Surgeons demand refund from insurer; St. Paul paid stockholders instead of holding reserves for claims

Charleston Gazette
Monday, July 8, 2002

A group of Charleston surgeons believes a major insurer may owe 1,270 West Virginia doctors an estimated $30 million because it abandoned them last year.

That’s about how much these physicians paid St. Paul Insurance Co. for “tail coverage,” meant to handle medical malpractice claims that don’t surface until after a doctor stops practicing, the surgeons allege in a lawsuit.

Drs. Eric Mantz, Willis Trammell and Todd Whitsberger also blame St. Paul’s “grossly poor management” for the company getting out of the medical malpractice market worldwide last year.

A brief filed last week in the case cites a recent Wall Street Journal investigation that found that St. Paul “released” $1.1 billion between 1992 and 1997 that had been reserved to cover malpractice claims.

“According to The Wall Street Journal, St. Paul’s problems arise exclusively because of grossly poor management,” the brief said.“St. Paul wrongly distributed $1.1 billion in malpractice reserves to stockholders and other company projects instead of holding those reserves to pay claims.”

Other parties in the fray include the Consumers Union, the publisher of Consumer Reports. It joined the Consumer Federation of America, U.S. Public Interest Research Group and the Center for Justice & Democracy last week welcomed a GAO investigation and lauded the Wall Street Journal’s investigation.

For a copy of the complete article, contact CJ&D.

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