Reports Differ Over Pa. Med-Mal Claims

Insurance companies and other underwriters in Pennsylvania reported paying less for malpractice claims against medical professionals last year, according to a federal agency, even though doctors complain that rising premiums are forcing them to leave the state, close their practices or curtail high-risk procedures.

The modest decline in annual payouts reported to the National Practitioner Data Bank was the second in a row — from $424 million in 2001 to $402.8 million in 2002 to $394.5 million last year. The figures do not, however, include malpractice claims payments for hospitals.

Citing reports that the number of medical-malpractice lawsuits filed in Pennsylvania also dropped last year, Randy Rohrbaugh, a deputy commissioner in the state department of insurance, said that increases in medical-malpractice premiums appear to be slowing.

“It appears to be that … the hardest of the market has hit its peak and we’re starting to plateau,” Rohrbaugh said in an interview. “How long will we plateau? Who knows? What comes after the plateau? Who knows?”

An insurance industry lobbyist, however, cited increasing claims losses by major insurers in Pennsylvania and said the data bank’s numbers do not appear to accurately reflect the reality of the medical-malpractice insurance market.

“The numbers raise more questions than they answer because the major medical malpractice insurers still doing business in Pennsylvania report an increase in amounts paid on claims from 2001 through 2003,” said Sam Marshall, the president of the Insurance Federation of Pennsylvania.

The 2003 reports to the data bank include a blend of underwriters’ payments actually made last year and in 2002 on behalf of physicians and other medical professionals and follow a decade during which the annual total doubled. The 2003 total could change slightly if an underwriter corrects an error in a report made last year, according to officials at the Health Resources and Services Administration, which administers the data bank.

Despite the developments, the state’s largest medical malpractice insurer will again raise its rates July 1, this time by 25 percent, an increase that bucks a recent slowdown in premium increases by the state’s top malpractice insurers. The insurer, Medical Protective Co., of Fort Wayne, Ind., increased its rates 15 percent last July 1 and 45 percent in 2002.

A spokeswoman for Medical Protective, which covers 4,800 physicians in Pennsylvania, said the company needs to cover its mounting losses with rate increases “so that we can have that long-term stability for our physicians we write.”

Medical Protective and Pennsylvania Medical Society Liability Insurance Co., the state’s second-biggest medical-malpractice insurer, showed improved financial statements in 2003.

Still, both companies needed investment gains to cover underwriting losses.

“It’s not a very good year on the insurance side,” said Ed Ketz, an accounting professor at Penn State University’s Smeal College of Business who reviewed Medical Protective’s 2003 statement. “The investment side looks much better.”

Cheye Calvo, an insurance policy specialist for the National Conference of State Legislatures in Washington, D.C., said it’s difficult to tell whether the slowdown in premium increases is a result of insurers’ revenue catching up with losses or changes to laws and court rules designed to lessen insurers’ losses.

It also remains to be seen if the premium increases actually were needed to cover claims, or if the money will become a surplus, Calvo said.

Insurance premiums in Pennsylvania and many other states soared after a period during the 1990s in which premiums grew slowly, or even dropped, because of intense competition, analysts say.

The relatively low premiums left some insurers without adequate reserves to handle mounting claims, which generally take a few years to work through the courts. When the claims came due and the securities markets plummeted, insurers couldn’t use investment gains to make up the built-in underwriting losses, and some were driven into insolvency and others left the business, analysts say.

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