Lawmakers, Montemayor Unhappy With Rate Hikes

Medical liability insurer, General Electric Medical Protective, has indicated it will bypass Texas regulators and raise liability insurance rates for doctors and Insurance Commis-sioner José Montemayor is not happy about it. Neither are Texas legislators who recently took Montemayor to task on why medical malpractice rates are still increasing in the state eight months after the passage of Proposition 12, a measure designed to put a stop to rising malpractice insurance costs by capping noneconomic damages in medical liability cases.

Members of the Texas House of Representatives’ Civil Practices Committee listened to a review of the malpractice situation in the state, and for the most part were unhappy with what they heard. Texas Medical Liability Trust, the state’s largest medical malpractice underwriter, decreased its rates by 12 percent, but few physicians are seeing lower rates. According to the Austin American Statesman, Montemayor told the panel that some hospitals have seen their costs go down, but Texas Medical Liability is only one of five major med-mal insurers that have agreed to lower rates. Monte-mayor also said some malpractice insurers are seeking to enter the Texas market.

GE Medical Protective, which insures about 7,000 of the state’s 38,000 physicians, is moving its medical malpractice business to a risk purchasing group. The Associated Press reported that the company plans to increase premiums by 10 percent on June 1. The Texas Department of Insu-rance previously rejected the company’s request for a 19 percent rate hike.

In a letter to Texas physicians posted on the TDI Web site, Montemayor said he is “disappointed” in GE Medical Protective’s decision and believes “it is premature. If the company would have waited for four to six months and relied on the reforms of Proposition 12, they would have reached a different conclusion and not felt the need to move its policyholders to a purchasing group.”

Montemayor noted that GE Medical Protective plans to allow all of its current policyholders to switch their coverage to the RPG if they so desire. “While this may be a courtesy and convenience,” the Commissioner stated, “the Texas Department of Insurance is reviewing every legal option available to protect Medical Protective’s policyholders and ensure they pay a fair rate.”

In the letter, Montemayor said 10 new medical malpractice carriers have “taken concrete steps to enter the Texas marketplace and many more have indicated an interest in doing business in Texas.” He asserted the move by “Medical Protective in no way reflects on the viability of the medical liability market in Texas.”

In November 2003, Monte-mayor rejected a request by the Texas Medical Liability Insurance Underwriting Association, or Joint Underwriting Associa-tion (JUA), to increase rates by 35.2 percent for physicians, surgeons and other non-institutional health care providers, and by 67.9 percent for hospitals and other institutional health care providers.

At the recent hearing lawmakers asserted that requests for rate increases rather than decreases indicate insurers are not keeping their promises in relation to Proposition 12.

However, the Statesman reported that the president-elect of the Texas Medical Association, Dr. Bohn Allen, believes rates will remain high until a backlog of malpractice lawsuits makes its way through the courts.