Albany Has Fix For Doctors' Insurance Ills

By freezing liability premiums for a year, lawmakers have delivered financial relief to doctors in New York, but the battle over malpractice insurance rates is far from over.

Lawmakers placed a moratorium on a rate increase between July 1 of this year and June 30 of next, a move that physicians said avoids an impending crisis and sets the stage for renewed discussions about ways to address the escalating cost of medical malpractice insurance in New York. The legislation also prohibits the state's insurance superintendent, Eric Dinallo, who sets insurance rates each year, from imposing a surcharge on premiums to make up for deficits facing insurance companies.

"The Legislature has postponed the day of reckoning," the president of the Medical Society of the State of New York, Dr. Michael Rosenberg, said. He added: "This issue has not been resolved, but the crisis has been avoided."

Physician groups said the moratorium, which came as part of a budget agreement, was something of a surprise. Earlier in the week, some speculated that lawmakers who returned to Albany for a special economic session would lower premiums immediately to provide financial relief to doctors.

Stakeholders — including physicians, hospital, consumer, and attorney groups — said the last-minute legislation set the stage for renewed discussions about the state's medical malpractice insurance situation.

In New York, doctors and hospitals pay malpractice insurance premiums that are among the costliest nationwide. Last year, following a 14% rate increase, Governor Spitzer charged a task force with investigating and addressing the state's high medical malpractice costs. The group did not produce a final report, and last month, instead of raising rates again, Mr. Dinallo announced a delay in the setting of new rates to give lawmakers time to address the situation.

"It buys us another year," the executive director of the New York chapter of the American College of Obstetricians and Gynecologists, Donna Montalto, said of the moratorium. "Going forward, this means we have a lot of work that we'll be doing after this election."

In recent months, task force members have floated a variety of proposals, including lowering the amount of liability insurance doctors must purchase to $1 million from $1.3 million. Obstetricians favored a bill sponsored by the chairman of the Senate's health committee, Kemp Hannon, to create a fund for neurologically impaired infants.

Physicians also favored a method for addressing the deficit in the state's insurance pool for high-risk physicians, the Medical Malpractice Insurance Plan. By law, Mr. Dinallo can impose a surcharge of up to 8% each year to close the plan's deficit, which is about $350 million. "That has to be addressed," Dr. Rosenberg said. "You can't just keep charging physicians 8% more in surcharges a year and not have an access crisis."

In the coming months, he said, his group will lobby aggressively to negotiate "comprehensive" change, because otherwise doctors will face the same problem next year. "The same forces that are here will still be there. Arguably, they'll be even stronger," he said. "Unchanged, it is our view that we're looking at a system that cannot stand."

A past president of the New York State Academy of Trial Lawyers, John Powers, said negotiators simply ran out of time during the recent budget negotiations. "With the change in administration, the change in governor, suddenly we had a whole new set of players at the table," he said. Groups representing trial lawyers submitted 23 written proposals, including measures to improve patient safety and physician accountability, he said.

Lawyers also sought an increase in contingency fees that were put on a sliding scale in 1986 as a way of reducing malpractice litigation and the cost of insurance. Currently, attorneys received 30% of the first $250,000 paid to plaintiffs and 10% of payouts of $1.25 million and more. Under the Pataki administration, lawmakers passed a bill that would repeal that sliding fee scale, giving lawyers one-third of payouts across the board, but Governor Pataki vetoed the bill on the grounds that it should be part of a comprehensive approach to addressing medical malpractice insurance.

"That's where we find ourselves again now in 2008," Mr. Powers said. "We assume that that's one of the things that's going to be in it," Mr. Powers said of any deal that is hammered out in the next year. "That's one of the reasons we were all sent back to the table."