But then the collapse of the stock markets and falling interest rates, along with medical inflation and litigation costs, hurt the balance sheets of most medical malpractice insurers. NCRIC reported $4.2 million in losses last year, compared with $742,000 in profit the previous year. Revenue grew to $61.3 million compared with $42.7 million.
In the quarter ended June 30, it posted $437,000 in losses, compared with a profit of $542,000 at the same time last year.
Doctors marched in Richmond in February, calling for tougher caps on court awards.
(Bob Brown -- Richmond Times-dispatch)
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Adding to the company's woes, earlier this year, a D.C. Superior Court jury sided with the defunct Columbia Hospital for Women Medical Center and returned a $18.2 million verdict against NCRIC. The court case arose when NCRIC tried to collect $3 million in premiums allegedly owed by the hospital. The hospital countersued, charging that NCRIC overcharged and encouraged doctors to practice elsewhere. The company has asked a trial judge to overturn the jury's verdict. The company said it has not accounted for this verdict in its financial statements because it thinks it will prevail.
In addition, an NCRIC agent committed fraud by collecting premiums from a Northern Virginia health care provider and pocketing the money. When the incident was discovered, the agent was prosecuted and put behind bars. And although the agent is responsible for restitution, NCRIC paid $1 million to cover two claims filed by the health care provider -- $600,000 of it in the second quarter.
Despite NCRIC's losses and other problems, A.M. Best Co., which tracks the insurance industry, gives NCRIC an A- or "excellent" rating, the fourth highest ranking out of 15. The rating takes into account the adequacy of the company's reserves, the market value of its assets and the competency of its management.
Last year, NCRIC asked West Virginia officials for permission to increase its premiums by 35 percent effective Jan. 1, Pate said. In January, state insurance officials instead approved a 9.8 percent increase.
Lynette Maselli, spokeswoman for the West Virginia Insurance Commission, said the agency had its actuaries and analysts review NCRIC's request. "We could not see how a 35 percent increase was justified by the rate filing they submitted, Maselli said. "We have to allow companies to remain solvent but we also have to afford consumer protection and we can't allow them to charge rates that are excessive or discriminatory."
NCRIC immediately notified all 250 doctors it covered in the state that it would not renew their plans.
"It is the first and only time that we have decided to leave a state," Pate said. "We spent a lot of energy trying to get over that decision. In a sense, we felt we had failed even though it was a regulatory issue, not a failure on our part . . . We were being asked to take a huge financial risk."
Without NCRIC, doctors who lost their coverage had only one place to turn: the West Virginia Physicians' Mutual Insurance Co., a nonprofit that opened July 1.
Up until that point, hundreds of the state's doctors were insured by a state-run program created in 2001 after St. Paul Cos., West Virginia's largest insurer, and other insurers left the state. In July, the state legislature decided to transfer all 1,400 state-covered doctors to the mutual in an effort to reinvigorate a private malpractice marketplace.
"But no one ever intended for the mutual to cover all the state's doctors," said David Rader, president and chief executive of the mutual. "We welcome competition."
In August, NCRIC got the state's insurance officials to approve a 9.5 percent increase in premiums effective this month, on top of the already approved 9.8 percent that took effect in January. As a result, NCRIC returned to West Virginia.
Blume hoped that NCRIC would reinstate his coverage, and NCRIC offered to. But at too steep a price: $18,502.19 for the year, said Blume, and that was the discounted rate for part-time doctors.
Even before NCRIC returned, Blume had sought insurance from the West Virginia mutual. But it rejected him, possibly because he had three claims against him, all filed by patients who had no insurance. He was acquitted in one case, dropped from another and settled out of court in the third, Blume said.
By Thursday afternoon, Blume said he was leaning toward practicing insurance-free. Going without insurance means he will have to give up his privileges at area hospitals and nursing homes.
"I've just decided to go bare, that's what I'm thinking at the present time," Blume said. "We'll take care of whoever comes to our door, anyone that's sick, but that's it. I'll be saying goodbye to my nursing home patients in the next few days."