News Briefs

MASSACHUSETTS

Sprinkler Opposition: Dozens of Massachusetts restaurants and private clubs are appealing a state mandate in that they install sprinkler systems, arguing that they are being misclassified as nightclubs.

The Legislature last year passed a law requiring any club with occupancy of 100 or more to install sprinklers within three years. The effort was inspired by The Station nightclub fire in Rhode Island, which killed 100 people. A total of 113 establishments have appealed orders from fire departments requiring them to install sprinklers, officials told The Boston Globe. Cost is a major concern among affected businesses. Installing sprinklers to a 5,000-square-foot nightclub would cost about $25,000, according to one owner.

Job Creation: A recent report on the Connecticut economy noted that while the state remains tops in per capita income, there has been no real job growth for the past 15 years. Insurance employment in the state reached a high of 84,600 in 1991 but was down to 67,600 last year. The Connecticut Economic Resource Center urged the state to be more creative at luring jobs to its businesses including the insurance sector. It followed another study from the Federal Deposit Insurance Corp. that ranked Connecticut last in job creation. More than two years ago, the state established an Insurance and Financial Services Cluster to coordinate efforts at attracting new insurance jobs and providing employment training.

Lead Paint Trial: Jury selection began in the retrial of the Rhode Island’s landmark lawsuit against former manufacturers of lead paint. The trial, the state’s second in three years against the lead paint industry, is expected to last several months. An earlier trial against former lead paint manufacturers ended in a mistrial in 2002. The state says the presence of lead-based paint in homes and buildings created a public nuisance and led to the poisoning of thousands of children. The defendants say landlords and homeowners who fail to keep up their properties are more to blame. Lead paint was banned in 1978. The defendants in the case are the Sherwin-Williams Co., American Cyanamid Co., Millennium Holdings LLC, NL Industries Inc. and Atlantic Richfield Co. Superior Court Judge Michael Silverstein agreed to sever American Cyanamid from the case, meaning the company remains a defendant but will be tried separately at the conclusion of this trial. American Cyanamid lawyer Jerry Petros had argued that the company should not be tried alongside the other defendants because it was not part of the Lead Industries Association.

NEW YORK

No to Gay Standing: A New York Appeals Court has ruled that the same sex partner of a man who died after surgery related to injuries suffered in a car accident does not have standing to sue the hospital for malpractice under state law. The 3-2 decision by the Appellate Division Second in Brooklyn Department overturned a Nassau County Supreme Court ruling. Plaintiffs had a civil union partnership recognized in 2000 under Vermont law. However the appeals court ruled that New York State does not recognize same-sex partners as spouses for purposes of bringing suit under its wrongful death statute. The court said that the originators of the state’s wrongful death statute did not consider same-sex partnerships when they passed the law. It suggested that the remedy is for the Legislature to change the law.

Online Auto Rates: The consumer advocacy group, New York Public Interest Research Group, has called upon the insurance department to compile rate information and post it online so state residents can more easily shop for policies and compare prices. The insurance department’s online rate postings currently divide the state into regions. But NYPIRG says there are wide disparities in prices for identical coverage in the same regions. Chapin Fay, a representative for the state insurance department, said the ranges in prices for similar policies reflect the fact that different companies go after different markets. He said the department is “always open to new ways and more efficient ways of educating customers.” However, the department is reluctant to provide more specific price information. “We feel we have to stop short of advocating or seeming to advocate one company over another and take it as our job to simply educate customers,” Fay said.

NEW JERSEY

Premium Subsidies for Physicians: The first checks from the state to help high risk New Jersey doctors pay malpractice insurance premiums have been sent. The subsidies are being distributed to eligible medical practitioners under the Medical Malpractice Liability Insurance Premium Assistance Fund. The subsidy payments, nearly $11,000 each to 1,200 physicians, implement a section of the New Jersey Medical Care Access and Responsibility and Patients First Act of 2004, which seeks to protect medical access for New Jersey residents in part by offering financial assistance to physicians in certain high risk specialties. Practitioners and healthcare providers in obstetrics/gynecology, neurosurgery and diagnostic radiology were eligible to apply for subsidies. “It is important for all medical practitioners to understand that this is the first year of a three-year program,” said Banking and Insurance Acting Commissioner Donald Bryan. He said that physicians who were not eligible for the subsidy this year will be included in the review next year and some of those practitioners may be found to be eligible.

PENNSYLVANIA

Better Medical Market: Pennsylvania Governor Edward Rendell said that his state has turned the corner on improving its medical malpractice insurance market thanks in part to recent legislative and court reforms and he urged legislators to continue a premium abatement program for another two years to give the reforms time to take full effect. Rendell cited reduced payouts from the state’s catastrophic malpractice fund Mcare, flattening insurance rates, a leveling off of the number of physicians using Mcare and private insurers’ renewed interest in writing malpractice coverage as among the signs that the market has gotten better. The state’s Mcare program provides insurance for claims above $500,00 for physicians. Claims payouts from the Mcare fund are expected to total $232 million in 2005, a substantial drop from $320 million paid in 2004. In 2003, the total had climbed to $379 million. To cover the costs of Mcare, participating physicians pay a surcharge to Mcare. For 2006, the Mcare surcharge will be reduced by 25 percent.

In terms of availability of insurance, more doctors have formed their own risk retention groups, relieving some of the pressure. One of these groups, the Northeast Physicians Risk Retention Group, now covers physicians in 17 counties. In addition, the state’s largest medical malpractice writer, PMSLIC, has said it will begin to write new business again.

Rendell pressed for continuation of the premium abatement plan, which is meant to encourage physicians to continue practicing in the state. Orthopedic surgeons, neurosurgeons, ob/gyns and other high-risk surgeons had 100 percent of their Mcare payment abated in 2003, 2004 and 2005. All other physicians received 50 percent abatement. The program has cost the state $220 million a year.

“When you look at all these statistics collectively, I think everyone would agree that we’ve started to turn the corner on the medical malpractice problem,” Rendell said. “I expect the legislature will agree with me that, based on the need to maintain our momentum and not revert back to a crisis, that the abatement will be continued.”

MARYLAND

Commissioner Redmer Exits: Maryland Insurance Commissioner Alfred W. Redmer has left his job to become chief executive officer of Coventry Health Care, a Delaware-based health insurance company. “It’s just a perfect opportunity,” Redmer said. Gov. Robert Ehrlich named Deputy Commissioner James V. McMahan to serve as acting commissioner pending the selection of a permanent head of the Maryland Insurance Administration. Redmer, a member of the House of Delegates when he was appointed insurance commissioner two years ago, had 20 years experience in private health care before becoming commissioner. Redmer said the agency under his leadership took an active approach to educating consumers, resulting in a decline in the number of complaints. He was commissioner when Tropical Storm Isabel hit Maryland, and came under criticism at that time from some storm victims who thought the state was too slow to come to their aid. But Redmer listed his agency’s response to the storm as his greatest achievement. “We helped citizens collect millions of dollars they would otherwise not have collected,” he said.

Sedans Lose Appeal: The Maryland Automobile Insurance Fund has prevailed over a challenge to its most recent 52.8 percent increase in rate for sedans. Acting Commissioner James V. McMahan upheld the increase in a recent order. The new rates affect nearly 70 percent of the state’s sedans. The state residual market insurer also received approval to increase its safe driver discount from 15 percent to 20 percent per year for a maximum of 60 percent over three years for those sedans that remain accident free. The filing also did away with physical damage coverage, which is not a mandatory coverage.

Sedan owners had claimed the MAIF data was inaccurate and its methodology flawed. But MAIF representatives showed that a much larger rate increase of nearly 200 percent could be justified. The last time rates were increased for MAIF’s sedan business was 1997, when they went up 75 percent.

VIRGINIA

DWI Cases Thrown Out: A Fairfax County judge who believes Virginia’s drunken driving laws are unconstitutional has resumed his practice of dismissing all DWI cases brought into his court, leaving prosecutors unable to appeal his rulings. General District Judge Ian M. O’Flaherty last month dismissed two more drunken driving cases after defense attorneys successfully argued that the Virginia law presuming intoxication at blood-alcohol levels of 0.08 or higher violates an obscure 1985 U.S. Supreme Court ruling. All 50 states have laws that establish such a presumption, and their constitutionality has been upheld. But O’Flaherty has sided with defense attorneys’ arguments under Supreme Court language from a 1985 case called Francis v. Franklin, which deals with prosecutors’ obligation to prove all elements of a crime beyond a reasonable doubt. Fairfax Commonwealth’s Attorney Robert F. Horan Jr. said a quirk in Virginia law makes it impossible for prosecutors to appeal when a district court judge decides a law is unconstitutional.

DISTRICT OF COLUMBIA

Hampton Takes Over: Washington, D.C. Mayor Anthony Williams appointed Thomas Hampton as the Acting Commissioner of D.C.’s Department of Insurance, Securities and Banking, succeeding Commissioner Lawrence Mirel, who left recently for private practice after serving in that position for six years. A veteran of DISB since 1988, Hampton most recently held the position of Deputy Commissioner. Before joining DISB, Hampton worked in the insurance industry for captive insurance companies in Bermuda, the Cayman Islands and American International Group. Also at DISB, Dana Sheppard, who was acting director of the Risk Finance Bureau at D.C.’s DOI, Securities and Banking, has been named the Associate Commissioner.