Malpractice 'Crisis' Over?

AIR said it used recent CIAB market survey data showing the average rate hike for doctors over the past six months has been 0 percent. This is following similar results for the last quarter of 2004, which saw rates rising only 3 percent at the end of that year. By comparison, rates jumped 63 percent during the same quarter of 2002.

Joanne Doroshow, AIR spokesperson and executive director of the Center for Justice & Democracy, said: "Consumer rights organizations have long maintained that the 'crisis' of skyrocketing insurance rates for doctors and other policyholders would end when the insurance investment cycle stabilized, and that this would occur whether or not so-called tort 'reform' laws were enacted. Insurance industry data now unmistakably confirms this prediction."

J. Robert Hunter, Director of Insurance for the Consumer Federation of America, said: "We are now witnessing the wholesale collapse of insurance rates, including medical malpractice rates. The end of the 'hard market' of sharp rate increases, less competition and cutbacks in coverage has occurred, and a 'soft market' is now fully in place."

"The hard phase of the insurance cycle clobbers American businesses and professions every 10-to-15 years," said Mr. Hunter. "Although these hard markets last only about two-to-three years, they can no longer be tolerated."

He said state regulators "must enforce the rating laws in order to end the boom and bust swing from illegal overpricing, such as the rates some policyholders have been asked to pay today, to illegal and inadequate underpricing, which will be seen when the market softens too much later in the cycle.

"Fortunately, the hard market price jump is behind us and we are now entering the softer market, so legislators have a decade or so to grapple with how best to do this before the next hard market hits the nation. And there is now clearly no need to rush into quick legislative fixes, such as legal limits on patients' rights."

CIAB said AIR's use of data from its quarterly commercial market surveys had been used "to justify a predetermined conclusion."

"This is clearly a case where Americans for Insurance Reform decided they wanted to declare that there were no longer any problems getting medical malpractice insurance, and then they manipulated numbers to support their agenda," said Ken A. Crerar, CIAB president.

CIAB said the latest survey, which covered the fourth quarter 2005, showed a slight increase in premiums for medical malpractice insurance renewals, averaging about .6 percent, according to an analysis of its data by Lehmann Brothers Equity Research. The survey for the third quarter of 2005 showed that the average medical malpractice account renewal also held steady.

"However, to interpret that data to mean that the 'crisis' is over is a gross misrepresentation of the situation," Mr. Crerar said. "First of all, having rates stabilize for one or two quarters doesn't mean those rates have gone down. It only means that they have not gone up any farther. It is like saying that just because gasoline costs $2.50 a gallon today, down from $3 a gallon last year, we don't have an energy crisis, and gas is cheap."

Mr. Crerar said in addition to the faulty conclusions reached in the press release, he strongly objects to the manipulation of CIAB survey data and the publication of false numbers, accrediting them to CIAB's surveys.

He noted that the AIR announcement at one point uses an "average" rate increase of 3 percent, reported in the final quarter 2004 CIAB survey, and compares it with a supposed increase in rates of 63 percent during the fourth quarter of 2002. However, Mr. Crerar said the 2002 figure "is totally false."

"There is no such figure in our fourth quarter 2002 survey," Mr. Crerar said. He said it appeared that AIR added together figures that represent the percentage of accounts experiencing rate increases and are trying to report that as a rate increase. "This is not just sloppy math, it is total incompetence."

CIAB survey findings in fourth quarter of 2002 could be used to show more than 60 percent of the medical malpractice insurance accounts being renewed that quarter experienced a rate increase. "But that is hardly the same as a 60 percent increase in rates, said Mr. Crerar.

"Everything about this AIR news release is wrong, just wrong," he said., adding, "Any respectable consumer advocacy group would realize that this is simply an organization representing the interests of criminal trial lawyers and trying to stymie any meaningful reform for medical malpractice and the tort and liability system."

The AIR report was also slammed by the American Tort Reform Association, spokesperson Gretchen Schaefer said in reaction that, " States that have enacted meaningful medical liability reform are seeing a positive impact on patient access to healthcare because doctors are returning to those states or are being more easily recruited because premiums have dropped.

She said the Center for Justice & Democracy has a "history" of taking the work of other organizations and media and piecing together their own story.

She said they had used a comment that ATRA made concerning product liability insurance to apply to medical malpractice insurance. CJ&D, she said, "is a front group for the plaintiffs' bar."