Bad medicine

Cozy relationship between doctors and insurance companies muddies tort reform debate

White-coated doctors marching on the state Capitol makes for good political theater. But Armani-suited insurance executives doing the same ain't exactly must-see TV. Insurance companies rate on the public hug-ability scale at about the same level as trial lawyers. But if a doctor appears before you, your fears should be allayed, right?

Not exactly.

If legislators were to get a clear picture of the fight for tort reform, they'd see pinstripes for every white coat. Instead, they see doctors. It's a misleading view.

If some of this sounds like a rerun from the 2003 General Assembly session, it is. But what's different this season is that the seemingly rock-solid arguments made by the health care industry are crumbling.

In a nutshell, the health care industry is arguing that an increase in million-dollar-plus court settlements is causing malpractice insurance rates to skyrocket. What those in favor of tort reform want, among other changes, is a $250,000 cap on pain and suffering damages to control insurance costs. That's the grand prize.

MAG Mutual, which provides malpractice insurance to 75 percent of the state's doctors, contends that out of control jury awards accounted for a record number of minimum-$1 million payouts — 20 in 2002.

Consumer rights groups, victims and lawyers, however, say such a cap denies justice to people permanently disfigured or killed because of medical errors. If you drastically reduce jury awards, attorneys will only take the most egregious cases. In those cases, juries would still be able to award multimillion dollar verdicts — not to pay for suffering but for ongoing medical expenses.

The way tort reform has been portrayed in the media, though, you'd be forgiven for thinking this is a fight between doctors and ambulance-chasing lawyers. A clearer picture of the tort reform fight would show physicians walking shoulder-to-shoulder with insurance executives. Here's why:

First, MAG Mutual paid Georgia's largest physicians organization, Medical Association of Georgia, $675,000 last year in a so-called endorsement deal — by far the organization's single-largest contribution. Most of the organization's endorsement deals, with companies such as Pfizer total around $5,000.

Second, because MAG Mutual is basically a co-op, when it makes money, profits are supposed to be returned to doctors as reduced malpractice rates. That's another clear incentive for physicians to go to bat for their insurer.

Dr. Ralph Haynes, a pulmonary specialist who serves on the Finance and Claims Committees of MAG Mutual, sees nothing sinister about the cozy financial relationship between the insurance company and the Medical Association of Georgia.

The Medical Association founded MAG Mutual in 1982, Haynes points out, and the association "certainly supports and advertises its former creature."

But why, asks Allison Kelly, executive director of consumer advocacy group Georgia Watch, is MAG Mutual, which insures about 12,000 doctors in Georgia and is virtually the only game in town, making a $675,000 payment in exchange for an endorsement from the 7,000-member Medical Association?

"With a single sum that large, frankly, it makes me wonder if that endorsement agreement isn't really a method to pay the doctors' political organization to carry water for the insurance companies," Kelly says.

According toFrank Clemente, director of the consumer group Public Citizen's Congress Watch division: "If [a portion of the medical organization's] budget is paid for by the insurance company, obviously there's a conflict of interest at work there. This is a hand-in-glove arrangement between the doctors and their insurance company."

Perhaps the most frightening contention of the health care industry is that doctors will flee Georgia because of rising malpractice rates. In a story in the Atlanta Journal-Constitution, Haynes cited a fall 2003 study in which 65 percent of the ob-gyn's surveyed said they would stop delivering babies by autumn 2005 if insurance rates weren't leveled.

But the number of malpractice payouts by ob-gyn's actually declined 22 percent nationally from 2001 to 2002, according to information from the National Practitioner Data Bank.

Haynes dismisses the Ralph Nader-founded Public Citizen and its statistics by saying it's funded by trial lawyers. Actually, most of the group's money comes from grants and private contributions, and only one-tenth of the work it does is in the area of medical malpractice.

More damning is a recent study by the federal government's General Accounting Office. Examining so-called "crisis" states, the GAO found the per-capita census of doctors unchanged. Doctors just weren't leaving.

And MAG Mutual's own promotional material paints a different financial picture than the one described to legislators.

Its president says MAG Mutual lost $10 million in 2002 and will lose $3 million in 2003. But in seven Southern states, the company covers some 15,818 physicians, and during the last eight years has paid $33 million in dividends — a sign of financial well-being.

Meanwhile, MAG Mutual closes 85 percent of claims with no payment, according to its own promotional literature. In testimony before a House subcommittee, a MAG Mutual executive testified that in 2003, only 42 malpractice cases actually made it to trial. Of them, MAG Mutual won 25 and lost four. The rest were deemed mistrials or withdrawn by the plaintiff — not a bad winning percentage.

The answer to
rising malpractice premiums, according to consumer groups and victims, is not a cap on court settlements, but better oversight of doctors.

Kelly and Clemente would like to see more money spent on the state's Composite Board of Medical Examiners, which is supposed to police Georgia doctors. Instead, the board's funding, like every other state agency, is going to be cut this year. According to recent data compiled by Public Citizen, Georgia disciplined less than 7 percent of all physicians who paid medical malpractice claims during the previous year. The best state, Colorado, averaged just above 17 percent.

Kelly also wants the names of doctors with multiple guilty verdicts in malpractice cases made public. Currently, consumers can't even look up their own doctors' names to protect themselves.

But Clemente claims that doctors and insurance companies aren't worried about protecting patients.

In my estimation, the doctors have already been successful in their strategy," Clemente says, "which is to make it harder to win lawsuits against them and against hospitals."