Insurance Company Pays $1 Million To Settle Suit

By: Associated Press
By: Associated Press

The St. Paul insurance companies, whose pullout from the medical malpractice insurance market caused a crisis for Nevada doctors, will pay a group of Las Vegas physicians $900,000 under terms of a settlement announced Friday.

Another $100,000 will be paid to the state in administrative assessments, resolving a separate complaint that two St. Paul companies didn't follow proper procedures in issuing policies.

The $900,000 will be split among 164 doctors who were charged higher rates in 2001 before the rate increase took effect, state Insurance Commissioner Alice Molasky-Arman said Friday. The amounts will vary depending on types of coverage.

"This settlement represents a fair compromise to an impasse which could have potentially turned into a lengthy court battle without resulting in any monies being refunded to policyholders," Gov. Kenny Guinn stated.

"The settlement will result in immediate refunds to Nevada's physicians, which could not have been accomplished through a potentially lengthy and costly legal process."

Molasky-Arman said the settlement will give the doctors a dollar-for-dollar refund of a 25 percent rate increase that had been added onto their policy renewal bills a month or two before a September 2001 effective date.

"I preferred to see a refund to the doctors rather than a fine," Molasky-Arman added. Under state law, the maximum fine would have been about a third of what actually will go back to the doctors.

Nevada's problems began when St. Paul Cos., which had insured 60 percent of the state's doctors began canceling its malpractice policies in December 2001.

Facing losses of nearly $1 billion, the Minnesota-based company said it was getting out of the malpractice insurance business worldwide. Part of the loss stemmed from policies that the company had written for Enron executives.

Nevada responded by enacting new medical liability laws in 2002, capping most medical malpractice awards at $350,000. The law allows larger pain-and-suffering awards if a jury finds gross negligence or a judge finds clear and convincing evidence warranting a higher award.

Another new state law requires insurers to provide 120 days notice to "essential" physicians such as obstetricians, trauma surgeons and other high-risk specialists, and Molasky-Arman has said several companies still provide coverage for doctors in the state.

But some physicians say continuing difficulties in finding policies could force them to leave the state, limit their practices or quit.


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