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NEWS RELEASE
Feb 20, 2003


CONTACT: Doug Heller - 310-392-0522 x309

California's #2 Medical Malpractice Insurer Should Lower Doctors' Rates, Insurance Commissioner Should Reject Price Hike Proposal

Consumer Group Presents Data, Arguments in Challenge to Rate Hikes Under Rules of Prop. 103
Santa Monica, CA -- SCPIE Indemnity, California's second largest medical malpractice insurer should lower physicians' rates by more than six percent rather than raise rates by 15.6% as the company proposed, according to documents filed with the California Department of Insurance yesterday by the Foundation for Taxpayer and Consumer Rights (FTCR). Using California's insurance reform law Proposition 103, the non-profit FTCR challenged the rate increase requested by SCPIE and its affiliate American Healthcare Indemnity last fall. The proposed rate increase would cost SCPIE's 9,000 physician-policyholders approximately $18 million.

"Medical malpractice insurers try to raise rates on doctors in California, just as in the rest of the country, but Proposition 103 allows the public to intervene and keep prices down," said FTCR's senior consumer advocate Doug Heller. "Because of insurance regulation, California physicians are immune to the national epidemic of insurance company profiteering."

Proposition 103, enacted by voters in 1988 in the wake of spiraling insurance rates, requires insurance companies to justify all rate changes prior to imposing the hikes. The law allows policyholders and other consumer representatives to challenge proposed rate changes and analyze the data provided by the insurance company.

Nationally, insurance companies and doctors are pressing for changes to laws that govern injured patients' rights to compensation when they are the victims of malpractice. Insurers argue that these "malpractice caps" will lower rates for doctors. In California, however, premiums continued to rise for doctors even after the state imposed such caps in 1975, according to data collected from the National Association of Insurance Commissioners. Only after the passage of Proposition 103 in 1988 did physicians' premiums drop and then stabilize. This is documented in a recent report by FTCR, which is available at http://www.consumerwatchdog.org.

According to FTCR's actuarial analysis of SCPIE's proposal, the data do not justify the proposed rate hike.

"SCPIE's documents show that doctors' rates should be lower, yet the insurance company insists that they need a 15.6 percent hike in their rates for 2003, resulting in more than $18 million in excessive rates," said Daniel Zohar, the attorney representing FTCR in the rate challenge. "Only because of the public scrutiny of insurers afforded by Prop 103 can we identify and challenge unfair insurance rates. In the midst of the national debate about controlling medical malpractice costs, this rate hike proposal shows that malpractice caps do not lower costs to doctors, but simply raise the profit opportunities of the insurance carriers. And it would all paid for by the discounted justice imposed on the victims of medical negligence for the last 30 years."

The California Department of Insurance is currently reviewing FTCR's challenge to the rate hike and SCPIE's defense.

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