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New Study Leads State Attorneys General and Insurance Commissioner to Strongly Challenge Insurance Industry's Price-Gouging of Doctors: Group

Posted on: Thursday, 7 July 2005, 15:01 CDT

NEW YORK, July 7 /U.S. Newswire/ -- In response to a new study released today by several national consumer organizations titled Falling Claims and Rising Premiums in the Medical Malpractice Insurance Industry, two state Attorneys General and one state Insurance Commissioner responded with strong statements condemning the actions by insurers to dramatically raise insurance rates for doctors while claims are dropping.

"The numbers underscore the need for much tougher, more aggressive oversight to prevent and punish profiteering," Connecticut Attorney General Richard Blumenthal said. "Federal and state regulators should thoroughly scrutinize recent rate increases and take appropriate corrective action. Affordable medical malpractice insurance is critical to public health. Expensive insurance rates become a matter of life and death when they drive doctors out of business - as is happening in Connecticut and nationwide. Insurance company greed can be hazardous to our health."

"The data in the Annual Statements filed under oath with state insurance departments, which this Report discloses, call into question much of what the medical malpractice insurance industry has been saying publicly during the past several years," said Missouri Attorney General Jay Nixon. "There is no excuse for malpractice insurers doubling their rates while their claims payments decrease."

Michigan Office of Financial and Insurance Services Commissioner Linda A. Watters said, "We are definitely disturbed by the numbers in this report, which offers evidence that doctors may be paying excessive premiums. In the market competition study that we recently issued, we considered loss ratios below 50 percent as patently excessive. If these carriers truly have loss ratios that that are this low and yet they are still increasing rates, one has to wonder if they're gouging."

Medical malpractice insurance rates for doctors have skyrocketed in recent years even though, as this study now confirms, claim payments are down. These findings suggest that doctors have been price-gouged for several years as insurance industry profits have ballooned to unprecedented levels. AIG, under investigation by state and federal authorities for its business practices, and HCI, a subsidiary of HCA, the largest for-profit hospital chain, are among the worst offenders.

Falling Claims and Rising Premiums in the Medical Malpractice Insurance Industry's conclusions are based upon an examination, for the first time, of statements supplied under oath to state insurance departments by the nation's top medical malpractice insurers. The study reveals that the insurance industry has been overcharging doctors significantly despite the fact that their claims payments, in real terms, have dropped since 2000. Moreover, contrary to the impression they have given the doctors and the general public, the "losses" that medical malpractice insurers predict they will pay in the future - the insurers' purported basis for current rate hikes - are down as well.

Jay Angoff, author of the study, former State of Missouri Insurance Commissioner and a renowned expert on insurance issues, said, "The leading malpractice insurers' Annual Statements indicate that they have been raising their premiums even though both their actual claims payments and their projected future claims payments have been falling. The Annual Statement data thus prove that doctors have been overcharged during the last several years. Those overcharges are obviously bad news for doctors, but they have resulted in good news for investors in the leading pure malpractice insurance stocks, which have doubled during the last three years while the stock market as a whole has remained flat."

Joanne Doroshow, executive director of the Center for Justice & Democracy, which commissioned the report, stated, "To put it bluntly, if you look at what the insurance companies say about why they raise premiums, and then look at the data in this report, the numbers just don't add up. The facts are very simple: medical malpractice payouts are down yet insurance companies have significantly increased premiums. This shows that the entire campaign to limit liability for doctors over the last several years by capping compensation to injured patients has been a fraud, and that based on these data, insurers must know that it has been a fraud."

The following companies are examined in the report: Lexington Insurance Company; GE Medical Protective Company; The Doctors Company; ISMIE Mutual Insurance Company; Health Care Indemnity, Inc.; Mag Mutual Insurance Company; Medical Assurance Company; ProMutual Group; First Professional Insurance Company; State Volunteer Mutual Insurance Company; Norcal Mutual Insurance Company; ProNational Insurance Company; Continental Casualty Company; American Physicians Capital, Inc.; and Evanston Insurance Co.

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For more information and a copy of the study, contact the Center for Justice & Democracy, http://centerjd.org .

http://www.usnewswire.com

Source: U.S. Newswire

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