MINUTES OF THE
SENATE Committee on Judiciary
Seventy-second Session
March 24, 2003
The Senate Committee on Judiciary was called to order by Chairman Mark E. Amodei, at 4:21 p.m., on Monday, March 24, 2003, in Room 2144 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Attendance Roster. All exhibits are available and on file at the Research Library of the Legislative Counsel Bureau.
COMMITTEE MEMBERS PRESENT:
Senator Mark Amodei, Chairman
Senator Maurice E. Washington, Vice Chairman
Senator Mike McGinness
Senator Dennis Nolan
Senator Dina Titus
Senator Terry Care
COMMITTEE MEMBERS ABSENT:
Senator Valerie Wiener (Excused)
STAFF MEMBERS PRESENT:
Nicolas Anthony, Committee Policy Analyst
Bradley Wilkinson, Committee Counsel
Barbara Moss, Committee Secretary
OTHERS PRESENT:
Scott M. Craigie, Lobbyist, Nevada State Medical Association, Keep Our Doctors in Nevada, Alliance of American Insurers
Jack Meyer, Senior Vice President of Business Development, The Doctors Company
Kerry L. Earley, Attorney
Chip Wallace, Director, Provider Communications, Nevada Mutual Insurance Company
Chairman Amodei:
The hearing is open on Senate Bill (S.B.) 97.
SENATE BILL 97: Makes various changes relating to certain actions against providers of health care. (BDR 1-248)
Scott M. Craigie, Lobbyist, Nevada State Medical Association, Keep Our Doctors in Nevada, Alliance of American Insurers:
I would like to introduce the panel: Chip Wallace, director, Provider Communications, Nevada Mutual Insurance Company (NMIC), present on behalf of Andrew O’Brien, president, NMIC, who was unable to attend the meeting; Kerry L. Earley, defense counsel for health care professionals in the State of Nevada; and Jack Meyer, senior vice president of business development, The Doctors Company.
Mr. Meyer will begin with a Microsoft PowerPoint presentation specifically customized for the panel.
Jack Meyer, Senior Vice President of Business Development, The Doctors Company:
The Doctors Company was formed in California in 1975 and received a certificate of authority to write business in Nevada in 1980. It is a national, physician-owned, medical malpractice insurance company. It insures 28,000 physicians nationwide and approximately 800 in Nevada.
My presentation will use national, The Doctors Company, and State of Nevada data. I will proceed with the PowerPoint presentation entitled, “The Crisis of 2002-2003: Causes and Solutions” (Exhibit C. Original is on file in the Research Library.). I will discuss the problems of frequency, severity, and randomness. I will address the fallacy of the bad doctor, solutions, tort reform, theory, and practice. My mantra throughout the presentation will be predictability. Remember, without predictability you cannot have pricing. With predictability you know what price to charge for the product.
The graph on page 3 (Exhibit C) demonstrates frequency by specialty from 1995 to 2001. As you can see, a neurosurgeon is sued about once every 2 years, on average. An obstetrician gynecologist (OB/GYN) is sued once every 3 years, whereas a pathologist is sued only once every 8 or 9 years. This is the relative frequency of the different medical specialties.
I will talk about the California Medical Injury Compensation Reform Act of 1975 (MICRA), severity, and bad doctors. It is interesting to note on any given day there are more than 125,000 malpractice suits against America’s doctors. A neurosurgeon has 6.5 times the risk as an internist, anesthesiologists are a little better, and general surgery is 3.9 times the risk compared to 1 for internal medicine. These are the relative frequency of claims against specialties. We have had high, but stable frequency, but dramatically increased severity nationwide. Why? Part of it is dissatisfaction with medicine, erosion of the doctor-patient relationship, the impact of managed care, high tech care which seems sterile, and unrealistic expectations on the part of patients.
Things such as baseball players’ salaries and purses in golf tournaments have undermined juries’ understanding of the value of money. We have come to believe we live in a risk-free society and think a heart transplant should be as easy a procedure to perform as receiving an antibiotic for a cold. We know it is a more serious procedure, but expect it to be almost as successful.
There have also been incomprehensively large judgments in other areas. One example is the cigarette industry in California where there was an award of $28 billion against a cigarette manufacturer. Settlements track awards. Once again, the population becomes immune to the impact of enormous settlements.
In 1996, approximately 7 percent of The Doctors Company claims indemnity was between $500,000 and $1 million, and 3 percent was equal to or over $1 million. In 2002, 10 percent of our losses were between $500,000 and $1 million and, in terms of the $1 million awards, 8 percent were $1 million or more.
In terms of severity, in California the average loss is $50,000, nationally the average loss is $90,000, and in Nevada the average loss is $175,000. This is a tremendous difference in the size of an average award.
Chairman Amodei:
To what do you attribute the disparity in the average in Nevada versus nationwide?
Mr. Meyer:
States vary dramatically. The state of Iowa, for example, has a homogeneous population, no tort reform, and the awards are relatively modest. Certain urban areas have tremendous losses: Philadelphia, West Virginia, and Mississippi. I cannot say why Nevada falls into the same category as those states.
Senator Care:
You said the average claim paid in California, judgment or otherwise, was $50,000, whereas Nevada was $175,000.
Mr. Meyer:
The Nevada average closed claim from the Division of Insurance is about $175,000.
Senator Care:
How many claims per capita were there in California 2 years ago compared to Nevada for the same period?
Mr. Meyer:
I do not know, however, the problem does not appear to be a dramatic increase in frequency of awards, it is in severity of awards. Over the last 10 years, even though the population at The Doctors Company has increased significantly, our frequency of awards has remained the same or decreased a little. The mean jury verdict award went from $700,000 to $1 million in 2001. There has been a tremendous increase in severity.
A smaller number of claims represent a large percentage of a company’s paid indemnity. For example, 2.3 percent of our claims paid $500,000 or more, which represents 55.4 percent of paid indemnity.
Senator Nolan:
Do some states have a more litigious environment than others? We hear such anecdotes as, the population in Clark County tends to be transient, consisting of people without homespun roots, there is a transient population drawn into jury service, and there is a higher ratio of personal injury attorneys. When you look at writing a market, do you use any type of matrix which includes those variables to better help you understand the market? We need to get a grasp on what drives this market.
Mr. Meyer:
We look at losses over years. When marketing a state we obtain the filings of all the insurance companies in that state. Once again, we are talking about predictability and if there is a lot of volatility in a state with severe losses and lack of tort reform. I will repeat this over and over again, bad tort reform is worse than no tort reform at all. You think you have tort reform, but you really do not.
Chairman Amodei:
Do we have tort reform in Nevada?
Mr. Meyer:
Nevada passed a tort reform bill, but I do not believe it is effective.
Chairman Amodei:
Therefore, we have bad tort reform in Nevada rather than no tort reform at all.
Mr. Meyer:
I would say that.
Senator Care:
Assembly Bill No. 1 of the 18th Special Session, enacted during the special session, went into effect October 1, 2002. When did the medical community conclude it was bad tort reform?
Mr. Meyer:
In our minds, it is not adequate.
Senator Care:
When did Nevada doctors come to that conclusion? There may be a split between those who attended the Special Legislative Session, and others who did not wish to attend, or never intended to attend. Perhaps subsequent witnesses can testify on that. I do not want to feel we wasted our time when we interrupted our vacations to come to a Special Legislative Session for 3½ days.
Mr. Meyer:
I cannot address the Special Legislative Session because I was not there. From what I know of the bill and what I know of MICRA and its impact, later in the presentation I will be better prepared to venture a position on the reason I think the current law falls short.
Senator Care:
Is any legislation, other than MICRA, good tort reform?
Mr. Meyer:
Tort reform in Colorado goes further than MICRA. It has a $1-million cap on all losses, economic and noneconomic. When MICRA was written and passed it did not take that particular position because it wanted to make sure the injured patient received unlimited indemnity. In addition to unlimited indemnity, it wanted to limit the amount of noneconomic damages. Therefore, MICRA wanted to make sure it did not limit real damages, loss of wages, and medical care, but felt it necessary, over and above the real damages, to limit noneconomic damages. That is the hard cap and, in our opinion, is what makes MICRA work.
For example, Hawaii passed very innocuous tort reform. Why is there not a dramatic impact to MICRA to tort reform in Hawaii? It is because it has a cap and is at the discretion of the judge. I have been told by claims people that judges will never invoke the cap. Therefore, you have discretion, a lack of predictability, and no true tort reform. That is our position from working in California.
Senator Washington:
There is a question whether S.B. 97, which is fashioned after MICRA, is constitutional. If we enact S.B. 97 as is, are we faced with the possibility the legislation could be unconstitutional?
Mr. Meyer:
When MICRA passed in California, every provision was challenged over a 10‑year period and found to be constitutional.
Kerry L. Earley, Attorney:
We do not know about A.B. No. 1 of the 18th Special Session in regard to the cap because there have been no cases on it yet. The Nevada Supreme Court addressed the cap on sovereign immunity and $50,000 has been in place for a number of years. Case law found it constitutional. There is no vested right in the amount of damages. The right to damages and jury trial is constitutional, however, there is no vested right as to the amount of damages as long as there is a rational relation between what the Legislature did in imposing caps and legitimate public interest.
Case law in California had the same type of rationale. It had a similar preamble as S.B. 97 saying, “We have a health care crisis and an access-to-patient-care crisis.” They analyzed it and said, “We have a legitimate state interest and we feel it is happening in California. We are balancing a legitimate state interest with a rational relationship to what the legislature is doing.” That is how MICRA was challenged in California.
Will there be constitutional challenges? Yes, we know there will be a challenge to A.B. No. 1 of the 18th Special Session and S.B. 97, but there is case law from California from which to draw. There is some Nevada law on the $50,000 cap in place on sovereign immunity and a cap on punitive damages that is three times compensatory which has been on the books for a while. That is all the experience we have on caps in Nevada.
Senator Washington:
You indicated predictability is a pending factor on any type of legislation, including A.B. No. 1 of the 18th Special Session, which was passed and put into statute. If the constitutionality question is relevant, can you still determine or predict stability?
Mr. Meyer:
You make a good point. Until the provisions of your tort reform legislation are found constitutional there will still be anxiety about the permanence of tort reform. Illinois went through the whole process. Remember, when you have tort reform it only has an impact on new court cases, the ones in process are not affected by the caps. Consequently, there will be high awards even after legislation is passed.
Before the law was put into effect in Illinois there was a flurry of lawsuits. Six months or 1 year later the legislation was overturned, which did not add to the predictability or stability. There is no easy answer. You have to take a tough stand. I believe this is a long-term solution for your State.
Senator Washington:
The St. Paul Companies pulled out of Nevada. You are asking us to consider A.B. No. 1 of the 18th Special Session and determine the predictability. In essence, The St. Paul Companies pulled out causing a flurry of events that precipitated the special session.
Mr. Meyer:
The St. Paul Companies pulled out because it had to raise reserves $1 billion in the year it left. St. Paul Companies did not just leave Nevada, it left the medical malpractice industry. St. Paul Companies left because medical malpractice is not predictable.
Senator Washington:
Is that nationwide?
Mr. Meyer:
Yes, nationwide. The Doctors Company has been in Nevada since 1980 and has never left the State. We are doctor-owned and do not have stockholders. Our policyholders are the stockholders. We are writing at an approximate 120 percent loss ratio, with expenses it makes about a 145 percent combined ratio, and we cannot sustain it. We cannot write business at that rate. We are losing money.
Returning to page 6 of the PowerPoint presentation (Exhibit C), the increase in severity equals $1 million. In regard to the bad-doctor fallacy that 2 percent of the doctors cause 50 percent of the losses, the Harvard study says it is the degree of injury, not medical negligence that predicts the outcome. Many times juries react to the severity of the injury to the plaintiff rather than the legal matters.
Chairman Amodei:
How do you predict the severity of the injury? You said predictability is a key factor. Is there any way to predict severity of injury in an obstetric or neurosurgery sense?
Mr. Meyer:
There are severity grades on certain injuries; however, they are the real losses. The point is, 2 percent of the doctors cause 50 percent of the losses, but it is always a different 2 percent. There are not a lot of bad doctors, but the percentage of the doctors sued changes all the time. For example, fewer than 1 percent of physicians have 2 paid claims over a 10-year period of time. Only 1 in 5 doctors with a single paid claim gets a second one in 10 years, therefore, it is not really a bad doctor problem.
There is talk about a few bad doctors and insurance companies’ bad investments. In the old days bond yields came down. Doctor-owned carriers, such as The Doctors Company, subsidized premiums by using investment income. The Doctors Company does not write at an underwriting profit, unlike The St. Paul Companies with stockholders. No malpractice insurers ever had a negative investment income and malpractice insurers average less than 10 percent of assets and equities. I believe in Nevada it is 15 percent. The point is, yes, we have had a reduction in yields and cannot subsidize premiums as in the past. An OB/GYN in San Francisco pays $37,000 a year, an OB/GYN in Clark County, under The Doctors Company, pays $139,000 a year. The difference is not justified by the change in investment yields.
Chairman Amodei:
Would you discuss the challenge faced when writing premiums in Nevada, with only 3400 licensed doctors, versus the scale on which you write in California? Is pricing for varying pools affected when the loss is spread over 3400 versus the number in California?
Mr. Meyer:
You are correct. Actuaries explain critical mass thusly: unless there are a certain number of physicians in a state there is no critical mass and there will be more volatility. More importantly, the insurance company does not want to be the third or fourth choice of a doctor because it will not get the preferred physicians. Within a range there is enough predictability in a state like Nevada. When The Doctors Company wrote 1400 doctors in Nevada it was comfortable there was enough mass to make a prediction. It also has access to the filings of its competitors in Nevada.
Chairman Amodei:
I understand. One of the areas of greatest concern is premiums for OB/GYN practitioners in Clark County. When we are provided a Nevada‑to‑California comparison, I want to know whether the numbers are impacted by the number of OB/GYN practitioners in the pool you write in California, versus the number you write in Nevada. Or does size have nothing to do with it?
Mr. Meyer:
Size is impacted to the extent the less experience there is to draw from in an individual state, the more we use our own national experience.
Page 15 of the PowerPoint presentation (Exhibit C) indicates the final challenge was MICRA 1985. California Proposition 103 proponents say it actually limited premiums in California. Proposition 103 was an automobile insurance bill which caused medical malpractice companies to provide a dividend for 1 year, but it was not really a tort reform bill and did not have an impact on tort reform. As a matter of fact, The Doctors Company had been paying dividends for 11 years prior to Proposition 103, and dividends were higher prior to Proposition 103 than they were 5 years afterward. In the 5 years following Proposition 103 our rate increases averaged between 3 and 4 percent. The reason for that average was due to adequate rates and competition in California, and competition is healthy.
When MICRA passed in California, the goal was to have a sustainable insurance system providing full indemnification for actual loss. Earlier I mentioned Colorado with its cap on all losses, which California did not want. California wanted full indemnification for actual loss, more money for injured patients, faster settlements, and preservation of access to medical care without impeding access to courts for truly injured patients. California wanted to make sure the people in the state did not incur double costs and be assured the money was available at the time it was needed.
MICRA mandated a $250,000 cap on noneconomic damages. In other words, after all the real damages are paid, there is a $250,000 cap on noneconomic damages. The cap is per incident, not per claimant, and not per doctor. An important distinction between A.B. No. 1 of the 18th Special Session and S.B. 97 is a hard cap per incident.
Chairman Amodei:
There was discussion regarding some of the exceptions for gross negligence and exceptional circumstances. Was that the context in which you made that statement, or are there other provisions in A.B. No. 1 of the 18th Special Session to which you are referring?
Ms. Earley:
Assembly Bill No. 1 of the 18th Special Session has per plaintiff and per defendant. It has the stacking issue plus exceptions to the cap for gross malpractice and what is called “exceptional circumstances.” It is a two-edged thing and is not per claim or injury, it is per plaintiff and defendant. If there are five plaintiffs and one defendant, it is five times the $350,000. If there is one plaintiff and 18 defendants, it is 18 times $350,000.
Chairman Amodei:
Page 5, section 5, subsection 3, of A.B. No. 1 of the 18th Special Session says, “… Irrespective of the number of plaintiffs in the action, in no event may any single defendant be liable to the plaintiffs in the aggregate in excess of the professional liability insurance policy limit covering that defendant.” I think that means something in terms of absolute limits in some context. I do not want an immediate response. I asked our committee counsel to explain what was done in A.B. No. 1 of the 18th Special Session with respect to it because it is clearly one of the issues. I would like you to explain predictability with no potential limits. I will ask the trial lawyers to explain as well.
Senator Care:
The $250,000 cap has been the case since the inception of MICRA. Obviously, the longer the $250,000 cap stays, the less worth it is in terms of 1975 dollars. What is The Doctors Company position on attempts to raise the cap?
Mr. Meyer:
It has come up often. We believe indemnity payments have gone up faster than the Consumer Price Index (CPI) and other healthcare costs. The size of awards has outpaced inflation and the rest of healthcare. We do not believe pain and suffering awards need to be increased because general awards, the awards for real damages, have increased significantly. We feel the pain and suffering award, which is in addition to the real award, should remain the same. There are states in which there is a $500,000 index for inflation. We have seen a variety of things and believe a $250,000 cap, in the present environment, still does the job.
Senator Care:
In Colorado the victim is taken as a whole. Apparently there is no distinction, it is just the $1 million cap. It seems to me you could have economic damages over here and noneconomic over here, and one does not necessarily have anything to do with the other. Obviously you take a different approach. Would you address that issue?
Mr. Meyer:
They are handled differently depending upon the attorney and the litigation. I put them together because the actual damages are paid in full, and these are in addition. When I talk about predictability, the real damages are paid and, in addition, there is pain and suffering. Because there is a specific cap and it is very clear, resolution of claims are quicker. Therefore, more of the money goes to the plaintiff quicker. I, personally, put these together, but I do not know how they are addressed at a specific trial.
Senator Titus:
I find it interesting that you show up at a hearing to discuss tort reform, but you are not present at a hearing on insurance reform. There are a couple of bills on insurance reform and one is mine. We have not talked about it nor have you given me any input on it. You are anxious to do tort reform, but not insurance reform.
Also interesting is a press release that came out today where you talk about caps of $250,000 for a lifetime of pain and suffering and how hard-pressed insurance companies are to make it with all these high settlements. Yet, according to your statement, your chairman was paid $1,792,000 in compensation last year, and your president received over $2 million last year. It seems to me somebody is making money somewhere. Would you address that in light of the points you have been making?
Mr. Meyer:
I did not see the article and am not familiar with those figures. It still represents a small percentage of the premium. We write about $435 million in premiums a year; therefore, I believe the compensation is consistent with insurance companies of our size. I was asked by the chairman to attend this meeting, but I cannot address the reason we have not attended insurance reform meetings.
Page 91 of the PowerPoint presentation (Exhibit C) demonstrates that MICRA allows the collateral, outside sources to mitigate the loss. It allows for periodic payments. Once again—predictability—it smoothes out payments over a period. It also benefits injured parties because they have the money when they need to have it paid. It provides for a sliding scale on attorneys’ contingency fees which is still very adequate, but it puts more money in the injured party’s pocket.
Senator Care:
In regard to periodic payments, S.B. 97 states it can be done at the option of either party. The argument is the carrier can hold on to that money and receive a return on investment. There is also an argument to be made that sometimes people get a lump sum settlement and it is gone in a couple of years. In the case of a judgment, it usually is the plaintiff’s money, barring some sort of lengthy appellate process. Regarding the $250,000 cap in California, they know it is there and plaintiffs are paid quicker and allowed periodic payments of future damages.
Mr. Meyer:
We can enforce it and require the plaintiff to accept periodic payments.
Senator Care:
Is it not a contradiction when saying the $250,000 cap experience in California means the party is paid quicker, as opposed to the defendant insisting on periodic payments? However, I do not suppose the patient would get paid quicker. Do you see what I mean?
Mr. Meyer:
I understand what you are saying. It appears contradictory, but all awards are not periodicized.
Senator Care:
Is it the defendant’s option in California?
Mr. Meyer:
No, we can ask for periodic payments. I would be glad to provide the committee with the percentage. I understand all payments are not periodicized.
Senator Care:
I would be interested in knowing why a carrier would want it to be, or not want it to be, and what the situation would be.
Mr. Meyer:
When physician-owned companies started, they were small with little capital because the commercial insurance company raised rates 400 percent 2 years in a row and abandoned the state of California. There were no insurance companies available in California; therefore, physicians started their own companies. They did not have much money and had to get capital contributions from the doctors. This provision was made, in part, because a couple of million dollar awards would have put the companies out of business. Periodicizing the payments helped them find stability. It has never been changed. I will make it a point to let a member of the committee know the percentage of periodic payments and awards.
Senator Care:
In regard to claims per capita in California as opposed to other states, it seems to me the sliding scale limit on attorneys’ contingency fees would make it more difficult, in some cases, for someone who thinks he or she is a victim to find counsel to represent him or her.
Mr. Meyer:
Just the opposite is true in California. There is a 50 percent higher frequency in California than the rest of the county insofar as claims. It has not proven to be any deterrent to lawsuits. We have a considerably higher rate of suits in California than the rest of the country. Plaintiffs do not have trouble finding attorneys in California.
Senator Titus:
I keep hearing you talk about predictability and I know that is what insurance companies need. I am unaware whether or not you have seen my bill, S.B. 122, since you have not been present to testify. One of the provisions in my bill is, if the insurance company does not want to settle and the doctor does, and it is within the limit of the policy, like the $1 million cap, if the insurance company fights it in court, the insurance company will be gambling with its own money as opposed to the doctor’s money. I surmise that is case law in California, however, it is not case law in Nevada.
SENATE BILL 122: Makes various changes regarding malpractice insurance and actions. (BDR 57-265)
Page 22 in the PowerPoint presentation (Exhibit C) demonstrates cases in which the plaintiff wants to settle, the insurance company takes it to court, and the verdict is higher than that on which the plaintiff agreed to settle. In that case, it seems to me the insurance company is the repeat offender. When the insurance company fights it and the settlement is higher, the insurance company passes the higher cost on to the doctors who must pay the premium as though it were their fault, or the court’s fault, as opposed to the insurance company’s fault for not settling. Please address that.
Mr. Meyer:
I cannot address it specifically because I do not have that particular information on California. There were very few resolution of losses in excess of policy limits in the last few years. I will provide the statistics to the committee.
Senator Titus:
The graph on page 24 (Exhibit C) shows a number of those kinds of cases. Perhaps we could take a better look at it.
Mr. Meyer:
We would have the same problem in California were we to take things to court rather than settle at the doctor’s request. In California, there are much lower premiums and losses than in Nevada. We have a pretty coordinated claims‑handling program and I find it hard to believe Nevada is such an anomaly.
Ms. Earley:
Nevada has the same case law as California, although I understand S.B. 122 is trying to codify it. If a doctor consents to settlement within his or her policy limits and the insurance company chooses not to settle the case, but take it to trial, they have what is called bad faith and it opens the cap of the policy limits. We have the same thing under case law. When doctors are in a position in which they feel they did nothing wrong, but are looking at a $5 million, $10 million, or $20 million loss, and $1 million exposure after that, if they do not consent they would then be on the hook. Consequently, the Doctors assets and everything they have worked for would be on the hook; therefore, they consent to the policies. Time after time, I see cases in which doctors consent because they cannot afford a life-care plan for a brain-injured child which is $10 million and the policy is $1 million. Even though doctors feel they did nothing wrong, they want a chance to go to court and explain to the jury they did not commit malpractice, took every reasonable caution, and used their best clinical judgment. Once the doctor gives consent, it is up to the insurance company, on the insurance company’s dime, and doctors are not taking the risk.
It is similar to the Burney v. Kramer case. I looked into the case and talked to the defense attorney. It was a Clark County case. There was never a demand by the plaintiff’s attorney within policy limits. The insurance company, which happened to be The Doctors Company, wanted settlement offers. The insurance company gave the plaintiff annuities and different settlement offers; however, there was no response from the plaintiff’s attorney who was an attorney from California taking a Clark County case in Nevada. Dr. Kramer gave consent, but since there was no demand by the plaintiff’s attorney within policy limits, the cap did not come off. It was a shoulder dystocia case. The major part of the damages were not economic damages and not medical expenses for the child. The Burney v. Kramer case is an anomaly. It usually does not happen that way. Counsel for the defense advises the plaintiff of his or her exposure and he or she needs to give consent. Should he or she not give consent, his or her exposure at trial is explained. That usually does not happen because plaintiff’s attorneys want policy limits, or to arrive at a settlement within policy limits. In that event, there is give and take and the case is settled.
Chairman Amodei:
Were the policy limits offered in Burney v. Kramer?
Ms. Earley:
No, they were not because it was a shoulder dystocia case.
Mr. Meyer:
Returning to the PowerPoint presentation (Exhibit C), the last three points, statute of limitations, 90-day notice, and encouraging and facilitating arbitration, are also benefits, but not as significant as the first four. There was also “several liability,” which was not part of MICRA, but passed subsequent to MICRA. Since it made proportional liability it was significant legislation.
Next is The Doctors Company reduced premium. In 1976 the average premium was $7600, the average premium in 2001 was $14,000. Actually it is less in terms of the value of a dollar; $7000 adjusted to 2001 is $23,000. It has had an impact on the stability of rates and reduces the average time. In states with no cap it takes an average of 2.4 years to make payments, in California it takes 2.8 years. More money goes to the patient in California [$800,000], out of state is about $600,000, on the proceeds of a $1 million judgment.
Chairman Amodei:
Can you draw a connection between the amount of money a patient gets in varying states to the premium charged? Does it have an actuarial impact?
Mr. Meyer:
Please repeat your question.
Chairman Amodei:
The challenge for this committee, in the context of this legislation, is trying to provide premium relief for physicians practicing in Nevada. In our jurisdiction it is only in the context of tort reform. We do not have jurisdiction over insurance reform or medical licensing. Unlike some committees, we are going to try to stay within our jurisdiction.
Therefore, we are looking at what is available in tort reform context that would have direct impact upon premium rates for OB/GYNs or neurosurgeons in Clark County. I understand public policy, but I am seeking a connection between what part of the reward goes to whom, and what will happen with a doctor’s insurance rates or his or her colleagues’ insurance rates. Please connect the dots for me.
Mr. Meyer:
The attorney’s contingency fee makes the difference. In truth, attorneys’ contingency fees do not affect the size of the award, they just affect how much of the award goes to the patient, which is good public policy.
Senator Titus:
Yes or no, has your company contributed to the campaign effort, advertising, ballot question, and petition-gathering for tort reform in Nevada?
Mr. Meyer:
I would not be surprised if The Doctors Company contributed to tort reform in Nevada.
Senator Titus:
Yes or no, will your company lower rates for OB/GYNs if S.B. 97 is passed?
Mr. Meyer:
It is a long process which includes constitutionality and cases in flux. We would provide tort reform credit. The congressional budget office believes tort reform is worth between 25 and 30 percent on premiums. If that is what it proves to be worth, it is the amount we charge. We are a doctor-owned company.
Answering Senator Care’s question, inflation is 3 percent, healthcare costs went up 5.4 percent, and the average indemnity cost went up 5.6 percent from 1984 to 2000. There have been indemnity increases in California in spite of MICRA.
In regard to The Doctors Company claim frequency, MICRA is not a deterrent from filing suit. States with effective tort reform lower healthcare costs from 5 to 9 percent. If we took away defensive medicine, we could save $50 billion according to the Stanford (sic) study: Kessler, D.P.; McClellan, M., “Do Doctors Practice Defensive Medicine?,” Quarterly Journal of Economics, Volume 111; (May 1996):353-90, which could fund a Medicare drug program. However, Nevada would probably experience some benefit to the healthcare delivery system. All of these organizations, including state divisions of insurance (DOIs) and the American Academy of Actuaries say good tort reform works—MICRA works.
In summary, frequency is stable at extremely high levels and severity is rising to unprecedented levels. It is a state crisis because some states have effective legal reforms and some do not. Nevada cannot afford to wait for national tort reform. Access to healthcare is imperiled. Ineffective tort reform is worse than no tort reform. Additional regulations of the insurance industry will not address the problem in our legal system. You need a number of insurance companies and competition in the State of Nevada. Proven remedies are available now.
Senator Nolan:
I think you answered the million-dollar question. Is there anything we have not considered that would expedite the medical malpractice insurance market in the State? Can we do anything to open the market or create competition to offer some of the smaller insurance writers a viable market in Nevada?
Mr. Meyer:
It varies in every state. There are no quick cures. I do not think Nevada can afford to wait to test out current tort reform because if it is not effective the State has put itself in greater jeopardy. There is a tremendous increase in severity and all insurance companies have felt the impact. The Doctors Company has a number of national programs, as well as the American College of Surgeons and the American College of Physicians, whose interest was to always get a better rate. Now they are saying all they want is access to an insurance company. That is what tort reform will get you.
Senator Washington:
Are economic damages calculated based on a contracted or noncontracted rate?
Ms. Earley:
Economic damages are the real costs put into evidence. They are the medical expenses dollar-per-dollar right now. They are medical bills, hospital bills, orthopedic surgeon—dollar-to-dollar pass-through costs.
Senator Washington:
When you say dollar-for-dollar, are they contracted or noncontracted?
Ms. Earley:
It depends on the bill. A hospital bill is put into evidence; however, sometimes the hospital will permit a discount, and so forth. The issue has arisen that even when the bill is paid by the lien, it was at a discounted basis, not the full price charged. However, the way the medical bills were given to the plaintiff goes straight into evidence.
Senator Washington:
So, it is submitted for evidence.
Ms. Earley:
Absolutely. Past and future medical expenses, past and future wage loss, and life-care plans in big-type claims are put into evidence. If a homemaker is injured, his or her services are put into evidence, including transportation and cost of a full-time maid. Homemaker services are projected from the past to the date of trial, and projection for life expectancy of the person are all put into evidence. Those are all straight economic losses, dollar for dollar.
Senator Amodei asked about the $1-million to $3-million cap. The cap has nothing to do with economic damages and pertains to noneconomic loss, which we call intangibles and are pain and suffering. Economic loss is what Mr. Meyer referred to as indemnity loss. An injured plaintiff may require additional surgeries and compensation for the cost of the surgeries. Should a plaintiff require surgery in 2005, and another in 2010, economists project the cost. They do not calculate what the surgery would cost in 2003 and compensate at that rate, they project what the surgery may cost in 2005 and 2010. Economists will explain what an appendectomy will cost 2 years from now. It is all put into evidence for the jury to consider. An injured plaintiff will be compensated for out-of-pocket expenses.
Noneconomic damages are pain and suffering, such as disfigurement, and called intangible. How much money would a person want for loss of a leg? They are the tough damages and juries struggle with them. Economic losses are black and white. I recently had a trial in which horseback riding lessons were requested for a brain-injured child. Getting into that type of thing is ludicrous. It was part of the life-care plan for the child. It is all compensated dollar for dollar.
Senator Washington:
Does it add to the predictability? Do the economic damages, contracted or not, add to the stability or predictability of insurance rates?
Mr. Meyer:
No, those things do not add to it. We find real damages should be compensated and we can live with the limited predictability of real damages. As I said in the beginning, Colorado has a $1 million cap on all damages. In California, we have had more than $10 million on real damage cases. Keep in mind, we have limits of liability and unless we decide to take a case on our own, that is the limit of our liability.
What keeps MICRA vital is its fairness to the claimant and the defendant.
Senator Nolan:
Do you handle most of your cases in-house, or do you contract and retain legal counsel?
Mr. Meyer:
We use outside counsel who are the best attorneys we can find. We use all inside claims adjusters who are employees of The Doctors Company.
Senator Nolan:
On average, what is the time frame on handling these cases? What type of fee range is used to pay attorneys?
Mr. Meyer:
I am not prepared to answer those questions. We try to keep attorneys’ fees under control. In areas where there are large numbers of doctors, we have a program in which we pay flat fees for certain activities done by attorneys. It provides incentive to quickly resolve cases, whereas a law firm will sometimes let it go over a couple of years. The Doctors Company is interested in reducing attorneys’ fees.
Senator Nolan:
We are looking at attorneys’ fees on both sides of this because it works into the legislation. We will ask the same question of trial attorneys and they will provide us number of hours, hourly cost, and contingency. It would help to glean that information from your industry as well.
Mr. Meyer:
Sure.
Senator Care:
I think I speak for most of the members of the committee. Throughout this Legislative Session we have been told the problem with insurance premiums is the wild card on noneconomic damages. Even with A.B. No. 1 of the 18th Special Session, that will be the case until we get whatever we end up with in front of the Nevada Supreme Court.
Ms. Earley mentioned loss of a leg. There are 63 Legislators in this building who have two legs. We have to decide how much pain and suffering somebody should get who loses both legs through pure accident, we are not talking about intent. That is not an easy thing, so let us talk about it for a moment.
It seems to me, in some cases, pain and suffering is worth more than $250,000, but for policy reasons a lesser figure must be used. The attitude is, sorry, that is the way it is. I do not think in those cases the amount is fair. I guess we just have to say, “Tough luck.”
Let me focus on Hawaii. I am intrigued by Hawaii because its law is similar to what the Nevada Legislature did last summer. The court is given discretionary power. I do not know the specifics, but I wonder how long that law has been on the books in Hawaii, what kind of judgments are given, and how often judges pay attention to the suggested cap?
Mr. Meyer:
The reason I mentioned Hawaii is because the Chamber of Commerce publishes a book on tort reform every year and it said Hawaii has tort reform. I was responding to a specific question. I called our claims people in Hawaii and they said judges never invoke caps on pain and suffering. That was the reason I commented on Hawaii, but I do not have any data. However, we may have data on other states that have had modified caps. I can give you some examples. The one I remember most dramatically was Illinois because it overturned tort reform.
Senator Care:
In regard to the $250,000 figure, people have told me the problem is not the figure, the problem is there must a figure. We can talk about what the figure should be, but there has to be a figure, whether $500,000 or $750,000. I am talking about pain and suffering. Do you have any thoughts on that?
Mr. Meyer:
It has to be a hard cap. Without a hard cap the crack in the cap will get wider and wider. More and more cases will fall into the exception rather than the rule. A $350,000 cap sounds reasonable. Remember, $350,000 is not going to bring a person’s legs back. Under our law, he or she should be fully indemnified for rehabilitation, loss of wages, and all real damages. How can we put a dollar figure on pain and suffering, loss of a parent, and so forth? With no caps, juries are forced to put a figure on it. It is the most sympathetic part of the whole procedure.
Senator Care:
Ms. Earley, have you a feel for whether Nevada juries are more generous than California juries when it comes to calculation of economic damages? Nevada adopting MICRA would not guarantee jury awards for economic damages would keep pace with what has happened in California.
Ms. Earley:
In my last four trials, economic damages for life-care plans have been huge. The insurance companies want to ensure the person is cared for. In the case of a brain‑injured child, they want to make sure past and future medical expenses and rehabilitation are covered. They are all fully compensated. In my example of horseback riding for a brain-injured child, if in good faith it is felt the child would be helped by horseback riding which costs $20,000 a year compared to a life‑care plan of $20 million, would it make a difference? No.
Competent trial attorneys put in life-care plans to cover all future costs. They consider everything, even contingencies. There was a case wherein they were unsure whether or not surgery in the future would be successful; therefore, they put in both contingencies. Should the surgeries not be successful they calculated the cost of a wheelchair for the person’s life expectancy, the cost for replacement every 5 years, and upkeep cost. In addition, they do what is called “abundance of caution” which, in case surgery does not work, the jury is given the costs to compensate.
There is usually not much debate regarding economic damages at trial between plaintiff and defendant. Costs in a geographical area are considered, such as Clark County. Points of dispute are noneconomic damages and no one would accept $20 million or $500 million to lose his or her legs. You cannot replace a child or a parent. It is the one area that can be helped by the cap which gives some predictability in evaluating a case. I can tell a doctor his or her exposure from discovery, such as past medical expenses and wage loss. There is no game playing and everybody is up front. What is the future going to be? What is future wage loss? If a child suffers some type of injury, his or her future wage loss is predicted, based on the education of the parents, and expert economists calculate the amount of money the child would have earned and his or her life expectancy. Based on the disability, the type of work of which the child would be capable is estimated, put into evidence, and compensated at time of trial.
Mr. Meyer:
Despite the fact economic damages are unlimited, the increase in cost has been reasonable. Therefore, even with unlimited economic damages, increase in costs have been steady and higher than the Consumer Price Index (CPI) and health care, but predictable and moderate.
Senator Care:
The data is out there and somebody could pull it together. Had we enacted MICRA 10 years ago and could go back and look at all the cases to see what would have happened to insurance premiums, some cases would not have been brought to trial because of the caps, hence, there would not have been the cost of litigation. There must be a way you could give us a thumbnail estimation of what the premiums …
Mr. Meyer:
Of course, many times a settlement will not distinguish between economic and noneconomic damages, which is one of the problems. Most cases are settled.
Ms. Earley:
We could do it for trial verdicts. In Burney v. Kramer, past pain and suffering was $1 million, and future pain and suffering was $4 million. The verdict was $5,521,000. The economic loss of future medical expenses was $350,000.
Senator Care:
Do it with $250,000, $500,000, and $750,000 to see whether the premiums would be any different.
Mr. Meyer:
I would be glad to work on that to see what we can find.
Senator Washington:
Based on the exceptions in A.B. No. 1 of the 18th Special Session, the underwriters will take a look at the cap. Because there is potential to pierce the cap, the predictability and stability of A.B. No. 1 of the 18th Special Session may not be apparent. Is that correct?
Chip Wallace, Director, Provider Communications, Nevada Mutual Insurance Company:
I defer to Ms. Earley.
Ms. Earley:
I was asked by a Clark County judge to approach the Legislature and ask what criteria would be applied for exceptional circumstances. Assembly Bill No. 1 of the 18th Special Session does not clarify an exceptional circumstance in a medical malpractice case. Unfortunately, in medical malpractice cases, an exceptional circumstance can be any injury suffered by a person. Losing a leg or losing a life, all medical malpractice cases are catastrophic with tough damages. The judges asked how they would apply the cap on exceptions. There is no criteria for exceptional circumstances, which is one of the major problems. How can there be predictability if the judges applying it do not know the criteria?
Senator Washington:
Mr. Meyer, is that what you referred to as a hard cap?
Mr. Meyer:
A hard cap means there are no exceptions. First of all, it would be per incident. You said you were unclear whether there was a per-incident cap. Each incident would have the cap and there would be no exceptions. It would not be at the judge’s discretion because that would remove the predictability.
Senator Washington:
The other exception was gross malpractice. In A.B. No. 1 of the 18th Special Session, the judge determines whether or not the case is gross malpractice. However, under S.B. 97 gross malpractice would be tried by facts by the jury.
Ms. Earley:
There is no gross malpractice exception. Gross malpractice is a conscious disregard of the effect. Similar language was put in the punitive damage statute. Conscious disregard, although it does not go to malice in intent, has been defined under the punitive damage statute. In a fact case wherein the judge says a certain protocol was not followed, it would go to a jury under punitive damages. Therefore, it is on the books being looked at now.
Senator Washington:
Should gross malpractice be decided by a judge or a jury?
Ms. Earley:
It would go to a jury. I think it should be decided by a judge, but there is no criteria. It must be determined whether or not the cap applies to exceptional circumstances.
Senator Washington:
As opposed to a jury?
Ms. Earley:
Right.
Mr. Meyer:
There are tragedies and extremely sympathetic plaintiffs. There are juries trying to find any way they can to compensate a person due to sympathy. We find when there are exceptions to caps there are changes. It has nothing to do with degree of negligence, only with the sympathy factor.
Senator Washington:
Several liability was mentioned in A.B. No. 1 of the 18th Special Session; however, S.B. 97 changed it to say the complaint is filed against the doctor as opposed to the whole group or the hospital.
Ms. Earley:
There is several liability for noneconomic damages. The only difference is S.B. 97 gives several liability for both economic and noneconomic damages whereas Assembly Bill No. 1 of the 18th Special Session only gave several liability for noneconomic damages.
Senator Care:
Is legislation in Washington, D.C., federal MICRA? Would it settle the matter for all 50 states, should it be enacted, or is federal legislation written in such a way that states may go outside the scope of the federal legislation if certain qualifiers are written in their own statutes?
Mr. Meyer:
I believe the federal legislation, as written, is very comprehensive; however, Nevada cannot wait for federal legislation. The State is already having problems because it includes limits on health maintenance organizations and things like that. The federal legislation is going to have a difficult time. One of your Senators said, and we agree, this is a State matter. I am not hopeful federal legislation will pass.
Senator Care:
I do not suggest waiting for federal legislation. We have never addressed that aspect of the issue.
Mr. Meyer:
The Doctors Company supports the present federal legislation by the Bush Administration.
Senator Care:
There is a definition of professional negligence in S.B. 97 which is somewhat different than the definition in A.B. No. 1 of the 18th Special Session. Have you compared them? The definition is found, among other places, in section 1, subsection 4(a) of S.B. 97. Do you consider the definition substantively different than that found in MICRA or A.B. No. 1 of the 18th Special Session? I fear it places a higher burden on the plaintiff.
Mr. Meyer:
It appears to me it is fairly close to MICRA’s wording. I do not have MICRA with me; however, I will provide it to you.
Senator Care:
Line 26, section 1, subsection 4(a) of S.B. 97 says, “… which act or omission is the proximate cause …,” as opposed to “a proximate cause.” Do you see a distinction between “a” and “the,” let alone the differences between A.B. No. 1 of the 18th Special Session and S.B. 97?
Mr. Craigie:
We will check California’s language and get back to you by tomorrow morning.
Senator Care:
In regard to disclosure by physicians in hospitals, I theorize a way to decrease the number of claims would be if the patient knew everything he or she could possibly know about the doctor and hospital before going into the office or operating room. Do you know whether or not mandatory disclosures in California are substantively different than Nevada? It was done in A.B. No. 1 of the 18th Special Session, which you know. I am not suggesting the doctor’s medical school grades should be disclosed, but you get the idea. That type of information might influence a person’s decision and theoretically steer him or her to a good doctor as opposed to a not-so-good doctor.
Mr. Meyer:
I do not know the differences between the laws in the two states. I know California just passed a three-strikes bill and I will provide you a copy of it.
Chairman Amodei:
The first potential work session date for S.B. 97 will be April 4; therefore, to the extent you have agreed to provide information, please submit it to Nicolas Anthony, committee policy analyst, by April 2, to be added to a work session document and assimilated by members of the committee prior to the work session.
Mr. Wallace:
I am taking the place of Andrew O’Brien, president, Nevada Mutual Insurance Company, who was unable to attend the hearing. I will read his prepared testimony (Exhibit D).
Chairman Amodei:
Section 5, subsection 3 of A.B. No. 1 of the 18th Special Session says,
In all cases of medical malpractice the amount of damages awarded the plaintiff may not exceed the amount of money remaining under the professional liability insurance policy limit covering the defendant after subtracting economic loss. …
To the extent your entity feels a desire to respond to this, I would like a statement concerning whether or not they think that is a hard cap existing in A.B. No. 1 of the 18th Special Session. The individuals from The Doctors Company responded to the question, and I will ask it of the Nevada Mutual Insurance Company as well.
One of the items discussed today is the unpredictability of exceptional circumstances. I understand the best-case scenario would be to get rid of exceptional circumstances entirely. Ms. Earley spoke about discussions with judges requesting guidelines, definitions, and criteria. I request both companies to provide their ideas on how to define exceptional circumstances and whether their position is succinctly and specifically that exceptional circumstances should be gone. I will ask the trial lawyers to submit those answers by April 2, which is when the records will close for purposes of submissions on S.B. 97.
Senator McGinness:
Mr. Meyer pointed out The Doctors Company insures 800 doctors in Nevada. How many doctors are insured by the Nevada Mutual Insurance Company?
Mr. Wallace:
There are approximately 630 physicians insured.
Senator Care:
An article in the March 20, 2003 Las Vegas Review-Journal said:
Some Las Vegas doctors are being charged up to 150 percent extra to be covered by the State’s insurance plan, one that was developed last year as a last resort for specialists who cannot find liability coverage elsewhere … The company says it is not raising rates but some doctors face an extra surcharge because they have lawsuits filed against them.
When this crisis began in January or February 2002, it included groups such as OB/GYNs. A cardiologist who lives down the street from me belonged to such a group and said the crisis did not affect cardiologists. Subsequently it did affect them and they all received increases in premiums. It seems to depend upon the field of practice rather than a track record of lawsuits. What do you do in California with a doctor who seems to have more claims filed against him or her in that 10-year period than other doctors?
Mr. Meyer:
In California, The Doctors Company also has a wholly owned subsidiary that provides coverage for hard-to-place doctors. The premiums are very high. The program is also available in Nevada, however, the premiums are lower and those doctors end up at the State rather than our high-risk program. The program has experienced significant growth in California and many other states. It provides a place for doctors with claims and other problems and after a certain number of years another carrier will take them. Therefore, it is the carrier of last resort. The program is available in Nevada, but The Doctors Company does not write many doctors here.
Senator Care:
In your presentation regarding what has happened in California since 1975, are the claims against doctors that eventually paid judgments included and computed in the figures?
Mr. Meyer:
Yes, but there are still doctors who have claims problems.
Senator Washington:
In reference to California Proposition 103, enacted in 1988, I read an article in which the writer stated the premiums did not drop in 1975 because of MICRA, but dropped because of Proposition 103 in 1988. I guess the proposition actually froze the annual increase to no greater than 15 percent. Should we, as Legislators, advocate a freeze on insurance rates to see a drop in premiums, or should we continue to proceed with an attempt to enact something that will precipitate a drop in insurance rates and provide predictability? Is the predictability because of the freeze or the cap?
Mr. Meyer:
No, the predictability was because of MICRA. Actually, we had higher dividends before Proposition 103 than after. After Proposition 103, our rate increases were extremely modest. There was never a rate increase disallowed under Proposition 103.
Senator Washington:
It had a cap of 15 percent.
Mr. Meyer:
One year we took none, the next year we took 3 percent, and the next year we had a minus 4 percent because we had adequate rates and competition. There were a number of carriers selling insurance in California and that is what kept rates down. It is the predictability of MICRA and the fact it brings carriers into the state. Despite the fact Proposition 103 began as an automobile insurance bill and contributed to large reforms, the medical malpractice carriers were not required to roll back rates. In the past few years there has never been a rate increase anywhere near 15 percent in California, which is due to MICRA and competition. I honestly do not believe Proposition 103 is your answer.
Senator Washington:
I am not advocating Proposition 103, I am just asking whether or not it was the determining factor that caused rates to go down or stabilize.
Mr. Meyer:
No, it was not. It was in the view of this group, but had nothing to do with rate stability in California. It was the result of MICRA.
Senator Titus:
You say that so definitively, as though it were written in stone and handed down from heaven. How can you say it had nothing to do with it and it was all MICRA? Everything else you have answered has been around and around, hedging, and off and on, but you make a hard fact of MICRA.
Mr. Meyer:
I was an employee of Johnson and Higgins at the time Proposition 103 was passed and enforced. It was never spoken of beyond the 1 year of a dividend. That was the only year Proposition 103 was an issue. The malpractice insurers were not required to roll back their rates, but they gave a dividend. Honestly, we never heard any more about Proposition 103. Our rates were determined by the marketplace and the rate increases were very modest.
Senator Titus:
The rates in Nevada were extremely moderate as well with no MICRA in place. In fact, some of the companies, such as The St. Paul Companies, came in with rate decreases for several years. How do you account for that? How do you put that into perspective?
Mr. Meyer:
It was a combination wherein they had to pay the piper. The St. Paul Companies thought it was doing well with investment income. There is a long tail on this business and a company does not find out it is in trouble until it is in trouble. For example, a company will not find out until 2 or 3 years later if there is a severity problem, which is what happened in 2000 and 2001.
Senator Titus:
Do you think tort reform faces that?
Mr. Meyer:
Tort reform modifies that because it eliminates the severity problem. There is some fluctuation and much more predictability. I did not want to sound arrogant about Proposition 103, but I was at the carrier when it was implemented. I was in the sales department and it was just a 1-year dividend and then business as usual. It really did not have that much of an effect.
Senator Titus:
Going back to the reason Nevada’s rates were so low, you said it was a combination of factors and there was no MICRA in place at that time.
Mr. Meyer:
A lot of companies were getting a lot of investment income because of interest rates. Many stock companies were interested in expanding and one by one they began to realize they had to adjust their reserves because of the losses they suffered. They were selling at a loss. Granted it was a competitive market. The Doctors Company had a higher investment income, but as bond yields decreased we had to charge more, but nothing like the difference that occurred. There was some impact when there was a reduction in investment yields.
Senator Titus:
It seems to me you want to explain some things in terms of the market, investments, and so forth, and in other things it is simply MICRA. I do not know how you can isolate MICRA as making everything wonderful, but when things are not wonderful, it is the fault of everything else. It does not seem fair to isolate MICRA as salvation, but when I ask you to explain every other thing it is a whole bunch of market factors, not just one quick little answer like MICRA.
Mr. Meyer:
It was a complicated process by which the market hardened. There were many factors, such as investment yields, increase in severity, companies charging competitive rates, and that was all changed by the marketplace. At the present time, carriers have to at least break even or make money on their product and, consequently, there is no availability. I get calls from doctors all the time wanting coverage and we will not provide it in certain states because there is too much volatility.
Chairman Amodei:
I appreciate your description of unpredictability and volatility. Part of the reason the committee is struggling is because we have experienced legislative volatility from last summer to the present. We are attempting to get to the same place. Many of the same representations we heard in the now-approaching half‑dozen hearings on this proposal are similar to the ones heard in special session in July 2002. That is not to say A.B. No. 1 of the 18th Special Session is good, bad, or whatever, and S.B. 97 is the same; however, at this point in time you can see how the field is crowded once again. I appreciate your attempts.
There are two other things I would like to see. I am not going to pick on Mr. Wallace because his company has not been in existence long enough, but if you can answer, feel free to jump in. Speaking for myself and focusing upon what affects premiums, could you provide any readily available information in terms of nonrenewal rates in Nevada? We are not interested in names and do not want to get into that. Your earlier testimony indicated the problem is not necessarily bad doctors, it is just that one doctor gets a claim every so many number of years.
Testimony on both sides indicated a reasonable demand was made and the insurance company would not respond to it. Can we get a feel for how many times you collected attorneys’ fees as a result of offers of judgment and how many times you have paid them in the State of Nevada? I know those things are not taken lightly, therefore, if the information is readily identifiable we would like to have it, if not, please respond appropriately.
Mr. Meyer:
I will respond to it, I will get it to you.
Ms. Earley:
I attempted to get AIG Healthcare to attend the hearing because they also write insurance in Nevada. Richard Bucilla, division executive, AIG Healthcare, provided a letter of support (Exhibit E) I want to make part of the record. I will read it at this time.
Chairman Amodei:
There being no further business to come before the committee, the hearing is adjourned at 6:10 p.m.
RESPECTFULLY SUBMITTED:
Barbara Moss,
Committee Secretary
APPROVED BY:
Senator Mark E. Amodei, Chairman
DATE: