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home / insurance / in the media

The Oregonian
Oct 28, 2004

by JAMES MAYER

ELECTION 2004: MEASURE 35 - CRITICS SAY DAMAGES LIMIT DIDN'T HELP TEXAS

Summary: Opponents argue insurance rates still may rise despite a cap on malpractice awards, but supporters disagree.

A key claim by Measure 35 supporters is that out-of-control jury awards for medical malpractice are driving up insurance rates and threatening health care in Oregon. Reduce the awards, they say, and the premiums will come down.

But the measure doesn't require premiums to drop, and with less than a week before Election Day, opponents are trying to undermine that claim by pointing at Texas for evidence that insurance companies may try to raise rates even with a jury limit in place.

Last year, Texas voters approved a $250,000 limit on noneconomic damages in medical malpractice cases, half the limit proposed by Measure 35.

Six weeks later, The Medical Protective Co., the nation's largest medical malpractice insurer, asked state regulators to approve a 19 percent premium increase, saying the limit would have almost no effect on the company's losses from lawsuits.

"These companies are unwilling to pass on the savings to doctors. They want to keep the profits for themselves," said Doug Heller, a spokesman for the Foundation for Taxpayer and Consumer Rights, a California-based group that brought the rate increase request to light this week.

Kelly Stoner, spokeswoman for the Measure 35 campaign, responded that voters should focus on what has happened in Oregon. Malpractice premiums fell dramatically when Oregon imposed a limit in 1987 and began climbing after the Oregon Supreme Court threw out the limit as unconstitutional in 1999, Stoner said.

It took some pressure from regulators, but the limit appears to be working in Texas, said Jim Hurley, spokesman for the Texas insurance commissioner.

Hurley said the state denied The Medical Protective Co.'s premium increase request, as well as others, saying the companies hadn't sufficiently taken the damage limit into account. Regulators approved a 10 percent boost for the company. Other companies have reduced or held premiums steady, he said.

"In only one year, rates have stabilized, and for many doctors, they have dropped," Hurley said.

But the fact that a big insurer tried to discount the effect of the limit, saying they expected it to reduce lawsuit losses by 1 percent, hands ammunition to Measure 35 opponents. They argue that the insurance industry can't be trusted when it says the measure will bring down rates.

"We believe these are lies, out-and-out lies," said Jason Reynolds, executive director of the Oregon Consumer League.

The Medical Protective Co. listed several reasons why the limit would have less effect than expected. They included the possibility that juries and judges would be more sympathetic to victims because their potential damages were limited, and the possibility that plaintiff's lawyers will find ways to shift damages to economic ones such as medical costs and lost wages.

Jim Dorigan, chief executive officer of Northwest Physicians Mutual, the largest malpractice insurer in Oregon, said The Medical Protective Co. was seeking rate increases because it had grown too fast by underpricing its products. He said its actions don't reflect the behavior of the industry generally, particularly doctor-owned insurance companies such as Northwest Physicians Mutual.

Dorigan said he was confident Measure 35 would lower claims costs, and if it did, his company would reduce the rates it charges doctors.

"We did it before," he said, "and we'll do it again."
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Contact the author James Mayer at: 503-294-4109 or jimmayer@news.oregonian.com


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