Medical malpractice rates to soar

Two medical malpractice insurers serving Pennsylvania are asking for rate increases that could affect thousands of doctors statewide.

Lower Paxton Township-based PMSLIC is asking the state Department of Insurance for an average 40 percent rate increase, according to department filings. MIIX

For a doctor who pays $40,000 for malpractice insurance coverage this year, a 40 percent rate increase would mean a $56,000 premium next year. A 50.3 percent increase would mean a premium of about $60,000.

As of Oct. 1, the Insurance Department was still reviewing the requests, said Melissa Fox, the department's deputy press secretary. If approved, both increases would go into effect Jan. 1.

PMSLIC insures about 7,000 doctors in Pennsylvania, while MIIX insures about 950.

The increasing number and size of jury awards in Pennsylvania medical malpractice cases is leading to increases in the costs of paying claims, said Anna Lavertue, PMSLIC's director of communications and quality. A rate increase is needed to help the insurer keep up with these costs, she added.

The insurer also needs to make sure that it has enough money to cover future claims, Lavertue said.

MIIX estimates that it will need to spend twice as much to cover future losses in Pennsylvania as it has collected in premiums during past years, said Edward Grab, a MIIX senior vice president.

"That's a situation that an insurance company cannot endure," Grab said.

Silver Spring Township-based PHICO Group Inc. has already succumbed to increasing costs. The insurer recently reported that its surplus had dropped from $127 million at the end of 2000 to $6.8 million in August. The Insurance Department has taken over PHICO to protect the remaining assets.

Coupled with PHICO's failure, the pending rate increases could deal another financial blow to doctors already struggling with rising malpractice insurance costs, said Chuck Moran, spokesman for the Pennsylvania Medical Society, Lower Paxton Township.

"Basically, there are going to be a lot of upset people," Moran said.

Many doctors in the Philadelphia area have either retired early, stopped performing high-risk procedures or have left the state because of rising malpractice costs, Moran said. Although the evidence is still anecdotal, there are signs that this trend is coming to Central Pennsylvania, he added.

Dr. Ernest Wood is a gynecologist with OB-GYN of Lancaster in East Hempfield Township. Initially planning to retire when he turned 65 in May 2002, Wood said rising malpractice costs are forcing him to consider retiring at the end of this year.

Wood said obstetricians and gynecologists practicing in Lancaster County paid an average of $40,000 for malpractice coverage this year. OB-GYN of Lancaster's 13 doctors are covered by PMSLIC, and the increase may force them to choose a new carrier, Wood added. About 35 companies sell malpractice insurance in Pennsylvania, according to A.M. Best Co., Oldwick, N.J.

"We just can't afford to keep paying more and more," he said.

Grab said legal reforms in Pennsylvania may eventually ease costs. Legislation involving tort reform and, privatizing the state's Medical Professional Liability Catastrophe Loss Fund passed the state Senate earlier this year and is pending in the state House of Representatives.

"I'm hopeful something will be done, but without legal changes, it would be unreasonable to think that costs won't continue to go up," Grab said.