Rates, frivolous suits not linked, insurer says

Malpractice firm cites higher lawsuit payouts

October 28, 2004|By M. William Salganik | M. William Salganik,SUN STAFF

The head of the state's largest malpractice insurer told a state Senate commission yesterday that rising malpractice costs are not driven by frivolous lawsuits.

David L. Murray, president and chief executive officer of Medical Mutual Liability Insurance Society of Maryland, said his company is seeing fewer baseless claims than it saw in the past, and never settles a claim it considers without merit.

Occasionally, Murray said, it loses a trial on a case where it considers the medical evidence thin.

Rather, Murray told the Senate panel that rapidly rising malpractice insurance premiums reflect higher payouts to plaintiffs - an average of $420,000 this year, more than double the level of four years ago.

The only solution, he said, is to reduce payments to plaintiffs or their lawyers or to create a fund to subsidize liability coverage for doctors.

Medical Mutual, which covers about three-quarters of the state's physicians in private practice, raised its rates 28 percent this year and has a 33 percent premium increase due to take effect in January.

Doctors have said that the increases are causing many to leave or curtail their practices, resulting in pressure for legislation to fix the system - including the creation of the Senate panel that conducted yesterday's session.

Sen. Brian E. Frosh, a Montgomery County Democrat who chairs the commission and the Senate Judicial Proceedings Committee, said yesterday that his group hopes to have recommended legislation by next month.

This week, Gov. Robert L. Ehrlich Jr. offered his draft bill, which was dismissed by Senate leaders. Ehrlich and lawmakers are struggling to reach a consensus that might produce a reform package at a special session before the end of the year, which could head off Medical Mutual's next rate increase.

At yesterday's session, Murray said he would provide Frosh's panel with all of the information it had been seeking from the insurer. This month, Murray had declined to answer some questions about claims history, investment reserves and data used to calculate rates, saying it was too difficult to calculate and would, if made public, give too much ammunition to plaintiff lawyers. Frosh said he would consider a subpoena, and Murray agreed to turn over the data.

Also at yesterday's meeting, Jay Angoff, a former Missouri insurance commissioner who is a consultant to the Maryland Trial Lawyers Association, told the panel that Medical Mutual keeps $80 million more in surplus than it is likely to need to pay claims, and therefore didn't have to raise premium rates so much. That prompted a flurry of questions from senators to Murray.

"If we took $80 million off," Murray answered, "it would reduce the premium rate roughly in half for one year, but that would be an incredibly reckless thing to do."

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