State insurance regulators approved yesterday the 28 percent premium increase sought by the state's largest malpractice insurer, which provides malpractice coverage for most of the state's doctors in private practice.
The higher premiums for Medical Mutual Liability Insurance Society of Maryland, effective next year, won't mean higher costs to consumers, said T. Michael Preston, executive director of the state medical society. That's because, Preston continued, most fees for doctors' services are set by contract with insurers or by government programs such as Medicare.
However, Preston added, the increase "will quickly translate into difficulty finding some types of physicians." In particular, he said, some doctors will stop delivering babies - premiums for obstetricians are among the highest, he said, ranging from $70,000 to $120,000 a year - and focus on the gynecology part of their practices. That will allow them to maintain income while sharply cutting insurance costs, he said.
"Obviously, doctors don't want a rate increase, but we also don't want the only viable malpractice company in the state to go the way of the others," Preston said. He is a director of Medical Mutual, which is owned by the doctors it insures.
But J. Mitchell Lambros, president of the Maryland Trial Lawyers Association, which opposed the rate increase, said the doctor-owned company imposed the rate boost as a prelude to the medical society's efforts to lobby lawmakers for tighter limits on malpractice claims. At a hearing this month, an expert witness for the trial lawyers said only a 3.7 percent rate increase was needed.
"The doctors' medical society and insurance company have been working together to get an oversize rate increase with the intent of using increased rates to deprive patients of their rights," Lambros said. "It is unfortunate for patients that the new insurance commissioner in one of his first acts has consented to their actions."
Both sides predict a heated battle in Annapolis next year over the malpractice rules.
Preston said the doctors might seek lower limits on so-called "pain-and-suffering" awards, limits on attorney fees, and new ways of defining damages. Jay Angoff, who was the expert witness for the trial lawyers, said law changes might be needed to alter the way the insurance administration reviews requested malpractice rates. Angoff is a former Missouri insurance commissioner.
Angoff also said there was a legal basis to appeal the rate ruling in court.
In yesterday's rate order, Thomas Paul Raimondi, associate deputy insurance commissioner, said the Medical Mutual's claims projections were seen as justified by the insurance administration's own actuaries, and by an independent actuary hired by the administration to review the rate filing.
In a 12-page decision, Raimondi reviewed a number of specific objections raised by the trial lawyers, and said, "It is my conclusion that those points lack merit. Nothing produced by [the witnesses] supports the conclusion that the proposed rate increase is excessive, inadequate or unfairly discriminatory." Those are the legal standards for blocking a rate request.
Angoff said Raimondi hadn't taken sufficient account of Medical Mutual's potential investment income or its reserves for claims, which Angoff said were too large.
Raimondi, in his decision, said he had reviewed the contentions of the trial lawyers, but "the written testimony of the other actuaries points out significant flaws that undermine the accuracy" of Angoff's arguments.