Malpractice Premium Forges Rare Alliance

Hartford Courant (Connecticut)

Gov. M. Jodi Rell Monday ordered a public hearing on rate increases for medical malpractice insurance after doctors, lawyers and the state attorney general earlier in the day called for a hearing on a 90 percent increase.

However, the kind of hearing that Rell and Insurance Commissioner Susan Cogswell agreed on does not go far enough and should not just be for “venting,” Attorney General Richard Blumenthal said.

Doctors and lawyers usually butt heads on malpractice issues. But the Connecticut State Medical Society and Connecticut Trial Lawyers Association Monday both sent letters asking Cogswell for a public hearing on an 89.6 percent rate increase.

Her department approved the increase last year for The Medical Protective Co., and it took effect July 1. The company insures roughly 200 Connecticut doctors, down from 358 at the end of 2003.

Rell directed the Connecticut Insurance Department to hold an “informational hearing,” not a formal one on a specific rate increase. The governor’s office says the hearing would gather ideas for reforms in the coming General Assembly session.

The hearing is designed to bring together various parties to “look for ideas and solutions that can be considered in this legislative session,” said Dennis Schain, a spokesman for Rell.

“The governor believes we can get at meaningful information that will help develop policies to bring down rates in the future,” Schain added.

Physicians have complained that high insurance rates have forced some of them to retire early, leave Connecticut or shrink the scope of their practices.

Critics of the rate increases have said they want to “let us know the impact on the health care of Connecticut, and that’s what we’re going to do” in an informational hearing, Cogswell said.

She said the hearing could address three companies’ rate filings, ranging from about 15 percent to 89.6 percent. However, the hearing would not automatically reopen the 89.6 percent increase, Cogswell said.

“If we hear something new and shocking” at the hearing, “certainly we would take that into consideration and see what we would do next,” she said.

The department had already reopened the Medical Protective matter once, hiring an independent actuary last fall who reviewed the rates and found them justified. The department did not grant requests last year for a hearing on the filing.

The Connecticut Trial Lawyers Association hired its own actuary, who still disputes the size of Medical Protective’s increase — and Blumenthal does, too.

“We want a real hearing, not a ‘show’ hearing,” Blumenthal said late Monday after learning of the informational meeting. “It should be about changing policy and reducing rates, and not just venting.” Blumenthal said there should be a formal contested-case hearing in which witnesses can be cross-examined and the company forced to “open its books.” “If it’s just a show-and-tell-type hearing that provides opportunity for rhetoric and speeches,” Blumenthal said, “it won’t accomplish the purpose of forcing the company to justify these humongous rate increases.” The insurance department has also approved a 23.2 percent rate increase, effective Nov. 1, 2004, for ProSelect Insurance Co., which sought 25 percent. A 14.8 percent increase proposed by the Connecticut Medical Insurance Co. is still under review. The department is having independent actuaries review all medical malpractice filings.

The date for the informational hearing has not been set, but Cogswell expects it will be in early February. She voiced frustration that the trial lawyers waited until now to renew their call for a hearing on Medical Protective, and noted “this thing has been on our radar screen for 11 months.” The dispute over Medical Protective’s rates stems from the company’s very low proportion of claim payments to premiums in Connecticut, and high operating profits.

However, the company said its rate increase is based on claim data of competitor Connecticut Medical because its own data are not statistically credible enough. Medical Protective notes it is relatively new to the state and does not have enough policyholders to rely on its own claim experience.

“We stand by the findings of the independent actuary, as does the insurance commissioner, that our rate increase is justified,” John Novaria, a spokesman for Medical Protective, said Monday. The firm is part of GE Insurance Solutions.

The state medical society had not publicly complained about the 89.6 percent rate increase. But Monday the group said it decided to throw its support behind a hearing because of physician concerns, especially after other insurers proposed much smaller premium increases.

Even the California-based Foundation for Taxpayer and Consumer Rights, an advocacy group, praised the coordinated effort by Connecticut doctors and lawyers for a hearing.

“If you want to lower insurance rates, you need to investigate the insurance companies,” said Douglas Heller, the foundation’s executive director.

“By opening the books of the insurers,” Heller said, “it becomes apparent that the companies are gouging doctors around this country.” The foundation challenged Medical Protective’s proposed 29.2 percent rate increase for California last year. The company ended up accepting an 11.8 percent increase there.

The Connecticut Medical Society’s letter, though, told Cogswell it believes a hearing on Medical Protective would “further confirm the work already done by your office to ensure that rates are appropriately set.” A hearing is “prudent,” but the “real solution must address the issues that drive premiums,” the society wrote.