January 2002 • Volume 8 • Number 1
St. Paul drops policies
Availability of Malpractice coverage threatenedBY JODY McAULAY GLOOR
The St. Paul Cos. announced Dec. 12 that it's getting out of the medical liability insurance business worldwide. The company is the second largest U.S. provider of such insurance.
Many cars display this language in West Virginia, a state in the midst of a medical liability crisis.Medical liability policies for the 40,000 U.S. physicians now insured by St. Paul will not be renewed when they expire. Earlier this year, the company sent nonrenewal notices to covered obstetricians, general surgeons and emergency room physicians.
St. Paul opted to leave the medical liability business because of the financial burden of ever-increasing claims. Last year, the company collected premiums of about $530 million for medical malpractice policies, according to a Dec. 12 press release. However, St. Paul forecasts an underwriting loss in 2001 of about $940 million.
Recently, the company limited coverage for Georgia physicians to a surplus lines-basis only, a company spokesman said Dec. 4. These policies, he said, "allow physicians to customize coverage to fit their practices, and the company can charge an adequate premium." Now, those policies also will be dropped at renewal time.
"Adequate premiums" were skyrocketing in other states as well, driving practices out of business, said Thomas Stevens, president of Government Relations Specialists in Charleston, W.Va. An expert on medical liability issues, Stevens is the lobbyist for the West Virginia AFP.
"Physicians already are closing their offices because they can't afford medical liability insurance," Stevens told attendees at the AAFP Legislative Conference, held Nov. 16 17 in Bernalillo, N.M.
"Now that St. Paul has stopped writing policies, only a handful of insurers will be left, which will drive costs up further," he said Dec. 12.
"Just look at the fate of physicians practicing obstetrics in the Delta," said FP Randy Easterling, M.D., of Vicksburg, Miss., at the conference. Rising liability costs are causing doctors to move out of the region, leaving thousands of patients without obstetric care.
"Even industries recruited into Mississippi are very concerned that adequate health care can't be provided in that area," Easterling said. And many companies may pull out, adversely affecting the entire state's economy.
Before the Dec. 12 announcement, St. Paul sent nonrenewal notices to every covered physician in West Virginia. St. Paul's actions and excessive premiums prompted a medical liability crisis in the state, Stevens said. Physicians are struggling to find coverage elsewhere and keep their practices open. "In fact, one of the most popular bumper stickers in the state reads, 'Sick? Call a trial lawyer!'"
In response, the West Virginia House of Delegates passed a bill Nov. 27 that would create a temporary medical liability insurance plan operated by the state. If similar legislation is approved by the state Senate, an estimated 200 300 physicians will have alternative malpractice insurance.
Stevens believes the only way to deal with this crisis nationwide is to advocate tort reform. Many attending the legislative conference agreed.
"We need to be more proactive," said Timothy Alford, M.D., of Kosciusko, Miss., who serves on the AAFP Commission on Legislation and Governmental Affairs. "The blood that has to be spilled to get reform in this area is sometimes fatal when doctors leave practice."
Effective tort reform, Stevens said, must include:
- collateral source rules,
- pretrial screenings and mediation,
- expert witness qualifications and certificates of merit,
- structured settlements and periodic payment of awards,
- elimination of joint lawsuits for multiple defendants,
- limits on damage awards and
- limits on plaintiff attorney fees.
"But even if states enact tort reforms -- and courts don't interfere -- it doesn't mean medical malpractice insurance will be available," Stevens told the crowd. "Politics is not a spectator sport anymore. Get involved in the legislative process."
Tort reform alone won't solve the medical liability problems physicians have faced during the last 200 years, said AAFP Board Chair Richard Roberts, M.D., J.D., of Madison, Wis. In fact, some tort reform actually could raise insurance costs. The problem involves the judicial system as well as insurance companies, physicians and patients.
"Medical liability is a complex and frustrating issue for physicians and patients," he said. "The AAFP remains very concerned about the need to develop a fair and efficient system for resolving malpractice disputes. We will continue to advocate for our members to that end."
Alford called on the Academy to "give members ammunition to take to legislators by measuring this crisis, measuring the outcomes and helping us take action before the next crisis hits."
The Mississippi State Medical Association and Mississippi AFP plan to encourage state lawmakers to introduce a tort reform bill that will "ease the current physician burden" of medical malpractice, said Alford.
FP Report is published by the AAFP News Department.
Copyright © 2002 by American Academy of Family Physicians.
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