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home / insurance / in the media

The Los Angeles Times
Sep 04, 2003

by Kenneth Reich, Times Staff Writer

Garamendi Cuts Malpractice Insurance Hike;

The rate increase will be 9.9%. The insurer had requested 15.6%.
State Insurance Commissioner John Garamendi, acting on the recommendation of an administrative law judge, has reduced a medical malpractice insurance rate increase for 9,000 California doctors from 15.6% to 9.9%.

His order will be effective Sept. 22. Although the insurer, SCPIE Holdings Inc., has until that date to move for reconsideration, its president and chief executive, Donald J. Zuk, said Wednesday the company will not do so.

"Although we remain firm in our view that the requested rate increase was fully supported and justified, the commissioner's decision will not lessen our commitment to California physicians and other health-care providers," Zuk said.

The consumer group that caused the hearings by appealing the rate increase, the Foundation for Taxpayer and Consumer Rights, said the reduction in the rate increase means a $16 million overall savings for physicians in 2003 and an additional $7.2 million in savings in premiums next year.

It noted in a statement that SCPIE has taken 23% in increases since 1999, and that, even without an increase thus far this year, it had recorded a profit in the second quarter.

Zuk, however, declared, "This profit, if annualized, would represent approximately a 1% return on equity, hardly overwhelming evidence that the requested rate increase was not justified."

Zuk added that his company's latest rate increase application had been filed almost a year ago for implementation last Jan. 1 and only now has been approved in part.

"The decision-making process dictated by California law and regulations is a very lengthy process," he said. "We hope that changes can be made to streamline the process so that these lengthy delays can be avoided in the future."

Garamendi was not available for comment.

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