The Great Malpractice Insurance Scare of 1986 is over in West Virginia, but only after a lot of teeth-knashing, name-calling and a pitched lobbying battle that created a number of strange political alliances.
Doctors and hospitals in the state have been saying for weeks that they would have to close their doors at the end of this month when three major insurance companies planned to cancel malpractice insurance coverage for most of the state's medical providers.
These companies had said they would cancel coverage because this spring the legislature tightened regulation of the insurance industry. The law was scheduled to go into effect in two weeks.
But the West Virginia legislature, called into special session this week, reversed course, removed the provisions most troublesome to the insurance industry and thus ensured that most of the companies will remain in the state.
In the West Virginia capital, the malpractice crisis has dominated political debate since March, casting into sharp relief the nationwide debate about the cost and availability of liability insurance of all stripes.
Republican Gov. Arch Moore, who had proposed setting up an unprecedented state-run insurance fund to fill the void that would be left by the companies' withdrawal, labeled the latest legislative changes "total capitulation" to the insurance industry. But he has indicated he will sign the bill.
Indeed, Moore and the heavily Democratic legislature had little choice, according to politicians on both sides of the aisle in Charleston.
"The people of this state were faced with a crisis where they couldn't get medical care come May 31," said Dan Tonkovich, the president of West Virginia's senate. "We felt we could not play Russian Roulette with an unknown plan."
The insurance companies cite West Virginia as further evidence of how our civil justice system has spun out of control, awarding ever larger and unreasonable judgments against doctors and other professionals. To trial lawyers and consumer advocates, however, the West Virginia crisis is yet another crisis manufactured by insurers to coerce state legislatures to limit the rights of victims of professional negligence.
The debate in West Virginia also galvanized some of the state's most powerful figures and interest groups to battle -- often in strange combinations. Moore, a conservative who has won three terms as governor through his flamboyant brand of Populism, found himself on the same side as his traditional nemesis, the liberal Charleston Gazette, which joined him in flailing the insurance industry.
In another unsual twist, doctors here joined the insurance industry in pushing for a change in the malpractice law. Lobbyists for the medical association and other health groups have said they found the changes sought by the insurers to be reasonable; critics have said the doctors have been carrying water for the industry in its efforts to change the law and carry out other forms of tort reform.
"The doctors just came up here wholesale and did their the insurance industry's bidding," charged Truman Chaifin, a plaintiff's lawyer who serves as the chairman of the Senate Judiciary Committee.
David Morgan, president of West Virginia's medical association, termed the charge "utter nonsense."
"I'm pleased to hear it. That means we've been effective," said Morgan, who this spring led a major effort by physicians to persuade legislators to change the liability laws.
Although the insurance companies won the short-term battle this week, victory was not cheap in a state inclined to resent meddlesome outsiders. Bad feeling against the insurance industry is running high among West Virginians for insurers "holding a gun to our heads," as one legislator here put it.
"Here are a group of people who have managed to become the most hated group of people in the state," said Jim Humphreys, a Democratic delegate from Kanawha County. "They may attract more venom than nonunion coal operators."
"Everyone is really wound up and angry at the insurance industry," added Joseph Albright, the speaker of the House of Delegates, who struggled this past week to keep hostile legislators in line.
Even representatives of the insurance industry, though they say the criticism is unwarranted, acknowledge they've done a poor public relations job.
Dennis Vogelsberger, an official with McDonough Caperton, an insurance brokerage firm that handles much of the liability business in the state, said there is "great hostility to the insurance industry."
"I think it is unjustified," he added. But he said, "The insurance industry has done a very poor job of communicating how it operates to the public."
The hullabaloo in West Virginia originated in the waning days of the legislature's regular session, when legislators considered a sweeping medical malpractice insurance bill. As in many state legislatures this spring, one of the items on the plate was reform of the state's liability laws, which insurance companies and doctors generally contend have led to an escalation of lawsuits and expensive judgments and settlements. Legislators agreed to some modest reforms, including capping awards for noneconomic damages at $1 million.
But the bill included unusually tough language forcing the malpractice insurance companies to disclose much more detailed financial information about their business; it also severely limited their ability to cancel or not renew policies.
Soon after Moore signed the bill in April, CNA Financial Corp. and St. Paul Fire and Marine Insurance Co. sent out notices of cancellation to more than 1,000 doctors they insure and hundreds of other medical providers.
A third firm, Ohio Hospital Insurance Co., told 34 hospitals in the state -- about half the total -- that it would cancel their policies. Other firms followed suit.
"If they didn't make the decision to pull out then, then perhaps they could never pull out," said Wayne Sinclair, a Charleston attorney representing St. Paul and the American Insurance Association, who noted the new law was scheduled to go in effect at the beginning of June.
West Virginia's attorney general, Charles Brown, almost immediately filed a suit against the insurance companies, accusing them of violating the state's antitrust laws -- charges denied by the companies.
At a dinner meeting with insurance industry representatives and officials of the state's medical association, legislative leaders agreed to support a compromise removing the language of the bill that most irritated the insurers. This included taking out the restrictions on nonrenewals, and easing reporting requirements.
For his part, the governor had a grander notion: bringing the state itself into the insurance business. Under his proposal, the state essentially would run an insurance fund that all doctors and hospitals would be required to join. In addition, malpractice claims would be adjudicated by a special commission set up by the governor, rather than by state courts.
Moore called a special session of the legislature to hear this and other proposals. But the legislature shot down his proposal, choosing the compromise commonly known around the statehouse as the "Band-Aid" approach. As legislators tell it, the governor's plan was poorly conceived, hastily put together and would have exposed the state to extreme financial danger.
To Moore, the legislature's approach amounted to surrender. "It's as clear as the noses on our faces," the governor said, "because they came in, they removed the points that the insurance industry desired to be removed . . . "
But Moore will sign the bill. "If this is all the legislature is going to give me . . . I have to accept it," he said.
The insurance companies "have already indicated that they're coming back for tort reform," Moore continued. "They've flexed their muscles, and they're using West Virginia as a battleground. I suggest to you that we'll have this same crisis in another six months or a year until they finally get it." reform," Moore continued. "They've flexed their muscles, and they're using West Virginia as a battleground. I suggest to you that we'll have this same crisis in another six months or a year until they finally get it."