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Jan 10, 2005

CONTACT: Douglas Heller (310) 392-0522 ext. 309

Connecticut AG, Doctors and Lawyers Call for Regulatory Investigation of Medical Malpractice Insurance Giant

GE Medical Protective Raised Docs' Rates 90% Despite 56% Operating Profit from 2000-2004
Santa Monica, CA -- Teaming up to challenge the near doubling of medical malpractice insurance premiums by GE Medical Protective, Connecticut Attorney General Richard Blumenthal, the Connecticut State Medical Society (CSMS) and the Connecticut Trial Lawyers Association (CTLA) called on the state Insurance Commissioner, Susan Cogswell, to hold a public investigation of the rate hike today.

Consumer advocates hailed the announcement, calling it an historic opportunity for doctors and lawyers to solve the problem of unjustified medical malpractice premiums by joining forces to challenge the insurance industry. Doctors and lawyers have typically been on different sides of the medical malpractice debate but could become a powerful force for insurance reform if the groups work together towards addressing high premiums, according to the nonpartisan Foundation for Taxpayer and Consumer Rights (FTCR).

"If you want to lower insurance rates, you need to investigate the insurance companies," said consumer advocate Douglas Heller, the Executive Director of FTCR. "With doctors, lawyers and law enforcement teaming up to demand insurance company accountability, Connecticut could pave the way toward real savings for physicians."

In July 2004, GE Medical Protective, one of the nation's largest medical malpractice providers, imposed an 89.6% rate hike on its doctors. Despite agreeing to conduct a second review of the premium increase, Cogswell has not held public hearings as had been requested after the hike took affect. It is believed that under public scrutiny the GE Medical Protective rate hike will prove to have been excessive.

An analysis of GE Medical Protective's book of business in Connecticut, found that the insurer has paid very little money for claims against doctors covered by the firm over the past five years. The company has realized operating profits of 56% since 2004, according to the study by AIS Risk Consultants.

The state medical society, in its letter, urged Cogswell to open up hearings to doctors and the public, because "many insured physicians have raised concerns as to the manner in which the rate was established by MedPro, especially in light of their reported loss ratio experience."

Connecticut, like most states, has little regulation of insurance companies, and physicians facing steep increases in their medical malpractice premiums have little recourse to block the hikes. Only California, as a result of the 1988 voter initiative Proposition 103, allows members of the public to challenge proposed insurance rate hikes before the increase goes into effect, according to the California based FTCR. In 2004, FTCR challenged a 29% rate hike proposed by GE Medical Protective for the firms' California physicians. The ensuing investigation led the company to decrease its hike by 60%.

"By opening the books of the insurers, it becomes apparent that the companies are gouging doctors around this country," said Heller. "Politicians, led by President Bush, refuse to take on the insurance companies and, instead, travel the country arguing that restricting the legal rights of patients injured by bad doctors is the solution to these premium hikes."

GE Medical Protective Says Legal Restrictions Don't Work

Around the nation, insurers hope to avoid scrutiny by funding a massive lobbying campaign aimed at convincing lawmakers that litigation by injured patients is the reason for the hikes. But, while lobbying to limit legal rights of injured patients by enacting caps on damage compensation, the companies argue against the value of such caps when pressed in regulatory hearings. In 2004, the Wall Street Journal reported that GE Medical Protective claimed that "the caps would lower payouts by just 1%" in a document it filed when it proposed a 19% rate hike in Texas soon after the state imposed a $250,000 cap on damages. ("Malpractice Insurer Sees Little Savings in Award Caps," October 28, 2004) A copy of the document is available at:

"When pressed, insurance executives admit that legal restrictions are just a ruse. Hearings like the one proposed today would help clarify what is really going on in the insurance industry, and, before any states or Congress follows Texas to enact caps, they should follow Connecticut and demand insurance company investigations," said Heller.

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