... and Justice for All

Windfall Profits for Kentucky Medical Malpractice Insurance Companies

    That Kentucky's four largest medical malpractice insurers are reaping windfall profits at the expense of Kentucky's doctors, hospitals and patients was shown by a recent examination of the profitability, performance and financial condition of these companies for the time period 2002 - 2006.  The examination, which was conducted by Jay Angoff, the former Insurance Commissioner for the State of Missouri, analyzed the loss ratios, claims payments, reserves, surplus and dividend payments made during this period by Medical Protective Company (MedPro), State Volunteer Mutual Insurance Company (SVMIC), ProNational Corporation (ProNational), and American Physician's Assurance Corporation (APAC).  The report was based on the annual statements these companies have filed with the Kentucky Department of Insurance and the National Association of Insurance Commissioners.

    The study revealed the following notable conclusions: (1) SVMIC, ProNational and MedPro each had an incurred loss ration of less than 62%.  An incurred loss ratio of 62 means that for each dollar an insurer brings in in premiums, it projects that it will ultimately pay out 62 cents in claims, thus leaving 38 cents of the premium dollar, as well as all investment income, available for expenses and profit.  (2) MedPro, SVMIC, and ProNational each had a paid loss ratio of less than 31%.  An insurer's paid loss ration measures and insures actual claims payments and is an indicator, not of an insurer's profitability, but rather its cash flow.  Most notably, it was found that ProNational took in $71.4 million in premiums during the study period but paid out only $2.5 million in claims.  (3)  All four of the companies have paid out substantially less in claims than they initially estimated: ProNational's estimates were overstated 12.6%, MedPro's 14.4%, SVMIC's 23.0%, and APAC's 33.5%.  (4)  Because of their cash flow each of the companies were sitting on mountains of cash far exceeding the minimum surplus that the National Association of Insurance Commissioners require them to hold: ProNational's surplus was 385%, APAC's 509%, SVMIC's 618%, and MedPro's 897%.  None of the companies had issued any dividends to the policy holders. 

    The Kentucky Insurance Commissioner is without authority to order refunds be paid to doctors who have paid excessive rates.  Instead of pursuing this reasonable objective, the thrust of the Kentucky General Assembly these past few sessions has been to pursue legislation that would limit the amount that an insurance company would have to pay on the most egregious and harmful cases of medical malpractice.

Robert L. Abell
www.RobertAbellLaw.com

It Is Presumed That You Have Given Up Your Constitutional Rights

As a general rule, before a court concludes that an individual has given up or waived an important right it must be demonstrated that the individual was fully and adequately informed of the existence of the right, that the individual understood what that right meant in practice, that the individual knew that whatever they were about to say or sign or do would cause them to give up that right and that the individual knowingly and voluntarily gave up the right.  There is, as a general rule, a presumption against the notion that an individual has given up an important right.

It says here that among our most important rights is trial by jury.  But don't take my word for it.  The Seventh Amendment to the United States Constitution preserves the right to trial by jury; Section 7 of the Kentucky Constitution states: "The ancient mode of trial by jury shall be held sacred, and the right thereof remain inviolate, subject to such modifications as may be authorized by this Constitution." 

Increasingly in recent years businesses and employers have sought to evade the very possibility that they will be held responsible by a jury for their misconduct by demanding that employees and consumers arbitrate any dispute of any kind that they may have with them.  Consumers that sign lengthy and complex form agreements find that in the teeny-tiny fine print that they have waived their right to trial by jury and agreed to arbitration.  Employees that are sent an e-mail stating that their employer has adopted a new policy of arbitrating any and all employment-related disputes including employment discrimination claims and show up for work the next day are deemed to have given up their right to trial by jury.  It is estimated by the National Employment Lawyers Association that up to one-fifth of workers (approximately 30 million people) are subject to arbitration agreements in their jobs.  Furthermore, courts rule that if there is a question or close call whether an individual has agreed to arbitration, the presumption is that they have.  In other words, it is presumed that you have given up your constitutional and sacred right to trial by jury.  Well.

Robert L. Abell
www.RobertAbellLaw.com