Battle Erupts Over Insurance Plan for MDs


A coalition of groups aligned with trial lawyers is denouncing a possible remedy to New York‘s medical malpractice insurance crisis: a state-sponsored indemnity fund that would pay the future medical bills of injured patients.

In a letter sent to Governor Paterson yesterday, the groups — including the Center for Justice & Democracy, the Center for Medical Consumers, and the New York Public Interest Research Group — criticized the proposal, which they said Governor Spitzer discussed with stakeholders before his resignation. The groups said the fund would relieve doctors, hospitals, and insurance carriers from paying for the future medical expenses of injured patients. Although the size of the fund was not immediately known, it would receive funding from the state’s Medicaid program or another state funding mechanism.

Policymakers have been searching for a solution to soaring premiums for medical malpractice insurance that have prompted some doctors to close their practices or move out of state. The latest move by the advocacy groups is a signal that efforts to ease the financial burdens being felt by physicians and hospitals — and, in some cases, passed along to patients, employers, and taxpayers in health care costs — may meet stiff resistance.

“We think it’s a crazy proposal, particularly these days when the budget deficit is such a problem in this state,” the executive director of the Center for Justice & Democracy, Joanne Doroshow, said.

In the letter, the groups also expressed dismay at being excluded from recent discussions about changes to the medical malpractice system. In a separate letter to Governor Paterson, officials from Consumers Union echoed that concern, writing that the exclusion of some groups from recent discussions did not inspire “confidence that the consumer perspective is being taken seriously.”

Yesterday, administration officials dismissed the notion that anyone had been excluded from discussions.

In July, following a 14% increase in malpractice insurance rates, Mr. Spitzer convened a task force to study medical malpractice in New York and to make recommendations for changes. The group – which included representatives from physician, consumer, hospital, and attorney groups – met several times last year.

“The administration is continuing to work with all stakeholders in an effort to develop a workable proposal,” a spokesman for the governor’s office, Morgan Hook, said.

In recent months, officials have considered a number of suggestions, such as imposing a cap on liability rates, freezing malpractice premiums, and imposing a one-time surcharge on physicians.

Sources said that in a meeting earlier this month, Governor Spitzer floated the idea of a state-sponsored indemnity fund.

Under the proposal, hospitals, doctors, and insurance carriers would no longer be responsible for paying the future medical expenses of injured patients. Rather, a state-sponsored fund would pay those expenses. The fund would be tied to the state’s $47 billion Medicaid program or it would receive other state funding, according to a source who attended the meeting. “The state will pick up the medical expenses in some way or another,” the source, who requested anonymity because of a confidentiality agreement, said. “It changes the rules of the game drastically.”

The source said Mr. Spitzer did not indicate whether he favored the proposal, but the former governor signaled his intention to include a proposal in the final budget.

Groups that signed yesterday’s letter said that intention prompted the communication to Mr. Paterson. “You have the budget coming up on April 1, so that was the driving force behind the letter,” a spokesman for a coalition of 13 groups called CURE-NY, John Guyette, said. “Obviously, it would be problematic if taxpayers are subsidizing malpractice.”

But as Mr. Paterson faces a looming budget deadline, some questioned whether malpractice reform is a main priority for the administration right now.

“This is a huge issue for us, but it doesn’t mean it’s a huge issue for everybody,” the vice president of the Medical Liability Mutual Insurance Company, Edward Amsler, whose company was represented on the task force, said. “If I was a governor of the State of New York with a budget crisis, that’s where I’d be focusing right now.”

Yesterday, administration officials hinted that recommendations are not likely until after a budget is passed. A spokesman for the state Insurance Superintendent, Eric Dinallo, who chaired the task force, said a proposal is still being worked on.

The governor’s spokesman, Mr. Hook, said a medical malpractice overhaul is “still a priority for the Paterson administration,” but added, “Obviously, the budget is foremost on his mind right now.”

Members of the medical community urged lawmakers to make recommendations soon. Medical malpractice insurance rates, which are set each year by the state’s Insurance Department, take effect July 1. However, new rates typically are set in May or June.

“That’s six weeks away,” a past president of the Medical Society of the State of New York who sat on the task force, Dr. Richard Peer, said. “Everything is sort of suspended right now because of the budget and the change in the governor and everything.”

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