Controversy As NAIC Votes Again On Med Mal

By Michael Ha

NU Online News Service, June 14, 1:28 p.m. EDT, SanFrancisco?Regulators are set to vote again tomorrow on thefinal draft of a controversial report on medical malpracticeinsurance, which suggests in part that caps should be put on juryawards.[@@]

The report, which could be formally adopted then, hasencountered vocal opposition from a number of consumeradvocates.

Its language was previously adopted after an electronic vote bymembers of the Market Conditions Working Group. But another votewas scheduled after a protest by some consumer advocates whocomplained of being left out of the discussion.

A voice vote will be used when the report is considered at asession of the Property and Casualty Insurance (C) Committee.

The report examined the troubled medical malpractice insurancemarketplace and basically concluded that it's the higher claimscosts and increased litigation?not the loss of investment incomeand the need to make up the loss?that have led insurers to raisepremium rates.

It also mentions some doctors leaving certain states or evenquitting their profession because of an inability to obtaininsurance. The report also alludes that putting caps onnon-economic damages in jury awards would be the most effective wayto stabilize the marketplace.

When the report was discussed this spring during the NAICmeeting in New York, several consumer advocates pummeled itsfindings, slamming the report as having hardly any substantialinformation on insurance topics such as loss control.

Some also criticized the report for glossing over medicalmalpractice insurers' lackluster investment income, which a numberof consumer advocates argued has been a major contributing factorin soaring premium rates.

At this latest NAIC session the issue has become even moreheated. One reason for the increased ire from consumer advocates isthe use of the electronic voting process. "Consumer groups feellike they didn't have the opportunity to discuss it fully," saidconsumer advocate Birny Birnbaum, the executive director for theCenter for Economic Justice in Austin, Texas.

Mr. Birnbaum added, "I don't understand why they [regulators]are so intent on ramming this report through." He complained thatthe electronic voting on the final draft didn't give him anyopportunity to interact with regulators before they took avote.

"In the latest version that I saw, pretty much everything we hadsuggested was rejected," Mr. Birnbaum said. "The executive summaryfailed on taking a more balanced view. The focus on caps onnon-economic damages as the most effective tool to address rates?wepointed out there is no evidence to support that."

From the regulator's perspective, however, it's time to adoptthe report and there will be opportunities to make any neededchanges in future updates.

"So we will adopt it Tuesday, and we will put it for exposure infront of the whole organization for adoption sometime in thefuture," said Jose Montemayor, Texas insurance commissioner and thechairman of the Market Conditions Working Group.

"We are at that window, where you have to publish what you have,and in the future update it again," the commissioner said. "It's agood scholarly report, and we will continue to update it in thefuture." Next, the Market Conditions Working Group and CommissionerMontemayor will turn their attention to homeowners, and the groupcould soon begin working on a new study examininghomeowners/property insurance.