Virginia's liability insurance crisis has defied the efforts and expectations of the General Assembly and appears to be worsening for many nurses, doctors and the state government itself, members of a special legislative committee and other experts said yesterday.

As if to underscore the insurance troubles that surfaced in the briefing for lawmakers in Richmond, 127 physicians filed suit in Alexandria yesterday seeking damages that could total as high as $3 million from a major insurance company that declined to renew their medical malpractice coverage last year.

"It's robbery," declared Dr. Janice L. Emery, a Burke obstetrician and a plaintiff in the case filed against Phico Insurance Co., the Pennsylvania-based firm that decided last July to stop insuring Virginia physicians who practice in groups of less than 10.

Emery said that as a result of Phico's actions last year, she and her partner must "come up with $120,000 in 13 months" to maintain their liability protection.

"We're being forced to sit back and take what they do to us," Emery added. "We're wondering whether we should continue in obstetrics."

A spokesman for Phico, which had insured about 1,600 of Virginia's more than 10,000 physicians, would not comment on the lawsuit, which was filed in federal court in Alexandria.

The physicians' lawsuit marks only the latest turn in a protracted, nationwide effort by doctors, civic organizations, hospitals, day care centers and other individuals and organizations to obtain adequate and affordable insurance protection against possible claims.

Armed with evidence that skyrocketing premiums were driving some people out of their chosen medical and service professions, Virginia legislators last winter enacted laws that were designed to keep a lid on those costs. However, the picture that emerged in Richmond yesterday was as bleak as ever.

Lawmakers on a special panel studying the liability insurance crisis expressed surprise and indignation as several witnesses, ranging from a lobbyist for nurses to the state parks commissioner, said they still are caught in the crunch of rising premiums and dwindling protection.

"This problem is not going away," said Charles F. Scott, a state government employe who specializes in managing insurance risks throughout the bureaucracy.

Scott said the state government has become caught up in the crisis, citing the insurance premium for state medical facilities, which has more than doubled in 12 months to $6 million this year, and the policy on the 15,000-vehicle fleet of state cars, up from $51 per car three years ago to $81 last year.

Insurance companies, Scott told the committee, "are boycotting public entities," even state governments with claims records as favorable as Virginia's.

Judith S. Castleman, a lobbyist for nurses who assist in births and care of newborns, said the major insurer of obstetric and gynecologic nurses in Virginia recently informed many of them that their premiums would shoot from about $60 a year to $1,500. Hardest hit would be the state's 500 nurse-practitioners, the key providers of medical care in rural parts of the state and at public health centers, Castleman added.

"It's a mess," she said.

Legislators also said they were dismayed by the 47 percent increase in malpractice premiums recently sought by the insurer of 4,000 doctors in the state. A spokeswoman for the St. Paul Fire and Marine Insurance Co. said yesterday from its Minnesota headquarters that the firm's request reflects "the number and severity of claims" against Virginia physicians.

The rate increase request is pending at Virginia's State Corporation Commission.

"I'm extremely disappointed we still have the worst problem with medical malpractice," said state Sen. William E. Fears (D-Accomack). Added Del. Thomas W. Moss Jr. (D-Norfolk): "We do everything we can, and premiums still go up. Whatever we do in Virginia won't make any difference."

In the Alexandria suit, the doctors asserted that some physicians, particularly obstetricians and gynecologists, "are being forced to abandon or curtail their practices" because of rising rates.

The suit alleges that Phico defamed the doctors by making "untruthful assertions" that there had been "an unexpectedly large increase in claims made against Virginia doctors, suggesting that {they} were committing malpractice more frequently or with greater financial consequences or both."