Doctors to get refunds in insurance settlement

Monday, April 12, 2004 | 9:13 a.m.

CARSON CITY -- A $10 million state complaint against St. Paul Insurance Cos., the company accused of touching off the medical malpractice crisis in Nevada, is being settled for $1 million.

A hearing had been scheduled to begin today on the complaint filed by the state attorney general's office on behalf of the state Insurance Division against the company, but the settlement was announced Friday.

Under the terms, about $900,000 will be refunded to 164 physicians in Clark County whose policies were renewed during the months of July and August 2001.

Andrea Wood, communications manager for St. Paul, said Friday the company was pleased with the settlement and the finding by the Insurance Division that the company did nothing wrong in withdrawing from the medical malpractice market both in Nevada and nationally in 2002.

Wood said the refund is being made because of a misunderstanding between the company and the Insurance Division. She said it would be made within 60 days.

Peggy Dehl, a spokeswoman for the Insurance Division, said there was a disagreement over a 25 percent surcharge the company imposed on Clark County doctors when they renewed their policies in those two months in 2001.

Dehl said that if fines were imposed in a disciplinary hearing, all of the money would have gone to the state and there would not have been any refunds to the doctors, as outlined in the settlement.

As part of the settlement, St. Paul agreed to pay an administrative assessment of $100,000 to the state.

Gov. Kenny Guinn said: "I would like to commend Nevada Insurance Commissioner Alice Molasky-Arman for her effort, which alleviates a concern that I have shared with our doctors in Nevada.

"This settlement represents a fair compromise to an impasse which could have potentially turned into a lengthy court battle without resulting in any monies being refunded to policyholders.

"The settlement will result in immediate refunds to Nevada's physicians, which could not have been accomplished through a potentially lengthy and costly legal process."

The battle between the state and St. Paul had already been to the Nevada Supreme Court on issues in advance of the scheduled state hearing.

Among the allegations was that the company unlawfully collected premiums to provide "tail coverage" for physicians against any allegations of past malpractices. The state maintained the tail coverage was not provided.