The state Department of Business Regulation has taken a strong stance against a medical malpractice reform bill proposed by consumer groups and trial lawyers, saying it would almost certainly drive carriers out of the market and harm the medical community.
The bill, backed by a group called “Fair Insurance Rhode Island,” was introduced in February but has yet to be heard in the House or the Senate. Two competing “tort reform” measures – one sponsored by Democrats, another by Gov. Donald L. Carcieri – are also stalled.
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But just in case the “Fair Insurance” measure isn’t dead, the DBR last month filed a six-page letter expressing its opposition for several reasons: the potential impact on the market, “unclear” and “unreasonable” language, and the strain it would put on the DBR.
“Recent studies have shown that medical malpractice costs are significantly lower in those states that have enacted tort reform,” wrote Joseph L. Torti III, associate DBR director and superintendent of insurance. “It would appear, therefore, that a better solution to address long-term malpractice costs would be to reform Rhode Island’s tort system.”
Torti did not send a copy of his letter to the coalition, but after being provided with one by the PBN, Marti Rosenberg, executive director of Ocean State Action, a member of the group, said she was struck by the “vitriolic” tone and uniformly negative stance.
“Obviously we have substantive disagreements,” she said. “But most importantly, I think it’s the most blatantly political analysis that I’ve ever seen a state department do.”
In fact, the analysis, written jointly with the DBR lawyer and chief insurance analyst who hear medical malpractice rate requests, runs the gamut from technical issues, to predictions about insurers’ behavior, to larger-scale public policy issues.
Torti took particular issue with the central provision of the bill: that it would require the DBR to set a standard for what is an “excessive” surplus, and force carriers to refund that money to their policyholders. That, Torti argued, misses the whole point of monitoring insurers’ available capital, which isn’t to judge the adequacy of rates, but to ensure they meet a “minimum solvency margin.” The bill would turn that system on its head, unfairly penalizing fiscally conservative carriers and running afoul of national accreditation standards.
The result, Torti predicted, would be that Rhode Island’s few remaining malpractice insurers would leave the already “stressed” market, and the insurer of last resort, the Medical Malpractice Joint Underwriting Association (MMJUA), would be overwhelmed. Ultimately, the cost would be passed on to the state and to policyholders, Torti predicted.
As for other items in the bill, Torti said many are “duplicative in nature, unduly burdensome and would require significant additional staffing and resources in order to be fully implemented.”
He was particularly critical of a provision that would require the DBR to set up a medical malpractice premium quotation service – a costly but useless endeavor, Torti wrote, considering that other than the MMJUA, only two carriers are active in the state.
Rosenberg said the letter clearly shows the DBR is too close to the insurers it regulates.
“I’ve never seen a letter so personally aggrieved by a piece of legislation,” she said. “But what we’re saying is we need to give them new tools and get them outside the box they’re in.
Sometimes the regulators need to be shaken up a bit, to make sure they’re not just in a cozy relationship with the people they’re regulating, so the consumers have a voice.”
