a spokesman for Nevada Mutual Insurance Co., which is owned by a group of Las Vegas-area physicians. "Later on we'll entertain the idea of taking on MLAN, which really was created with the idea of a private entity such as ours acquiring it in mind."

Nevada Mutual is one of three companies that have requested permission to solicit investors and shareholders to fund new private medical malpractice insurance companies in Nevada, Molasky-Arman said.

It has already collected a combined $2 million from Las Vegas-area hospital operator Universal Health Services and Sunrise Hospital, and Molasky-Arman said the company could receive permission to begin writing policies as soon as next week.

Applications from two additional companies are awaiting approval, with others expected to follow, Molasky-Arman said. Regardless of whether or any new companies become operational, she said the presence of additional insurers is unlikely to lower doctors' current premiums.

"The questions about tort reform remain, and these new applications do not solve the question of affordability whatsoever," Molasky-Arman said.

"The rates charged by all of these companies who are applying are nearly as high, if not higher, than those that have been paid. The doctors are still going to be paying for the high loss ratio that's projected in this state ... that doesn't change."

Nevada's medical personnel have scrambled to obtain malpractice insurance since the state's former market leader, the St. Paul Cos., said last December it would discontinue writing such coverage worldwide. Most other carriers have since left the market or increased their rates, leaving many doctors unisured or forced to pay significantly higher premiums.

Members of the medical community estimated the situation could cause up to 400 physicians to leave the state or retire from practice. To encourage doctors to stay, Gov. Kenny Guinn in March used $250,000 from the state's general fund to create an essential insurance association that was later named the Medical Liability Association of Nevada.

MLAN began accepting applications April 15 and had received requests to insure 126 doctors as of Tuesday, Molasky-Arman said. Because it was created to provide temporary medical liability insurance that was not otherwise readily available in the voluntary market, however, the addition of new private carriers could remove the need for the state-sponsored association.

Any company that acquired MLAN would have to reimburse the state the $250,000 it allocated to launch MLAN, Molasky-Arman said. In addition, a suitor would also have to take on policies written by the association at the time of transfer, as well as provide coverage for prior acts committed since a doctor enrolled with MLAN.

"We're going to do whatever we can to maintain the interests of those doctors who have applied and been bound by MLAN," Molasky-Arman said. "If MLAN's business were transferred, our first priority would be ensuring it causes as little disruption as possible to its current policyholders."