Malpractice Rates Stymie Nevada Insurance Chief

Nevada’s insurance commissioner, urged by doctors to help hold down soaring medical malpractice insurance rates, said Monday she can’t force insurers to operate at a loss.

“If insurance companies show that their rates are justified by cold, hard data, I must approve them,” Alice Molasky-Arman said during a hearing on the malpractice insurance crisis.

“Our laws require that rates not be excessive,” she added. “But they must be adequate. I can’t force insurers to do business here at a loss. I can’t suppress rates.”

The insurance commissioner noted that state legislators tried at one point to suppress auto insurance rates, but the law was later struck down as unconstitutional by the U.S. 9th Circuit Court of Appeals.

Short-term alternatives to reduced rates, according to the state insurance division, include forming a joint underwriting association with the state, setting up a doctors’ mutual insurance company, or appealing to existing companies to prepare new plans.

Long-term solutions could include lobbying the state Legislature for tort reform similar to California’s $250,000 cap on jury awards for pain and suffering, health officials and insurance company officials have said.

Before she can enact emergency insurance procedures to maintain coverage for all medical personnel, state law required Molasky-Arman to conduct Monday’s public hearing to determine the availability of essential insurance coverage.

Witness after witness testified that skyrocketing malpractice rates--with some annual policies jumping from $40,000 to $250,000 or more--are prompting some doctors to retire early, double their patient load, cut services or quit.

The crisis is especially bad in southern Nevada, where the only emergency center plans to stop operating around the clock next month and could shut down entirely in June if rates are not lowered, Molasky-Arman was told.

The Nevada Trial Lawyers Assn. argued there’s no such thing as a frivolous malpractice lawsuit because, under state law, every case must be reviewed by a doctor and deemed to be probable malpractice before it can be filed.

The NTLA also said insurance companies are raising rates to compensate for having lost money on investments and for insuring bad doctors in the past. In the case of the biggest insurer in Nevada, St. Paul Cos., the trial lawyers said it lost $108 million in Enron investments.