A medical malpractice insurers group said that two consumergroups' research reports questioning the industry explanation forprice increases had been examined by studies they funded and werefound to be flawed.

Consumer groups that were mentioned said their interpretationand projection of data might be questioned but there was no factualerror

The Physician Insurers Association of America, pointed to astudy they supported by actuaries James Hurley and Gail Tverberg ofTillinghast Towers Perrin, which they said countered a report byAmericans for Insurance Reform.

PIAA said, contrary to AIR's report, the Tillinghast study foundthat past medical liability insurance rate increases reflect theclaims experience of insurers and that recent tort reforms aimed atreducing lawsuits and limiting awards have had a material effect onrates.

The Tillinghast report critiqued the AIR study entitledInsurance 'Crisis' Officially Over — Medical Malpractice Rates HaveBeen Stable for a Year, written by J. Robert Hunter insurancedirector for Consumer Federation of America and Joanne Doroshow,president and executive director of the Center for Justice andDemocracy.

AIR concluded that insurance rates are no longer rising, andthat state tort reforms have had little effect.

PIAA said the while the Tillinghast study agreed that rates mayhave flattened for the time being, it concludes that current ratesfor physicians may be unsustainable in the long run and that a lackof new entrants into the malpractice insurance market suggests thatthe current rate level may be too low to compensate for underlyingrisks.

Mr. Hunter said that rather than criticism he saw analysis ofhis report as registering a difference in interpretation. Theemphasis of his study, he said, was that the coverage scarcity inmalpractice insurance had ended

“My point was the crisis is over. They [Tillinghast] agree withthat. I'm saying we're now in soft market and should see softpricing for a whole decade. They don't agree and say states withtort reforms will do well and those without reforms won't.

“I don't think so.” He said historically the trend has been therates in states with and without tort reform measures rise and fallat the same pace. “You might see somewhat better rates in tortstates,” he conceded, but overall in the next decade Mr. Huntersaid he believes rates will be down in all states.

The second critique mentioned by PIAA was authored by Robert E.Hoyt, and Lawrence S. Powell titled “Pricing and ReservingPractices in Medical Malpractice Insurance.” That study examined aDecember report issued by the Foundation for Taxpayer and ConsumerRights entitled, “False Accounting: How Medical MalpracticeInsurance Companies Inflate Losses to Justify Sudden Surges inRates and Tort Reform.”

PIAA said Harvey Rosenfield, consumer activist and author of“False Accounting,” had “analyzed selective data” to conclude thatmedical malpractice insurers overstated their loss projections by$15 billion between 1995 and 2003.

Hoyt and Powell did find that found losses for this period areactually understated by $4.3 billion, with actual payments in 1998and 1999 already exceeding initial loss estimates.

Mr. Rosenfield said the Hoyt and Powell findings were anacknowledgment that industry “reserving practices were wayoff.”

Lawrence Smarr, PIAA president said “The consumer groups'reports have been intentionally crafted in an attempt to foolCongress and the media into believing that the current medicalliability system works. But the system best serves lawyers andleaves real victims waiting years for compensation.”

The PIAA studies, according to Mr. Smarr, point out “grossmanipulation and blatant misrepresentation employed by thesepersonal injury lawyer-oriented groups in order to pursue theirself-serving political agenda,”

PIAA reports are online at: http://www.piaa.us/.

The PIAA said its member companies insure over 60 percent ofAmerica's private practicing physicians as well as dentists,hospitals, and other healthcare providers.