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State's largest malpractice carrier caps rates, credits 2003 tort law Thursday, May 25, 2006 By Wesley Brown Arkansas News Bureau LITTLE ROCK - Arkansas' leading malpractice insurance carrier announced Wednesday that it won't raise rates for the first time since the late 1990s, citing a 2003 law that limits civil damages in court cases. However, the state Insurance Department said it was premature to draw conclusions about the effect of tort reform legislation adopted just three years ago. "We haven't seen a lot of (lawsuit) filings since the law went into effect. It's just too early to tell if it has helped," Insurance Department spokeswoman Charlye Woodard said. The agency gave a similar assessment in an August report that was part of an annual legislative review of the Civil Justice Reform Act of 2003. In a recent letter to Arkansas doctors, State Volunteer Mutual Insurance Co. said the decline in the number of malpractice claims across the state is largely due to new law limiting jury awards. Chairman Paul McNabb said the company's board decided recently that malpractice rates in Arkansas are adequate and would not be increased over the next year. "As a partner of the Arkansas physicians, SVMIC is committed to respond to the favorable effect of tort reform with you ...," McNabb wrote in the April 24 letter. "While the average cost of malpractice claim in Arkansas continues to increase, this effect is fortunately offset by a decline in the frequency of such claims." Act 649 of 2003 placed a $1 million cap on punitive and non-economic damages, along with joint and several liability and venue reform. It also requires an affidavit of merit from a medical expert to be submitted by a plaintiff when a malpractice complaint is filed. Brentwood, Tenn.-based State Volunteer Mutual raised its malpractice rates in Arkansas by 5.5 percent in 2005 and by 13.6 percent the previous year, according state Insurance Department's annual report. The insurance carrier provides coverage to more than 75 percent of Arkansas doctors who buy their own malpractice coverage, said David Wroten, vice president of the Arkansas Medical Society. Wroten said between 1999 and 2005, malpractice premiums for State Volunteer Mutual customers had increased more than 200 percent. Currently, the frequency of malpractice lawsuits filed has declined from 12 to seven cases per 100 doctors, which has stabilized the market, he said. "A lot of cases that use to get filed that didn't have merit simply have not been filed," Wroten said. However, a vocal opponent of the tort reform law said Wednesday that rates are stable because of insurance reform that the Legislature adopted last year, not tort reform. Act 1697 of 2005 requires malpractice carriers to justify future rate increases. "Insurance reform apparently works," attorney Morgan "Chip" Welch said. "Their (insurers') profits are so obscene that they don't need any more money. Ask these doctors if they are going to get a rebate." Two years ago, the state Arkansas Supreme Court rejected a petition that Welch filed on behalf the Arkansas Trial Lawyers Association and labor groups seeking to overturn state limits on jury awards. State Volunteer Mutual spokesman Thad DeHart denied Welch's claim that malpractice carriers in the state are posting unjust profits. He said the insurer is a privately held nonprofit, run and operated by physicians. DeHart added that State Volunteer Mutual was one of a handful of insurers to stay in Arkansas after insurance giant St. Paul Companies quit offering malpractice coverage in 2001. At the time, St. Paul insured more than half of the private doctors practicing medicine in the state. Now, he said, the few companies besides State Volunteer Mutual that offer malpractice coverage in Arkansas have limited market or are associated with the University of Arkansas for Medical Sciences, which has its own in-house risk analysis staff. "They can probably avoid a lot of instances that lead to lawsuits," he said. Now that the tort climate is better, the malpractice business may pick up again as for-profit insurers look for favorable markets, "and that's not right," he said. McNabb, the State Volunteer Mutual's decision to cap Arkansas malpractice rates would affect any policies renewing on or after May 15. "If everything is truly equal from renewal to renewal, then the premium will be the same as a year ago," McNabb wrote in his letter to Arkansas doctors. Wroten said a case headed to the Supreme Court seeks to overturn the merit certificate requirement in the 2003 tort law. "If that occurs, we could be back where we started," he said. |
