Nevada Malpractice Insurance - Background
In Nevada, the medical malpractice issue reached a crisis stage in December 2001,
when St. Paul Insurance Co., the state’s largest medical malpractice insurer, announced
that it was pulling out of the state. Other insurance companies either followed
suit or dramatically raised their rates.
Nevada physicians had already been weathering medical liability difficulties. Malpractice
premiums—especially in Clark County—were skyrocketing upward as much as 30- to 50-percent
annually.
Nevada physicians, particularly specialists such as surgeons and obstetricians,
were paying as much as $200,000 in annual premiums, and the state was one of only
eight in the nation whose physicians saw increases of more than 30 percent by at
least two carriers. At stake was the state's ability to recruit young, qualified
physicians and, subsequently, provide stable, quality, affordable healthcare for
its residents.
In response, physicians formed the Nevada Medical Liability Physicians Task Force
and hired a public relations firm to bring the crisis to the public’s attention.
They specifically pointed to outrageous jury verdicts—which had escalated from an
average claim of $34,719 in 1986 to $193,000 in 2001—as the prime culprit behind
soaring malpractice premiums. The Task Force pointed to the success of California's
1975 Medical Injury Compensation Reform Act (MICRA) and its $250,000 cap
on neneconomic damages as the solution to Nevada’s medical liability crisis.
Nevada legislators ultimately did pass medical liability tort reform in 2002, which
featured a $350,000 cap on noneconomic damages, with exceptions for gross negligence
and exceptional circumstances where juries could issue victim plaintiffs a pain-and-suffering
award that exceeded the cap. Physicians said that the legislation was not enough,
concluding the legislation was missing key reforms, again pointing to the California
MICRA law as the example to be emulated.
Legislators refused to discuss new legislation; the issue was ultimately placed
on the November 2004 election ballot for voters to decide. Fearing the physician
exodus that the Task Force's $10 million public relations campaign warned of, Nevada
citizens overwhelmingly approved the "Keep Our Doctors in Nevada" ballot initiative,
which effectively rescinded any exceptions to the noneconomic damage cap and added
additional plaintiff burdens of proof intended to reduce frivolous lawsuits.
The 2004 ballot initiative did reduce the number of malpractice claims filed in
Nevada. Prior to the reforms, Clark County courts heard an average of 330 malpractice
cases annually; the year after the reforms passed, the number of cases filed dropped
to 160. Nevada also gained a record number of 263 physicians in the year following
the ballot initiative, its largest number of new, licensed physicians since the
state began keeping records in 1987.
Whether the ballot initiative has achieved its intended effect of lowering medical
liability insurance premiums remains the topic of argument. The predicted rate reductions
have not materialized. Although premiums have stabilized—with no rate change in
either direction between 2007 and 2008 - insurers say they are waiting to see whether
the new law withstands possible legal challenges before lowering rates.
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