The American Insurance Association represents more than 450 property-casualty insurance companies.
EDWARDSVILLE-- Business groups and insurance companies have spent the better part of two years trying to pin the blame for Illinois' medical malpractice insurance crisis on aggressive plaintiff attorneys and out-of-control courts.
Attorneys and their supporters in recent months have launched a public relations counterattack, trying to put the blame on poorly run and greedy insurance companies.
There is one figure that is hard for insurance industry critics to dispute: $1.53.
According to A.M. Best, the nation's leading insurance industry rating agency, in 2002 the medical liability insurance industry in Illinois paid $1.53 in losses and expenses for every dollar they collected in premiums.
Nor is there any dispute that Illinois is down to four companies willing to write medical malpractice insurance in the state. Ten years ago there were more than 30 companies writing such coverage.
Officials at ISMIE Mutual Insurance Company, which was created by doctors to provide themselves malpractice coverage, argue that if those companies believed they could make money in Illinois, they would still be doing business here. ISMIE is the state's largest malpractice insurer.
Regardless of the causes of spiraling medical malpractice insurance premiums, people on both sides of the argument are encouraged by the appointment earlier this month of Judge Donald O'Connell as medical malpractice mediator.
Gov. Rod Blagojevich appointed O'Connell to get stalled medical malpractice reform talks going again. O'Connell is special counsel to the University of Illinois hospital system. He served as Chief Judge of the Cook County Circuit Court from December 1994 to August 2001.
"From the information we've had and our past dealings with him when he was chief judge, Judge O'Connell is good," said Dr. Harold Jensen, ISMIE's board chairman.
"Attorneys for insurers and hospitals and doctors and for patients all like O'Connell," said Kevin Conway, president of the Illinois Trial Lawyers Association, which has repeatedly butted heads with ISMIE and others who want medical malpractice reform. "Judge O'Connell is very fair, very smart. Even in some very heavily contested matters, he's had a lot of success settling and mediating."
The first mediation meeting is scheduled for Sept. 29.
The last session of the General Assembly started with some 50 areas of disagreement between the plaintiffs' bar and groups that want medical malpractice reform. After nearly two months of overtime to set the state budget, and in which many malpractice disputes were settled, the session ended with a new budget but no reform agreement.
Reform advocates blame trial lawyers, who objected to several provisions wanted by medical professionals, including caps on non-economic damages (commonly called pain and suffering awards), structured payments for damages, personal asset protection for doctors and protection for hospitals against claims arising from actions by contractual doctors who practice at their facilities.
Conway declined to say what the state's trial lawyers want to come out of the renewed malpractice reform talks.
"The problem with saying what we expect, other than we expect to deal in good faith, is that if people are posturing now, all they're doing is telling the mediator ahead of time it's going to be difficult for him," Conway said. "I find that counterproductive, as far as mediation efforts go. I'd like to hear what he says and see if the parties can talk like rational human beings."
Conway did challenge the widely publicized view that circuit courts in Madison and St. Clair Counties and certain other counties are out of control, or that excessive jury awards are driving up insurance premiums or making malpractice coverage unavailable at any price.
Joining him in that view is Doug Wojcieszak of Victims and Families United, a Madison County-based group with about 80 members that is supported by trial lawyers.
Wojcieszak criticizes ISMIE for passing out pay raises to executives when they are complaining about losing money. He also says ISMIE's own figures show that Madison and St. Clair Counties, which account for 4 percent of the state's population, also account for about 4 percent of medical malpractice claims payments.
"If our courts are so bad, you'd think we'd account for 15 or 20 percent of claims," he said. "We're 4 percent of the population and 4 to 5 percent of the claims," adding that the county also draws patients from neighboring counties.
And he says caps on non-economic damages, which the insurance companies have
long been lobbying for, will have little or no impact on insurance premiums.
"They say, 'If we could get caps, wouldn't life be grand!' In Madison County in the last seven years only, one case has gone to a jury that would have been affected by a cap," he said. "My home state is Ohio. They've got a $350,000 cap on pain and suffering, and a $1 million cap for catastrophic things like loss of a limb, and their rates keep going up. Pain and suffering awards aren't the problem."
He said insurers lost investment income after the stock market decline, and they are raising rates to make up for the losses.
Insurance officials say he and the trial lawyers are wrong on almost all counts.
"He's comparing total population of the state, and we don't insure the population of the state. We insure doctors," ISMIE's Jensen said. "We spend 64 percent more on indemnity (claims payments) and legal defense costs in Madison County than the statewide average. It's a much hotter, much more difficult jurisdiction for us. It is a bizarre court system they have there. The environment is unfriendly to not just to doctors but to other businesses."
He also said that over the last five years, ISMIE has paid $33.5 million in verdicts, settlements and accompanying legal expenses in Madison and St. Clair Counties while taking in $29.6 million in premiums from Metro East policyholders. And, according to Jensen, those premiums need to cover 215 outstanding claims that have yet to be resolved.
"Most of these claims will result in no payment to the plaintiff, but we'll have to spend significant amounts of money to defend them," he said.
ISMIE statistics also show that three years ago, the company's average payment to plaintiffs in the two-county area was $276,000. As of Sept. 30, 2003, that average exceeded $495,000.
ISMIE also challenges the claim that insurers are jacking up rates to cover investment declines. The company points out that most of its investments are in more conservative and predictable bonds.
They are supported by Stephen Schneider, vice president of the Midwest Region of the American Insurance Association.
"Insurance industry critics say, 'It's insurance company incompetence, that they don't know what they're doing with the rates. Or that investments that have caused this," Schneider said. "The state tightly regulates the amount of money any insurance company can put in the stock market. It usually hovers around 9 to 10 percent. Swings in the stock market could not swing rates in the way they are claiming. And if it were happening like that, we would have a crisis in every line of insurance."
Schneider also cites studies independent of the insurance industry to bolster the argument that soaring claims costs are the main cause of the malpractice insurance problem. For instance, "Liability for Medical Malpractice: Issues and Evidence," a Congressional Joint Economic Committee Study issued May 2003, states:
"One of the key drivers of costs for medical malpractice insurance is the recent surge in the size of damage awards in lawsuits. The typical (median) damage awards in medical malpractice cases jumped 176 percent from 1994 to 2001." The report added, "On balance, it seems clear that the medical liability tort system broadly fails as a means of compensating the negligently injured."