N.Y. Doctors Could See $50,000 Fee
BY E.B. SOLOMONT – Staff Reporter of the Sun
A $50,000 extra fee imposed on each doctor in New York State or “substantially” higher insurance rates for physicians with histories of losing malpractice cases could be part of the solution to the state’s medical malpractice insurance crisis, state Insurance Superintendent Eric Dinallo told The New York Sun in an interview.
Mr. Dinallo is co-chairman, with the state’s health commissioner, Dr. Richard Daines, of a task force created this past summer by Governor Spitzer that was assigned to report by the end of this year on ways to slow increases in malpractice premiums. The premiums, which are set by the state Insurance Department, rose 14% this year, the largest increase since 1993.
The rates, which are set by county and medical specialty, have forced some doctors to close their practices and raised fears of shortages of physicians in some specialties. A Brooklyn brain surgeon now pays $267,000 a year in malpractice insurance premiums and an obstetrician in Queens pays $180,490.
Members of the state task force have met six times behind closed doors, but several groups represented on the panel are at odds, including doctors, trial lawyers, consumer advocates, and insurance underwriters.
Mr. Dinallo said some possible recommendations include changes in the civil litigation system, increased physician accountability, and risk distribution, which could foster a more competitive insurance market. He also suggested issuing bonds or turning to the wider insurance industry to address the underwriters’ debt.
“There’s no lack of ideas,” Mr. Dinallo said.
Mr. Dinallo has argued that insurance rates had been artificially low for more than a decade and that the suppressed rates discouraged new carriers from entering the market. A state-regulated insurance pool for high-risk physicians, the Medical Malpractice Insurance Plan, is currently $500 million in debt, he said.
Mr. Dinallo said he had not anticipated that insurance carriers would pass on the 14% rate increase to doctors across the board. “I think people should, within reason, pay for their own piece of it, up to a point,” he said. “I think that we do need to be much more realistic about the rates of medical malpractice insurance. If you are a doctor who has a lot of meritorious claims against you, or payments, then maybe your rates should be substantially higher.”
A surcharge would take the form of a bill to doctors at the end of the year, Mr. Dinallo said. While such a fee has not been imposed in New York in several decades, it may be necessary to offset debt incurred by insurance carriers. If imposed, doctors could be charged $50,000 each, with higher-risk doctors facing higher fees.
Such a surcharge would likely be resisted ferociously by doctors already complaining about insurance premiums that are among the highest in the nation. If it were imposed, the surcharge could ultimately be passed along to patients or health insurance purchasers in the form of higher fees.
Mr. Dinallo defended the idea by describing the depleted reserves of the state’s medical liability underwriters. He said the insurance department is entitled to impose a surcharge on doctors in the event that insurance rates, which are set at the beginning of the fiscal year, do not enable insurance companies to cover the claims and settlements that accumulate during the year.
“I’m just very worried, as the head of the insurance department, that we have carriers that are able to fulfill their obligations and come in with payments when necessary and that we don’t end up with an insolvent market, which I think we’re close to,” Mr. Dinallo said.
“Let’s be clear,” Mr. Dinallo added. “The law says it should be surcharges, but I think we’ve built up such a mess” in the residual plan “that we can’t actually do that.”
Mr. Dinallo discussed these options for dealing with the state’s medical malpractice insurance crisis in a wide-ranging interview at his Manhattan office, decorated with canvases he painted more than two decades ago when he was a college student who favored abstract shapes and bold color schemes. Mr. Dinallo, 44, has since retired as a painter, but factions from doctors to insurers are looking to him for a creative solution to the medical malpractice insurance problem.
Mr. Dinallo’s portfolio in the Spitzer administration extends beyond that issue. In May, he helped to negotiate a $2 billion settlement for insurance claims associated with the terrorist attacks of September 11, 2001. Last month, he developed, along with the state comptroller, Thomas DiNapoli, a set of regulations to help protect the state’s pension fund, which has $154 billion in assets.
A graduate of Vassar College, Mr. Dinallo earned a master’s degree in public policy at Duke University and a law degree from New York University. He was a prosecutor for the Manhattan district attorney, and he served as chief of the investment protection bureau for the attorney general’s office under Mr. Spitzer.
Later, Mr. Dinallo was managing director and head of regulatory affairs at Morgan Stanley. He served as general counsel for Willis Group Holdings before his nomination as insurance superintendent.
In his current position, Mr. Dinallo said he is looking to update the insurance industry’s regulations, and he is considering reviving the New York Insurance Exchange. Mr. Dinallo is also part of an effort to offer universal health insurance to New Yorkers. He said he would support a requirement that children show proof of insurance coverage when enrolling in day care or school.
In the coming weeks, however, his attention will be focused on the medical malpractice insurance crisis.
“The deficit has to go somewhere eventually, unless we turn lead into gold or print money,” Mr. Dinallo said. “Other insurance companies that are sitting in the wings don’t want to come into the market until we figure out how that deficit is going to be allocated. They don’t want to come into the market and learn that they will have to carry that.”