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West Virginia doctors who say they pay too much for medical


malpractice coverage should count their blessings - they could be


living in Detroit, Fort Lauderdale or El Paso, where obstetricians pay


well over $100,000 a year for insurance.



Even so, a large rate hike by the state's largest malpractice


insurer last summer resulted in increased premium costs for many West


Virginia doctors.



"Malpractice insurance rates in West Virginia are skyrocketing,"


  • aid Evan Jenkins, director of the West Virginia State Medical

    Association. "The increases have only worsened a tough financial situation


    doctors are already in."



    Before the increase took effect, annual costs for medical


    malpractice insurance ranged from $10,000 to $80,000 for some


  • pecialties such as gynecology or neurosurgery. Annual premiums ranged

    between about $13,000 a year and $50,000 a year for other specialties


    including family practice, orthopedic surgery and radiology.



    Surgeons of all types pay more for insurance because of the greater


    risk of harm to the patient.



    "I know one surgeon who was paying $98,000 after the rate increase,"


  • aid Wheeling plastic surgeon Phil Polack.


    Medical Assurance of West Virginia, which received a 35 percent rate


    hike, insures about 1,000 of the state's 6,266 doctors. The company is


    endorsed by the state Medical Association, which has about 1,700 active


    physician members. Medical Assurance began doing business in the state in





    Its parent company, Medical Assurance Inc., is based in Birmingham,


    Ala. The company also insures doctors in Alabama and Ohio.



    Medical Assurance is one of two insurers sharing half the state's


    business. The second-largest company is the American Continental Insurance


    Co., or AIG.



    AIG has about 25 percent of the malpractice insurance market


  • hare in the state, according to the Insurance Commission. The commission

    granted AIG an average 55 percent increase in 1999.



    The next largest company is St. Paul Fire and Marine Insurance Co., or


    MICO. MICO has about 10 percent of the state's malpractice business


    and imposed a 15 percent rate increase on its customers in 1999.



    Several dozen smaller insurers write the remainder of premiums. One has


    about 5 percent, with the rest carrying only minimal numbers.



    West Virginia doctors in most specialties pay higher malpractice


    rates than specialists in other states, according to an industry


    organization that tracks rates.



    "I don't like to do state comparisons based on averages - the rates can


    vary so much from one doctor to another based on the doctor's


    malpractice history," said Carol Golin, editor of Medical Liability


    Monitor, a Chicago-based publication that tracks rates for


    malpractice insurance.



    "But it does look like West Virginia had the highest rate increase of


    any state last year."



    The Medical Liability Monitor shows on average, an internist in West


    Virginia pays $12,549 a year. The national average is $10,068.



    Although it's apparent that insurance rates for doctors have risen


    dramatically in the past two years, reasons for the increase are not





    Doctors representing the Medical Association are quick to blame what


    they call the "malpractice climate" in the state.



    "Our judicial system in this state makes it easy for people to sue


    doctors," Jenkins said.



    Medical Assurance officials also point to West Virginia as being


    different from other states in how the court system responds to medical


    malpractice cases.



    "In general, we see West Virginia as being a more costly and dangerous


    place for insurance than other states," said Frank O'Neil, Medical


    Assurance vice president for marketing.



    However, compared to other states and the District of Columbia, West


    Virginia ranked in the lower one-third in total award payments to


    plaintiffs between 1990 and 1999.



    The state ranked 35th in 1999, with No. 1 having the highest amount and


    No. 51 the lowest, according to records compiled by the National


    Practitioner Data Bank of the U.S. Department of Health and Human


    Resources. Washington, D.C., has the highest median award, with


    California, Idaho and Montana the lowest.



    "We justified asking for a rate increase based on the increased


    frequency and amount of awards we've seen in the state," O'Neil said.



    Medical malpractice claims resolved between 1993 and 2000


    paint a different picture. Frequency of claims, as well as the


    amount of awards, have not increased in the past eight years. In fact,


    they have decreased.



    The Gazette examined medical malpractice records on file with


    the state Board of Medicine. State law requires providers to report all


    malpractice claims to the board and this information is





    The number of malpractice claims dropped from 321 in 1995


    to 301 in 1999. The average for the eight-year period remained steady at


    about 300. These numbers include settlements, jury verdicts for the doctor


    and patient, dismissed cases and cases that never made it to court.



    In 1999, the Legislature amended the law, saying dismissed cases no


    longer needed to be reported to the Board of Medicine. This law went into


    effect in mid-1999, though more than 100 dismissals have been reported


  • ince then.


    Total amount of settlements and judgments also went down. In 1995,


    $48.2 million was paid to plaintiffs, compared with $32.3 million in 2000.


    The highest total amount paid between 1995 and 2000 was $50.7 million in





    To justify a rate increase on doctors, insurance companies must show


    the state insurance commission that they are losing money.



    Hanley Clark was insurance commissioner when the agency approved the 35


    percent overall rate hike for Medical Assurance. He says Medical Assurance


    gave him a profitability report showing the company was losing money in


    the state.



    "My job is to make sure the state is adequately insured," said Clark,


    who left his post Jan. 16, when Gov. Bob Wise appointed a new





    "Part of that mission is helping insurance companies remain solvent."



    Medical Assurance's statements show the amount spent on claims


    is increasing, but they are also bringing in a greater amount from the





    For the period between 1995 and 1999, West Virginia doctors paid the


    company $71.8 million for malpractice insurance. For the same


    period the company paid out $44.2 million in settlements and jury


    verdicts. That amount includes defense costs, such as attorneys' fees and


    the costs of expert witnesses.



    "Even if cases don't go to trial, we still spend tens of thousands of


    dollars," O'Neil said. "Defense lawyers are very costly."



    According to the Insurance Commission, Medical Assurance spent $12.6


    million in 1999 to resolve medical malpractice claims. Yet,


    only $6.3 million was paid out in settlements and jury awards to


    plaintiffs, according to Board of Medicine records. The other $6.3 million


    went toward defense costs. "No administrative costs are included in those


    loss figures, only our losses in terms of settlements, plaintiff's


    verdicts and defense costs," O'Neil said.



    Even more dramatic are numbers from 1995, the first year Medical


    Assurance was in the state. A report filed with the insurance commission


  • hows the company paid $8.6 million to resolve claims that year.

    Yet, claims data from the Board of Medicine showed the company paid


    only $5,000 to plaintiffs.



    The story is the same in 1996, when the company spent $8.6 million with


    only $814,500 going to plaintiffs.



    During 1997 and 1998 a greater percentage went to plaintiffs, with $2.7


    million out of $5.8 million in 1997, and $5.7 million out of $8.4 in 1998,


    paid in settlements and jury verdicts.



    In the company's 1999 annual report, president and CEO A. Derrill Crowe


    boasts that Medical Assurance leads the industry in the amount it spends


    defending claims, and admits it may "seem extravagant."



    O'Neil argues that a rate increase was necessary because


    malpractice insurers must set aside extra money because


    claims often take years to be resolved, and no one can predict how


    much those claims will cost. As of Dec. 31, Medical Assurance had


    $86 million in reserves to pay for future suits, he said.



    According to Insurance Commission records showing the company's loss


    record between 1995 and 1999, Medical Assurance has enough money in


    reserves right now to cover claims for at least the next five years


    - even if it doesn't take another penny from doctors.



    Last week at a meeting with health care providers, new insurance


    commissioner Jane Cline promised to review how her agency grants


    permission for medical malpractice rate increases.



    "The commission has been at fault in not reporting to the Legislature


    on the health of the malpractice climate," she said. "We want


    better review of rate filings and a better system to approve of rate


    increases before they are enacted."



    "The Price of Practice" continues Tuesday in The Charleston Gazette


    with a look at some of the more damaging cases involving medical


    malpractice, and what one state has done to deal with its own


    malpractice debate.



    To contact staff writer Martha Leonard, use e-mail or call 348-1254.




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