Mal

A medical malpractice insurers group said that two consumer groups' research reports questioning the industry explanation for price increases had been examined by studies they funded and were found to be flawed.

Consumer groups that were mentioned said their interpretation and projection of data might be questioned but there was no factual error

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

PIAA said, contrary to AIR's report, the Tillinghast study found that past medical liability insurance rate increases reflect the claims experience of insurers and that recent tort reforms aimed at reducing lawsuits and limiting awards have had a material effect on rates.

The Tillinghast report critiqued the AIR study entitled Insurance 'Crisis' Officially Over — Medical Malpractice Rates Have Been Stable for a Year, written by J. Robert Hunter insurance director for Consumer Federation of America and Joanne Doroshow, president and executive director of the Center for Justice and Democracy.

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

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

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

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

“I don't think so.” He said historically the trend has been the rates in states with and without tort reform measures rise and fall at the same pace. “You might see somewhat better rates in tort states,” he conceded, but overall in the next decade Mr. Hunter said 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 Reserving Practices in Medical Malpractice Insurance.” That study examined a December report issued by the Foundation for Taxpayer and Consumer Rights entitled, “False Accounting: How Medical Malpractice Insurance Companies Inflate Losses to Justify Sudden Surges in Rates and Tort Reform.”

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

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

Mr. Rosenfield said the Hoyt and Powell findings were an acknowledgment that industry “reserving practices were way off.”

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

The PIAA studies, according to Mr. Smarr, point out “gross manipulation and blatant misrepresentation employed by these personal injury lawyer-oriented groups in order to pursue their self-serving political agenda,”

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

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