Lawyers vs. doctors
The Colorado Physicians Insurance Companies (COPIC) and the Colorado Trial Lawyers Association aren’t often on the same page. But they do agree on one point: COPIC – the nonprofit, doctor-run medical malpractice carrier – plays hardball.
We don’t think that’s a problem. In fact, the forceful tactics COPIC employs in defending its members against lawsuits probably lowers the cost of practicing medicine in the state. That cuts the medical bills of all patients.
But COPIC drives trial lawyers crazy. The insurer is more likely to defend its clients in court than its competitors, and more likely to win. So it pays less in settlement costs than other providers.
The trial lawyers are the main backers of Senate Bill 248, legislation that would force any dominant insurance carrier (but not its smaller rivals) to jump through new regulatory hoops if it wants to raise rates.
Nowhere does SB 248, sponsored by Senate President Joan Fitz-Gerald, D-Coal Creek Canyon, name COPIC. But make no mistake. COPIC is the target. The company insures approximately 80 percent of the physicians who practice in the state. According to the ratings agency A. M. Best Co., it accounts for slightly less than 60 percent of the premiums paid by doctors.
In the view of Fitz-Gerald and the so-called consumer lobby, that’s a monopoly that requires tighter oversight from regulators. But with roughly 40 percent of premiums collected by other insurers, COPIC has nowhere near monopoly power.
The vice president of the trial lawyers, Darren Schanker, told us that because the state placed caps on damage payouts in the 1980s, Colorado should have the lowest “med-mal” rates in the nation. Instead, it ranks toward the middle. The upshot, in the trial lawyers’ view, is that the extra oversight in SB 248 would protect consumers.
But why would trial lawyers care so much about doctor premiums? Even if the solicitude is genuine, physicians can buy insurance elsewhere. They may stay with COPIC because of the service they receive, and its business strategy, which President Steve Rubin told us means “aggressively defending good medicine” in court.
Over the past eight years, COPIC says that in 62 percent of the cases filed against its members, it has not paid a penny to the party filing suit. No settlement(or court award), no fees for lawyers.
On average, it costs the insurer nearly $27,000 to defend each case. But since the average settlement payout nationwide is more than $125,000 – the median jury award is nearly twice that much – fighting may be cheaper than caving.
That may be why COPIC has so much business, and why the plaintiffs’ bar is after it.
SB 248, which passed an initial vote in the Senate on Thursday, defines a “Type 1” provider so that only COPIC might qualify, and would then subject it to greater scrutiny from regulators.
If a Type I carrier imposed a rate increase of more than 5 percent, “any qualified person” could demand a hearing by the Division of Insurance that would force the company to open many files for “public inspection.”
Rival insurance companies, activist groups and even lawyers who handle malpractice cases could peer into the company’s books.
Current law lets the Division of Insurance invalidate a proposed med-mal rate hike only if “a reasonable degree of competition does not exist” in the classification covered by the increase.
SB 248 would strike that phrase from the books. It would also subject a single company in a competitive environment to harassment. It deserves to die.