FOR RELEASE:
March 23, 2011                                                                                                     

CONTACT:
Joanne Doroshow917/548-5263; [email protected]
Lisa Cohen, 310/395-2544; [email protected]

NEW CONSUMER REPORT FINDS BASIS FOR �SAVINGS�
IN MEDICAL MALPRACTICE PROPOSALS BOGUS

NEW YORK — As New York State’s medical industrial complex continues to pressure lawmakers to enact among the most Draconian restrictions on the rights of medical malpractice patients in the nation, including cruel restrictions on the rights of brain-damaged babies, Americans for Insurance Reform (AIR) announced today the release of a comprehensive new study of medical malpractice insurance in New York State that refutes the insurance industry’s basis for these measures. 

Joanne Doroshow, Executive Director of the Center for Justice & Democracy and AIR co-founder, said, “The notion that either claims or premiums in New York State are out of control is the most sensationalized fiction driving these horrendous medical malpractice proposals.  AIR’s study refutes the principal basis for the argument that a $250,000 ‘cap’ on damages for injured patients will result in massive insurance ‘savings’ for doctors and hospitals, an argument whose only public justification is a one-line sentence in the Governor’s Medicaid Redesign Team’s Proposal 131, referencing Milliman, an insurance industry consulting firm that we and others have discredited in the past.” 

AIR’s study, called “Medical Liability and Malpractice Insurance in New York State,” (full study here: http://insurance-reform.org/AIRNYMRTF.pdf) examines over 30 years of New York insurance data proving that New York’s insurance rate increases and decreases are not driven by the legal system or jury verdicts, and that the causes of and solutions to any insurance problems that exist here lie not with the legal system (i.e., capping damages) but with the business practices of the insurance industry.  The analysis was done by J. Robert Hunter, Director of Insurance for the Consumer Federation of America, and formerly the Commissioner of Insurance for the State of Texas, and Federal Insurance Administrator under both Presidents Carter and Ford.  AIR, which Hunter co-founded, is a coalition of nearly 100 consumer and public interest groups representing more than 50 million people, including many organizations in New York State.

AIR finds:

• Inflation-adjusted payouts per doctor in New York State have been stable, have failed to increase in recent years, and are comparable to what they were in the early 1980s. 

• Inflation-adjusted premiums per doctor in New York State are among the lowest they have been in over 30 years, comparable to what they were in the mid-1970s.

The study concludes that there is absolutely no reason to further limit the liability of doctors and hospitals, who already benefit from numerous liability protections in New York State for their negligence.

According to Doroshow, “Milliman is a company that works on behalf of and is paid for by the insurance industry.  This company has been severely criticized in the past for reports that use poor methodology to justify a client’s political agenda.  Their faulty analysis of a neurologically-impaired infant fund was brought up and harshly critiqued in 2007 during Governor Spitzer’s Medical Malpractice Task Force, on which I served.  And just one year before its flawed New York estimate, the company issued a similarly deficient national report claiming that ‘caps’ would lead to lower insurance rates, when history and objective studies showed the opposite.”

Among many problems pointed out by AIR at that time (see “The Milliman Report: Fatally Flawed”) were:

Milliman figures are fatally flawed because they are not adjusted for medical inflation, and are only inconsistently adjusted for the steadily increasing number of doctors. … Milliman’s failure to make these adjustments completely undermines its analysis. By comparison, AIR’s study makes these required adjustments. With these adjustments made, AIR’s insurance industry data show paid losses stable since the mid-1980s.

The source for Milliman’s claims data is the National Practitioner Data Bank, instead of more reliable insurance industry reports. The data source used by Milliman for premiums is completely unidentified; NPDB does not collect premium data so it unknown what data Milliman is using here.  AIR only uses insurance industry data provided by A.M. Best Company for its analyses, which provides both claims and premium data.

In making state comparisons, Milliman made no effort to hold equal other factors that might impact a state’s premium and loss results, like a state’s insurance regulatory law, whether a state had an elected insurance commissioner, and other differences between the states. 

Said Doroshow, “AIR’s study, with fully accessible data that anyone can see, stands in stark contrast to the secret industry information that the Governor and hospital lobbyists are using to justify these legal restrictions, allowing no independent verification or analysis, and releasing no government information to support it.  In fact, history is clear that capping medical malpractice awards does not lead to lower premiums for doctors or hospitals because what drives rate hikes is not the state’s ‘tort’ law, which the AIR study confirms.” (See, http://www.centerjd.org/archives/states/newyork/CapsDontWorkF.pdf)

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Americans for Insurance Reform is a coalition of nearly 100 consumer groups from around the country that works to strengthen state oversight of insurance industry practices.  AIR is not connected to any trial lawyer or business group.