Malpractice:  What Crisis?

To appreciate the bias in Dr. Crowe’s assertions one need only review the filings of Medical Assurance Inc. with the Securities and Exchange Commission on March 28, 2000. Dr. Crowe received a little over $400,000 in salary in 1999 plus the option to purchase approximately 25,000 shares of Medical Assurance stock. See Medical Assurance Inc.’s March 28, 2000 SEC Schedule 14A at 6. Indeed, according to the SEC filing, Dr Crowe owns over 2,440,000 shares of Medical Assurance stock. Id. at 5. The value of Medical Assurance stock on September 5 was a little under $12 per share. Certainly, if one accepts that a "crisis" exists in West Virginia, and limiting the potential for claims in this state should expand that tort reform, Dr. Crowe’s $30 million investment skyrockets! NOTE: Today, Medical Assurance closed at $15.45 a share.

By claiming that a "crisis" exists in West Virginia, and raising malpractice premiums, Dr.Crowe’s investment has increased $8.4 million in six months.

Eliminate the claims, reap more income.

Is Dr. Crowe really concerned for the physicians in this state or does he have an ulterior motive? Medical Assurance, Inc. is not losing

money on medical malpractice insurance. Total shareholder return was 330% in 1998 and 211% in 1999. See Stock Performance Graph, Id. at 10. Why the need to increase premiums? Increase premiums, reap more income.

David M. Golden, Director of Commercial Lines, National Association of Independent Insurers, suggests that a removal of the cap on non-economic damages will only serve to further limit West Virginians’ access to health care due to economic consequences. Mr. Golden asserts that "studies show" when tort reform is adopted productivity and employment increases. He then attempts to boot strap an argument that if the cap on non-economic damages is eliminated the cost of goods and services will increase in the local economy. Noticeably absent is any citation to the "studies" which support his position. Perhaps, more striking is the absence of any assertion that retention of the cap on non-economic damages will hold down the cost of malpractice insurance premiums paid by West Virginia physicians.

In 1986, when the malpractice insurance carriers were threatening to leave the State if certain "reforms" were not adopted, the carriers were asked by the Legislature and the Insurance Commissioner what effect adoption of the entire package of proposed reforms would have on premiums. Amazing, as it may seem, the carriers indicated that premiums would not be affected by their proposed tort changes. How then in 2000 can one expect the retention or elimination of a single reform, the cap on non-economic damages, to maintain let alone reduce insurance premiums paid by the medical community in this State? Reduce claim payout, reap more income. How this insurance-industry-manufactured "crisis" has affected this State’s physicians is obvious.

Dr. John Holloway of Wheeling reports that premiums have increased 100% for family practitioners and pediatricians, and that one surgeon will see an increase of $70,000 in his insurance premium. Dr. Holloway also indicates that the "physicians are unable to pass on the increased costs." West Virginia’s physicians and surgeons are entitled to earn a living. They have spent many years in school, studying and learning their profession. They should not be forced to leave the State because insurance carriers squeeze their "bottom" line by increasing premiums unnecessarily.

Unfortunately, the medical community has "bought into" the underlying assumption that if tort reform is enacted by the Legislature, their costs of doing business will come down. As indicated above, nothing can be further from the truth. The insurance industry manufactures a "crisis" and then dupes the medical community into believing the tort system is responsible for their reduction in income.

Physicians then become "front" persons for an industry which is already garnering obscene profits, and which is seeking to further increase its "bottom" line by eliminating claims and reducing payments under a "deformed" tort system, while at the same time increasing premiums paid by its insured. Physicians and attorneys should join forces to halt the insurance industry’s raping of West Virginia.

Very truly yours,

R. Dean Hartley