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Malpractice Insurer Says It Won't Raise Rates

Posted on: Tuesday, 5 April 2005, 15:00 CDT

Apr. 5--For the first time in six years, the state's largest malpractice insurer said it will not raise doctors' premiums, turning around several years of huge increases that physicians said have driven some colleagues out of Massachusetts.

ProMutual Group, which covers about one-third of the state's doctors, or about 9,000 physicians and other healthcare workers, raised rates an average 11 percent last year, 20 percent in 2003, and 12.5 percent in 2002, leaving certain specialists such as obstetricians paying close to $100,000 annually.

But in a statement posted on its website yesterday, the company said it will keep premiums flat this year, citing "improved financial strength" and new patient safety initiatives that have helped reduce the number of malpractice claims against doctors. New rates take effect July 1.

ProMutual's chairman, Dr. Barry M. Manuel, a surgery professor at Boston University, said a new state law roughly halving the 12 percent interest rate that the company must pay certain patients who receive jury awards also helped reduce the need for premium increases. But he warned that premiums probably will rise again next year.

"This will just prove to be a short respite because severity of claims continues to rise," he said.

Medical malpractice has caught the attention of many state legislatures and of President Bush, who wants to cap damage awards for plaintiffs as a way to curb premium increases. But even as politicians debate various proposals, there still is major disagreement on the causes of the crisis.

Doctors and insurance company executives say premiums have risen because juries are awarding patients more money, which also drives up settlement amounts. Insurers and doctors are pushing legislation to limit the amount juries can award patients for pain and suffering. Massachusetts doctors want additional changes, including standards for expert witnesses, such as requiring physicians to be actively practicing in the specialty on which they are testifying.

But some lawyers, consumer groups, and many Democrats blame the malpractice insurance companies, saying they mismanaged their businesses. Critics argue that insurance companies, which typically invest heavily in the stock market, did not plan for the poor market returns earlier in the decade, and have made up for losses by excessively billing doctors.

These groups want stricter state regulation of the malpractice insurance industry, including public hearings and rate setting, and more aggressive education programs to prevent doctors' medical errors.

"When the stock market goes down, they want rate increases from their doctors," said Andrew Meyer, a malpractice lawyer in Boston. "The relative comeback of the stock market helped ProMutual recoup some of its losses. Plus they are under increased scrutiny after year after year of questionably raising rates. This year they're more sensitive that they shouldn't be raising rates as much as they are."

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Source: The Boston Globe

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