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Actuarial Profession Denounces Medical Malpractice Study

Posted on: Wednesday, 26 October 2005, 18:00 CDT

ROCKVILLE, Md., Oct. 26 /PRNewswire/ -- In an unprecedented move, the American Academy of Actuaries (AAA) has openly denounced a July 2005 study completed by Jay Angoff and commissioned by the Center for Justice & Democracy (CJD) as "incomplete, actuarially unsound, and misleading."

Angoff incorrectly concluded that the medical malpractice crisis was due to insurer price gouging and not to the generally accepted conclusion that claim costs are sharply rising.

While the AAA Medical Malpractice Subcommittee does not usually comment on individual medical liability studies, it made an exception because of the public attention the Angoff study has received, the apparent credibility ascribed to its conclusions, and the poor quality of the analysis. The subcommittee felt comments warning readers and potential users of the report were necessary.

The Angoff study was co-released by CJD, Alliance for Justice, Consumer Federation of America (CFA), Public Citizen, USAction, and U.S. PIRG. J. Robert Hunter, Director of Insurance for CFA and actuary for CJD, has perpetuated acceptance of this misleading study by stating, "Doctors and consumers deserve to see the facts behind the true crisis, which is that insurance companies are price-gouging their doctors, not an explosion in claims."

"This justifies everything we've said about Angoff's study and cuts through the propaganda used by these consumer groups to fool the public," said Larry Smarr, president of the Physician Insurers Association of America. "The fact that the Academy does not usually comment on individual studies only emphasizes what an egregious act of statistical distortion Mr. Angoff's analysis is. Unfortunately, newspapers, including The New York Times, have represented the study as truthful."

The AAA analysis points out that the report: * contains misleading and inappropriate comparisons of financial data presented in insurance company Annual Financial Statements; * does not include all costs associated with providing the insurance product; * does not adjust for growth in insureds over time; * misrepresents and misuses Risk Based Capital (RBC); * contains other mischaracterizations and misinterpretations.

These "consumer groups" have refused to acknowledge the growing bevy of experts, who have all roundly refuted Angoff's methodology and results. In fact, CJD responded to a Towers Perrin rebuttal by stating, "We stand by our Report and numbers," leaving no doubt as to their intentions to mislead and obfuscate the truth.

The PIAA is an association of doctor/provider owned and/or operated medical liability insurance companies which insure over 60 percent of America's private practicing physicians as well as dentists, hospitals, and other healthcare providers.

Available Topic Expert(s): For information on the listed expert(s), click appropriate link. Lawrence E. Smarr http://profnet.prnewswire.com/ud_public.jsp?userid=324756

Physician Insurers Association of America

CONTACT: Lisa Cole, PIAA Communications Director, +1-301-947-9000, orlcole@piaa.us

Web site: http://www.thepiaa.org/

Source: PRNewswire

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