Doctors’ insurance has paid $86 million in claims in 3 years

Stacy J. Willis

Tuesday, May 14, 2002 | 11:04 a.m.

Insurance companies have paid more than $86 million in medical malpractice claims in Nevada in the last three years -- the majority of which came from settlements, not jury verdicts, insurance division records show.

The companies held only about one third that amount in reserves for their insured physicians in the state -- and subsequently operated at a loss.

But as legislators tried to unfurl the state's medical malpractice insurance dilemma by taking their first look at the Division of Insurance's claims database, they learned that the state agency charged with regulating the industry calls these numbers -- its own numbers -- unreliable.

"In the process of cleaning up the data ... we found a significant number of errors," an Insurance Division staff member representing Commissioner Alice Molasky-Arman told the Legislative Subcommittee to Study Medical Malpractice on Monday. "We determined that our information was very incomplete."

The committee is charged with resolving a situation that has southern Nevada's obstetricians refusing new patients, pregnant women calling the governor's office, and national political organizations such as the American Medical Association sending officers to lobby in Nevada.

Among the information the division couldn't offer to the subcommittee was the portion of claims paid for pain and suffering, or non-economic damages -- a key issue in a battle that has pitted doctors against plaintiffs' attorneys.

Doctors and insurance companies generally say that the increasing insurance rates would level off if the state enacted limits on pain-and-suffering damages; plaintiffs' attorneys say jury awards are not the root problem.

"It appears that the vast majority (of claims) are settled, not a jury verdict," Assembly Majority Leader Barbara Buckley, D-Las Vegas, said.

According to the insurance division, which relies on insurance companies to self-report, between 1999 and 2001 companies paid $86.9 million in claims, $73 million of which was paid not in jury awards but in settlements.

The dollar amount of claims that were paid in settlements grew between 1999 and 2001 from $16 million to $32 million, while the dollar amount of jury awards stayed below $10 million each year.

By contrast, companies collectively held about $33 million in initial reserves to cover Nevada's $86.9 million in claims.

Joel Whitcraft, senior vice president of the Medical Protective Company, an insurer that has operated in Nevada since 2000, said that while Nevada has had only 22 plaintiffs verdicts in medical malpractice verdicts in the last five years, a limited number of high awards still affects the overall amount of claims.

"A few (high) verdicts have a tremendous influence on the ability to settle -- it dictates the benchmark for settlements," he said.

After a day of testimony from doctors, lawyers, representatives of insurance companies, and two victims of medical malpractice, the committee took no action. It is expected to continue examining the issue in coming months and make a full report to the Legislature.

In addition to capping non-economic damages, the committee is considering other remedies such as capping attorneys' fees, establishing a doctor-backed fund to help cover claims and enacting a 2-year deadline to settle a case -- among other possibilities.

Bill Bradley, who is representing the Nevada Trial Lawyers Association, and Larry Matheis, executive director of the Nevada State Medical Association, both said they would support changes to Nevada's Medical Legal Screening Panel, a panel of three doctors and three attorneys who review each medical malpractice case before it may be filed in court.

The panel, which was intended to weed out frivolous cases, reviews charges of malpractice and decides whether they are meritorious. If it is not meritorious, plaintiffs may still proceed to court, but would have to pay both sides of attorneys' fees if they lost.

Matheis said the physician community doesn't trust that the panel adequately weeds out non-meritorious cases.

Lawmakers wanted to know what portion of those deemed non-meritorious proceeded to settle for claims amounts, but the Insurance Division doesn't track those numbers, Molasky-Arman said.

"We are trying to find out what's good and bad about this and it's hard for me to judge that based on a lack of information," Sen. Randolph Townsend,R-Washoe said. "If all this (panel) is doing is slowing the system down, if it's not helping sort through (the cases), well we can't make that determination without real facts."

The study committee added to their list of possible policy recommendations to beef up the Insurance Division -- not only to keep better tabs on statistical information, but also to better monitor the Medical Legal Screening Panel.