Nevada Files Complaint on Insurer

The state attorney general has submitted a complaint against insurer St. Paul Cos., alleging unlawful business practices in yanking medical malpractice insurance policies held by Nevada doctors.

The complaint requires St. Paul to tell a hearing officer named by the state Insurance Division why the company shouldn’t face disciplinary action.

The complaint provided to Insurance Commissioner Alice A. Molasky-Arman also alleges unauthorized policy changes, commission payments to unlicensed agents and illegal policy nonrenewals.

“We’re going to do everything we can to ensure that this crisis is resolved and that violations are addressed so that it never happens again,” Atty. Gen. Frankie Sue Del Papa said Thursday.

St. Paul representatives say the insurer began canceling its policies because it could not afford high jury awards in malpractice cases.

St. Paul spokeswoman Andrea Wood said the company hasn’t received the complaint, but she added that rates charged by St. Paul were “consistent with Nevada law and were reviewed and approved by the staff of the insurance division.”

The malpractice crisis prompted Gov. Kenny Guinn in March to authorize spending $250,000 to form a state fund to underwrite malpractice insurance for doctors being priced out of their practices.

Guinn on Wednesday announced he was authorizing the association to offer prior act insurance to all physicians in the state.

He said the intent was to eliminate large “tail” insurance payments charged by new insurers for protection from claims made by patients that doctors had before their new policies go into effect. State officials have said those one-time payments can reach $125,000.

Guinn said the association would reduce by 18% the rates it charges surgeons and obstetricians and also eliminate tiered premiums charged to obstetricians based on the number of babies they deliver.

Under the tiered structure, doctors are discouraged from delivering more than 125 babies a year.

Guinn acted under authority he claimed in March when the state insurance commissioner declared a malpractice insurance crisis. She cited the decision by St. Paul--the biggest medical malpractice insurer in the state--to stop offering malpractice insurance.