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NEWS RELEASE
Sep 25, 2003


CONTACT: Carmen Balber - 310-392-0522 x324

California's 4th Largest Medical Malpractice Insurer to Ditch its Docs

Insurer's Flight Is More Evidence Malpractice Caps Won't Fulfill Promise To Help Doctors Find, Or Keep, Medical Malpractice Insurance
Santa Monica, CA. -- Farmers Insurance Group's Truck Insurance Exchange has announced that it will stop selling medical malpractice insurance in California beginning in 2004. The company's decision marks another blow to the insurance and medical lobbies' argument that California-style malpractice caps will stem the tide of insurers leaving the malpractice market, according to consumer advocates.

"If California's malpractice caps were such a panacea, would one of the largest medical malpractice insurers be leaving the state?" asked Carmen Balber, a consumer advocate with the California-based Foundation for Taxpayer and Consumer Rights. "The ups and downs of the insurance business-cycle has been driving the decisions of insurers in states throughout the country, regardless of whether or not there are caps."

California's malpractice damage cap law, the Medical Injury Compensation Reform Act of 1975(MICRA) has been identified by doctors and insurers as the model for solving the nation's medical malpractice insurance crisis. Doctors point to the fact that insurers have been leaving some markets as evidence that states and the federal government should impose stringent restrictions on the rights of malpractice victims to go to court and receive compensation for their injuries.

According to FTCR, Farmers' withdrawal from the California malpractice market belies insurer and physician claims that the threat of large jury awards is the primary cause of insurers leaving other states. Instead, insurers are to blame for the self-inflicted insurance cycle, in which rates are low when investment returns and interest rates are high, but insurers drive prices up when investments decline and subject policyholders to a manufactured 'crisis,' said FTCR.

"Insurance companies say damage caps are a security blanket for California doctors, but Farmers' evacuation exposes physicians to the cold air of reality. Farmers' decision to quit insuring in California is further proof that insurance industry financial and management decisions, not compensation for injured patients, are at the root of skyrocketing malpractice premiums and insurers abandoning doctors," said Balber.

A report by the California Medical Association (CMA), published in July 2001, contradicted another doctor and insurer claim: that the state's malpractice cap has stopped physicians from fleeing California. CMA's survey shows that 43% of surveyed doctors plan to leave patient care in California by 2004. Dissatisfaction with medical practice in California led more than 25% of doctors surveyed by the CMA to state that they would no longer choose medicine as a profession today, and 1/3 of those to say they would practice, but not in California.

"The constant drumbeat played by insurers that malpractice caps will solve doctors' insurance problems is proven false each time it is put to the test in California," said Balber. "Farmers' withdrawal from California's malpractice market is yet another illustration that damage caps will not keep insurers in the state or doctors insured."




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