Insurers and doctors accuse trial lawyers of manipulating the courts so they can pocket huge awards. "The trial lawyers are virtually the only people who are fighting to preserve our out-of-control liability system because they are feeding at its trough," said Mark S. Seigel, president of the Maryland State Medical Society and a practicing obstetrician/gynecologist in Gaithersburg.
Trial lawyers point the finger at bad doctors and poor investment decisions by insurers. Insurers invest the bulk of the money they raise through premiums in bonds and stocks, and when those investments falter, insurance companies have less money to pay out. "The crisis is manufactured by the insurance industry for the benefit of the insurance industry, and too many doctors have been conned into advocating the cause of insurers as opposed to the cause of their patients," said Carl Carlton, a spokesman for the Association of Trial Lawyers of America.
Doctors marched in Richmond in February, calling for tougher caps on court awards.
(Bob Brown -- Richmond Times-dispatch)
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Insurers disagree that their investment strategies are the problem. "Two thirds of our investments are in bonds," said Robert P. Hartwig, chief economist at the Insurance Information Institute. "Even if our investment situation had stayed stable, we still would have been losing a lot of money because of the rising awards and settlements and other tort-related costs."
Whatever the cause, the result has been that since the mid-1990s, medical malpractice carriers have been squeezed. Many that haven't been forced out of the business retrenched dramatically or abandoned it voluntarily, including St. Paul Cos., once the nation's largest medical malpractice carrier.
Against this backdrop, NCRIC struggles to regain its footing in an industry it entered 24 years ago, in a climate similar to the one today. In the mid-1970s, the average cost and number of paid claims skyrocketed and commercial carriers cut back on issuing policies.
States responded by tightening laws that govern malpractice lawsuits. And doctors began forming their own insurance companies, such as NCRIC, which was created in 1980 by the Medical Society of the District of Columbia.
NCRIC expanded into Maryland and Virginia when a growing number of D.C. residents moved to the suburbs and D.C. doctors began setting up offices to serve them. Last year, it collected 33 percent of its premiums in the District, 32 percent in Virginia, and 12 percent in Maryland.
Malpractice carriers struggled in the mid-1980s because of a surge in lawsuits, but in the early 1990s, the business environment improved dramatically. Claim rates were relatively stable or even declining a bit, settlement and verdict amounts were growing but not rapidly, and investment income was high.
As the business grew more profitable, companies with excess capital wanted to invest more aggressively and mutual companies began to de-mutualize. Among them was NCRIC Group, NCRIC's parent company. It went public in 1999, raising $8.4 million, and then raised another $39.5 million in 2003 in a second offering.
The company moved into Delaware in 1997 and West Virginia in 1999. The idea was to create a "contiguous presence" in the mid-Atlantic region, said R. Ray Pate Jr., NCRIC's president and chief executive.