Even though passage of tort reform legislation last fall offered some relief to insurance companies covering Mississippi physicians, the medical malpractice insurance crisis is far from over.
Other than eligible, non-admitted surplus lines companies, the three companies writing medical malpractice insurance for Mississippi physicians — Medical Assurance Company of Mississippi (MACM), The Medical Protective Company, and The Doctors’ Company — have placed a moratorium on writing new policies. The only exception is for physicians who join a clinic that is already covered.
“Most companies are taking a wait-and-see attitude to see if tort reform makes it through the challenge of the courts,” said Mississippi Insurance Commissioner George Dale. “MACM met with us a few weeks ago and said they’ve continued to lose a considerable amount of money and that they would have to have a moratorium on writing new policies. We sent letters to the others, begging them to write over here. The only one who responded positively was Medical Protective Company, also known as Pro Sure, in Birmingham, Ala. They said they were delighted that Mississippi is attempting to do some things that will be helpful, but they didn’t say they were going to write more policies.”
In a Jan. 3 report on affordability and availability of medical malpractice insurance in Mississippi, authorized by the Legislature in the last special session of 2002, the state department of insurance surveyed 5,025 physicians. Of the 2,178 physicians who responded, only 2% did not have medical malpractice insurance, up one percent from 2001. Other highlights from the survey:
• The cost of premiums are substantially increasing annually, with 54% of responding physicians claiming increases of 26% to 50% in 2002, and 31% receiving an increase of more than 50%. Many physicians have received notification that their premiums will increase substantially this year.
• One-third of responding physicians have had a claim filed against them within the last three years. Of those, 76% had one or two claims. As a result, their premiums either increased significantly or their coverage was not renewed.
• Nearly 20% of physicians who obtained or retained insurance were required by insurance carriers to reduce their exposure to risk by limiting procedures and patients, and restricting their practice in certain high risk specialties; and
• As a result of the medical malpractice insurance crisis, 79 physicians admitted they considered leaving Mississippi; 10 physicians relocated out of state last year. About 30 physicians were considering retirement; 26 physicians retired in 2002.
Again, respondents represent less than half of physicians who were sent surveys.
“The report said about what I thought it would,” said Dale. “It’s an issue of affordability more than it is availability. The scary part about it is, even with the availability issue, a lot of doctors are being written by substandard companies — those not regulated by our department and we don’t know that much about their financial condition — as a mechanism to satisfy the fact that they have insurance. This problem is a long way from being over. If a young person had gone, say, to the University of Iowa to get a specialist degree and returned to Prentiss or Monticello to practice medicine, I don’t know who he’d get insurance with.”
Health care professionals have their eye on Senate Bill 2291, which would authorize Dale to contract with an insurance company to provide medical malpractice insurance benefits for physicians who provide services to Medicaid and Medicare beneficiaries, and to cover the costs of coverage from the health care expendable fund and for administration of the plan. Introduced by state senator Robert L. Johnson III (D-Natchez), the legislation would direct the state treasurer to transfer $10 million of the tobacco settlement installment payment in 2003 and to authorize additional tobacco money on an annual basis.
“I don’t really know how likely the bill is to pass,” said Dale, who added that SB 2291 did not originate from his office. “My idea of a pool is to set it up on a temporary basis with a sunset provision, and not to use any taxpayer or tobacco money. It should stand on its own. The governor’s plan was a little different. He wanted to use tobacco money and that sort of stuff. We have not introduced the pool. I visited with the governor a couple of weeks ago and told him I wasn’t necessarily interested, but a pool may be necessary because we have hospitals and doctors facing the possibility of coverage problems.”
Calls to the attorney general’s office and the governor’s office were not returned by press time for comment on Senate Bill 2291.
Charles M. “Chuck” Dunn III, COO and vice president of claims for the Medical Assurance Company of Mississippi (MACM), said he wasn’t familiar with SB 2291. “I need to study it before I make a comment,” he said.
Dunn said lifting the moratorium on writing new policies would depend on a number of factors. “For one thing, we’re completely out of physical space for the volume of paper we’re receiving on a daily basis. We don’t have any physical space to put more claims professionals. We have 37 employees and that’s it. We didn’t build a structure to accommodate the volume of litigation that’s taken place, particularly in November and December.
“On average, each one of our physicians will have multiple cases, which brings us back to a difficult situation from a physical facility and personnel standpoint. We also have to make sure everyone is represented on all mass tort litigation. The volume almost precludes us from doing everything else we need to do, from a physical standpoint.”
MACM is owned, governed and operated by the Mississippi physicians who are its exclusive policyholders, and was created under special legislation authorizing formation of a non-profit medical liability insurance corporation that would be exempt from a portion of the state’s insurance regulatory laws and state income tax.
Reciprocal of America, which insures hospitals, recently took action to reinforce its capital and surplus position. On Jan. 3, ROA’s executive committee approved a plan to raise up to $70 million — nearly $22 million in Mississippi — from its hospital members. The capital will be used to offset losses from medical malpractice claims and to strengthen ROA’s financial position.
“In 1977, the hospitals of Virginia formed this reciprocal in the midst of a crisis and we are facing another one right now,” said Tom Smith, executive vice president of ROA. “Back then, we banded together to solve the problem and are calling on many of those same people and others in Alabama and Mississippi to step up to the plate and do it again.”
Larry Bourne, Mississippi director for The Reciprocal Group, said the company has been under a moratorium since January 2002. (DIR, the second largest medical malpractice insurer in Mississippi, covering 535 physicians, is a subsidiary of The Reciprocal Group; ROA, which covers hospitals, is also a subsidiary of The Reciprocal Group.) He stopped short of saying the company would pull out of the state if the capital call could not be met.
“It’s not our intention to do that,” said Bourne. “Reciprocal is committed to Mississippi. Obviously, the capital call is a critical issue. I don’t know the full implications if it is not met. Since we are domiciled in the state of Virginia, the Virginia insurance department might ultimately make the decision.”
Mississippi may have waited too late to pass tort reform legislation, said Bourne.
“Most of the med mal companies saw results be
to deteriorate in 1998,” he said. “Tort reform was really needed as early as 2000. Obviously, it would’ve been nice to have it passed during the regular session of 2001 because a lot of companies have taken