Malpractice insurance creates woes for doctors

Sandi Doughton; The News Tribune

 Tacoma, WA - 4/4/02 - When three clinics in southwestern Washington closed last weekend because doctors couldn't get malpractice insurance, it sent a shiver through medical practices across the state.

"I think we're going to be hearing about more situations like this," said Tom Myers, chief executive officer of Physicians Insurance, the company that insures 70 percent of Washington's doctors.

Malpractice premiums rose steeply this year in the state, as in the rest of the nation. Some Tacoma specialists report 300 percent increases, said Sue Asher of the Pierce County Medical Society.

At the same time, one of the state's major medical insurers pulled out of the businesses, leaving thousands of doctors scrambling to find new policies.

State Insurance Commissioner Mike Kreidler announced a plan this week to require insurance companies to help physicians find coverage.

While the cost of malpractice insurance alone probably won't drive doctors to bankruptcy, it is ratcheting up the financial pressure on practices already coping with cuts in Medicare payments and soaring overhead expenses, said Aaron Katz, director of the Health Policy Analysis Program at the University of Washington.

And when doctors can't find companies to insure them, they have no choice but to shut down.

"That's when it begins to be a critical problem," Katz said.

Primary care doctors at the three Chehalis-area clinics that closed over the weekend were insured by Washington Casualty, which dropped its coverage for physicians this year. The company had insured about 15 percent of the state's doctors.

When the doctors' malpractice coverage lapsed Monday, they still hadn't found another insurer, said Chris Bredeson, CEO of the Steck Medical Group, which operates the clinics.

The clinics reopened Tuesday evening after settling for a more expensive, less comprehensive malpractice policy, he said.

The Washington State Medical Association estimates the annual malpractice premium for obstetricians in Washington jumped from $29,000 in 1997 to $52,000 this year. Family practice physicians now can pay up to $10,000 a year.

The situation is even more severe in other parts of the country, where doctors relied more heavily on The St. Paul Cos., a Minnesota firm that pulled out of the malpractice market this year.

In Las Vegas, where some premiums skyrocketed to $200,000, up to 10 percent of physicians are expected to go out of business by this summer.

"We're not in a similar crisis here in Washington yet," Myers said. "But it's certainly possible in a year or two."

Physician groups tend to blame the problems on an increasing number of multimillion-dollar damage awards.

A Lynnwood woman and her brain-damaged baby were awarded a $13 million settlement in February as a result of what they said was a botched delivery at Stevens Hospital in Edmonds.

A Pierce County woman won a $16 million jury award against the University of Washington and a pharmaceutical company last year after undergoing needless chemotherapy and a hysterectomy as a result of a false cancer diagnosis.

But Katz said big damage awards generally are a small factor in malpractice costs. More important, he said, are a variety of financial factors, such as the profitability of an insurance company's other lines of business and the performance of the company's investments.

Kreidler's proposal won't address high premiums, but should help doctors and clinics find new insurers more quickly.

He wants insurance companies to jointly review insurance applications and cooperate to find each doctor a suitable policy. If the companies won't work together voluntarily, Kreidler intends to make it mandatory.

"We have significant problems here in Washington," he said. "What happened with these clinics really heightened our awareness of how imminent it was."

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