The National Business Institute asked me to speak on issues regarding subrogation and how they impact personal injury settlements. We have collaborated on an outline for the seminar. It is set forth below.
I. MEDICAL BILLS, STATUTORY and CONTRACTUAL LIENS, AND NEGOTIATION - Edwin Turnage
A. Typical Bodily Injury Releases and Indemnification
B. Payments to Physicians, Hospitals, Physical Therapists and Medical Insurers
C. What You Must Understand About Workers' Compensation
D. The Role Charity
II. UNDERSTAND THE ROLE OF CENTERS FOR MEDICAID AND MEDICARE (CMS), AND ERISA LIENS- Edwin Turnage
A. Statutory Basis of Liens
B. Procedures and Notice Issues
C. Negotiation Points and Issues
D. How to Handle Delay by Lien-holders
Thursday, August 14, 2008
Thursday, April 26, 2007
Doctors refuse to take bitter no-gift medicine
Drugmaker freebies can lead to harm for patients, some say
By Bruce JapsenTribune staff reporterPublished April 26, 2007
Whether it be Subway sandwiches for the office staff or reimbursement for continuing education, gifts showered upon doctors by drug- and medical device-makers have become so pervasive that they are a standard part of virtually every U.S. physician's practice.
Despite self-policing initiatives launched by organized medical groups and the drug and device makers to curb the cozy relationship between physicians and industry, 94 percent "or virtually all" physicians have at least one type of relationship with the drug industry, according to a study scheduled to be published Thursday in the New England Journal of Medicine. The study indicates that those self-policing initiatives are not always followed. Consumers should care about such relationships because drug companies tend to market the latest and most expensive brand names, and gift-giving can influence prescribing behavior and therefore how much Americans spend on prescriptions, the authors said. Drug marketing and conflicts of interest between doctors and medical product companies have come under congressional scrutiny because of their impact on costs and because of safety issues involving heavily promoted drugs, including Vioxx, the painkiller that was pulled from the market in 2004, nearly two years after studies showed it increased risks of heart attacks."
Relationships with industry are a fundamental part of the way medicine is practiced today," said the study's lead researcher and co-author, Eric Campbell, an associate professor of medicine at the Institute for Health Policy at Massachusetts General Hospital and Harvard Medical School. Campbell said consumers have reason to be concerned about the study's findings. "Would you care if this person was managing your 401(k) and you found out that they had financial relationships with mutual fund companies, or if an umpire was calling the World Series between the Cubs and White Sox would anybody care if the umpires were being paid by either of those two teams?" he asked. "If people would be very concerned that it was happening in a baseball game, you would be even more concerned if it was something like your health."
The findings arise from a survey of more than 1,600 practicing physicians in late 2003 and 2004. The survey was conducted at least two years after the American Medical Association launched a high-profile educational campaign for doctors to reinforce ethics guidelines that recommend that any gifts be of nominal value and benefit patients.
The AMA guidelines, which are voluntary, say any gifts should "primarily entail a benefit to patients and should not be of substantial value." Subsidies should not be accepted to pay for the "costs of travel, lodging or other personal expenses of physicians attending conferences or meetings, nor should subsidies be accepted to compensate for the physician's time." If physicians accept gifts, they should be worth less than $100 and "benefit patients," the guidelines say. Acceptable gifts include textbooks or drug samples.
The study suggests that many doctors do not always follow the AMA guidelines. It notes, for example, that 35 percent of respondents accept reimbursement for continuing medical education or for travel, food or lodging for medical meetings.
The drug industry lobby, Pharmaceutical Research and Manufacturers of America, said its member companies have worked to eliminate certain relationships and in 2002 established guidelines to curb such sales tactics as golf outings, entertainment and "dine and dash" dinners that drug companies order at restaurants for doctors to pick up for essentially doing nothing. Modest meals for the doctor at his office, however, are OK." The meals are recognition that the physicians are extremely busy [and] maybe the only time they have to meet is over a working lunch," said Scott Lassman, senior assistant general counsel for the lobby, which includes Abbott Laboratories, Pfizer Inc. and Merck & Co. in its membership.
Some doctors say, though, that free samples are needed, particularly in practices where there are a number of uninsured patients who cannot afford drugs. Take Dr. Kristin Coyle, a family physician in Sterling, Ill., who said her patients have been hit hard by unemployment. "We definitely have not only a physician shortage and a lot of people who cannot afford things like drugs -- we are a community trying to rebuild," said Coyle, who has accepted Subway, Applebee's and other drug-company-ordered lunches for herself and her office staff. Coyle said she allows reps to drop off free samples and that they are also allowed to make an educational presentation, such as explaining how a new drug or device works. "Basically, they are not allowed to interrupt my patient activity," Coyle said.
Some say, however, that doctors should at least let it be known to their patients that they have a relationship with drugmakers and why it exists. "People have no clue about this," said Jamie Reidy, a former Pfizer sales rep who wrote a book about his experiences selling Viagra and other Pfizer drugs. "They should care," Reidy said. "If they are getting a drug simply because the doc just got back from an advisory board and is pumped full of drug propaganda, that's a problem. But if the doc truly believes Drug X is best for that patient, fine."
----------bjapsen@tribune.com
Copyright © 2007, Chicago Tribune
By Bruce JapsenTribune staff reporterPublished April 26, 2007
Whether it be Subway sandwiches for the office staff or reimbursement for continuing education, gifts showered upon doctors by drug- and medical device-makers have become so pervasive that they are a standard part of virtually every U.S. physician's practice.
Despite self-policing initiatives launched by organized medical groups and the drug and device makers to curb the cozy relationship between physicians and industry, 94 percent "or virtually all" physicians have at least one type of relationship with the drug industry, according to a study scheduled to be published Thursday in the New England Journal of Medicine. The study indicates that those self-policing initiatives are not always followed. Consumers should care about such relationships because drug companies tend to market the latest and most expensive brand names, and gift-giving can influence prescribing behavior and therefore how much Americans spend on prescriptions, the authors said. Drug marketing and conflicts of interest between doctors and medical product companies have come under congressional scrutiny because of their impact on costs and because of safety issues involving heavily promoted drugs, including Vioxx, the painkiller that was pulled from the market in 2004, nearly two years after studies showed it increased risks of heart attacks."
Relationships with industry are a fundamental part of the way medicine is practiced today," said the study's lead researcher and co-author, Eric Campbell, an associate professor of medicine at the Institute for Health Policy at Massachusetts General Hospital and Harvard Medical School. Campbell said consumers have reason to be concerned about the study's findings. "Would you care if this person was managing your 401(k) and you found out that they had financial relationships with mutual fund companies, or if an umpire was calling the World Series between the Cubs and White Sox would anybody care if the umpires were being paid by either of those two teams?" he asked. "If people would be very concerned that it was happening in a baseball game, you would be even more concerned if it was something like your health."
The findings arise from a survey of more than 1,600 practicing physicians in late 2003 and 2004. The survey was conducted at least two years after the American Medical Association launched a high-profile educational campaign for doctors to reinforce ethics guidelines that recommend that any gifts be of nominal value and benefit patients.
The AMA guidelines, which are voluntary, say any gifts should "primarily entail a benefit to patients and should not be of substantial value." Subsidies should not be accepted to pay for the "costs of travel, lodging or other personal expenses of physicians attending conferences or meetings, nor should subsidies be accepted to compensate for the physician's time." If physicians accept gifts, they should be worth less than $100 and "benefit patients," the guidelines say. Acceptable gifts include textbooks or drug samples.
The study suggests that many doctors do not always follow the AMA guidelines. It notes, for example, that 35 percent of respondents accept reimbursement for continuing medical education or for travel, food or lodging for medical meetings.
The drug industry lobby, Pharmaceutical Research and Manufacturers of America, said its member companies have worked to eliminate certain relationships and in 2002 established guidelines to curb such sales tactics as golf outings, entertainment and "dine and dash" dinners that drug companies order at restaurants for doctors to pick up for essentially doing nothing. Modest meals for the doctor at his office, however, are OK." The meals are recognition that the physicians are extremely busy [and] maybe the only time they have to meet is over a working lunch," said Scott Lassman, senior assistant general counsel for the lobby, which includes Abbott Laboratories, Pfizer Inc. and Merck & Co. in its membership.
Some doctors say, though, that free samples are needed, particularly in practices where there are a number of uninsured patients who cannot afford drugs. Take Dr. Kristin Coyle, a family physician in Sterling, Ill., who said her patients have been hit hard by unemployment. "We definitely have not only a physician shortage and a lot of people who cannot afford things like drugs -- we are a community trying to rebuild," said Coyle, who has accepted Subway, Applebee's and other drug-company-ordered lunches for herself and her office staff. Coyle said she allows reps to drop off free samples and that they are also allowed to make an educational presentation, such as explaining how a new drug or device works. "Basically, they are not allowed to interrupt my patient activity," Coyle said.
Some say, however, that doctors should at least let it be known to their patients that they have a relationship with drugmakers and why it exists. "People have no clue about this," said Jamie Reidy, a former Pfizer sales rep who wrote a book about his experiences selling Viagra and other Pfizer drugs. "They should care," Reidy said. "If they are getting a drug simply because the doc just got back from an advisory board and is pumped full of drug propaganda, that's a problem. But if the doc truly believes Drug X is best for that patient, fine."
----------bjapsen@tribune.com
Copyright © 2007, Chicago Tribune
Wednesday, April 11, 2007
Insurance Company Exec receives $22.5M salary
By Eileen Alt PowellApril 11, 2007
Martin J. Sullivan, who has been running insurance giant American International Group Inc. since the ouster of longtime chief executive Maurice "Hank'' Greenberg, received compensation valued at nearly $22.5 million (euro16.82 million) in 2006, according to a regulatory filing.
Sullivan, 52, who is president and chief executive of AIG, collected a salary of $1 million (euro750,000), a bonus of $10.1 million (euro7.55 million) and non-equity incentive plan compensation of $5.8 million (euro4.34 million), according to the proxy filed on Good Friday with the Securities and Exchange Commission.
His "other'' compensation totaled $703,432 (euro526,009) and included some $257,498 (euro192,550) for personal use of corporate aircraft, $135,014 (euro100,960) for a car and driver and $278,250 (euro208,068) for home security. The home security spending was "a result of implementing the recommendations of independent, third-party security studies,'' the filing said. It did not elaborate.
In addition, Sullivan also was awarded restricted shares under the 2006 performance program with an estimated value of $4.88 when they were granted.
The Associated Press calculations of total pay include executives' salary, bonus, incentives, perks, above-market returns on deferred compensation and the estimated value of stock options and awards granted during the year. The calculations don't include changes in the present value of pension benefits and sometimes differ from the totals released by the companies.
The proxy was filed in advance of AIG's annual meeting on May 16 in New York City.
AIG had a very profitable year in 2006, with net income totaling $14.05 billion (euro10.51 billion), or $5.36 per share, compared with $10.48 billion (euro7.84 billion), or $3.99 per share. Its fourth-quarter profit rose eight fold from the year-earlier period when the insurer spent $1.64 billion (euro1.23 billion) to settle the allegations of improper accounting practices.
Sullivan took over as head of the New York-based company in March 2005 after the AIG board removed Greenberg, who had led the company for nearly four decades, amid federal and state probes into accounting irregularities in AIG's property and casualty insurance business. Greenberg later resigned the chairmanship, too.
British-born Sullivan had served as AIG's vice chairman and co-chief operating officer before being named chief executive.
___
On the Net:
www.aig.com
Copyright 2007 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
Martin J. Sullivan, who has been running insurance giant American International Group Inc. since the ouster of longtime chief executive Maurice "Hank'' Greenberg, received compensation valued at nearly $22.5 million (euro16.82 million) in 2006, according to a regulatory filing.
Sullivan, 52, who is president and chief executive of AIG, collected a salary of $1 million (euro750,000), a bonus of $10.1 million (euro7.55 million) and non-equity incentive plan compensation of $5.8 million (euro4.34 million), according to the proxy filed on Good Friday with the Securities and Exchange Commission.
His "other'' compensation totaled $703,432 (euro526,009) and included some $257,498 (euro192,550) for personal use of corporate aircraft, $135,014 (euro100,960) for a car and driver and $278,250 (euro208,068) for home security. The home security spending was "a result of implementing the recommendations of independent, third-party security studies,'' the filing said. It did not elaborate.
In addition, Sullivan also was awarded restricted shares under the 2006 performance program with an estimated value of $4.88 when they were granted.
The Associated Press calculations of total pay include executives' salary, bonus, incentives, perks, above-market returns on deferred compensation and the estimated value of stock options and awards granted during the year. The calculations don't include changes in the present value of pension benefits and sometimes differ from the totals released by the companies.
The proxy was filed in advance of AIG's annual meeting on May 16 in New York City.
AIG had a very profitable year in 2006, with net income totaling $14.05 billion (euro10.51 billion), or $5.36 per share, compared with $10.48 billion (euro7.84 billion), or $3.99 per share. Its fourth-quarter profit rose eight fold from the year-earlier period when the insurer spent $1.64 billion (euro1.23 billion) to settle the allegations of improper accounting practices.
Sullivan took over as head of the New York-based company in March 2005 after the AIG board removed Greenberg, who had led the company for nearly four decades, amid federal and state probes into accounting irregularities in AIG's property and casualty insurance business. Greenberg later resigned the chairmanship, too.
British-born Sullivan had served as AIG's vice chairman and co-chief operating officer before being named chief executive.
___
On the Net:
www.aig.com
Copyright 2007 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
Monday, April 2, 2007
Senator looking for the truth on workers' comp rates
Published The Greenville News: Wednesday, March 28, 2007 - 2:00 am
By Frank Knapp Jr.
Recently many of us who are trying to address the rising costs of workers' compensation
insurance were shocked when the South Carolina Chamber of Commerce sent out a newsletter and e-mail to its members attacking specific state senators who they contended were deliberately delaying progress on workers' compensation reform legislation. This attack, reported in a March 14 GreenvilleOnline.com story, was not only unfounded but was revealing in its motivation.
As president and chief executive officer of the SC Small Business Chamber of Commerce (which is not affiliated with the state Chamber), I have been immersed in all factors driving the increase in workers' compensation premiums. The Small Business Chamber has successfully proposed systemic legislative reforms that have addressed fraud, provided resources needed to speed up the system and created an assessment of how rate-making data is processed. The Small Business Chamber successfully intervened in the most recent court hearing to have an insurance industry-proposed increase in workers' compensation reduced by about 44 percent. The Small Business Chamber was the only business organization that fought the insurance industry on this increase.
This legislative session, the state Senate is addressing workers' compensation cost drivers in two paths. The Senate Judiciary Committee looked at the costs of claims as a driving force. Insurance carriers collectively file medical and indemnity claim costs to the state Department of Insurance. Based on this data and often through a court hearing, the state determines allowable rate increases related to these costs. A bill dealing with this issue, S. 332, has been vigorously debated by parties representing business, attorneys, state agencies and workers.
It is in regard to the progress of this bill that the state Chamber fired off its "Thumbs Down" attack accusing four senators, including Greenville Sen. David Thomas, of being "Trial Bar-friendly" and delaying progress on S. 332.
The truth is Sen. Thomas doesn't even serve on the Judiciary Committee and therefore he had absolutely no responsibility for the progress of that bill. There is no evidence Sen. Thomas has in any way wielded his influence on the committee's work. That bill has now moved to the full Senate.
So why would the state Chamber launch an attack on Sen. Thomas?
Because the senator has shown the willingness to investigate a second issue that certainly is driving up workers' compensation rates -- the little-understood and obscure-sounding "loss-cost multiplier." It is critical the public understand what this means and what is at stake. As chairman of the Senate Banking and Insurance Committee, David Thomas, does understand the significance of the "loss-cost multiplier."
Here is how this cost driver works:
After the state determines workers' comp rates related to the actual cost of claims, insurance companies themselves can add to the approved rate increase additional costs not related to the cost of claims. This additional charge is called the "loss-cost multiplier" and is easily manipulated to increase premiums because it is not regulated by our Department of Insurance.
The insurance companies do not even give the Department of Insurance documentation explaining what expenses they have included in the "loss-cost multiplier." South Carolina is the only state in the country that does not at least require insurance carriers to show how they arrived at their "loss-cost multiplier," let alone regulate this add-on charge.
Consequently, we do not know that the insurance carriers aren't driving up premiums on their own over and above covering their legitimate expenses. A rate increase they can't convince a judge to accept can simply be achieved by increasing their "loss-cost multiplier."
This is the issue that Sen. Thomas has bravely undertaken to investigate in his Banking and Insurance Committee. On this issue, the state Chamber also attacked the senator, accusing him of being unfriendly and presenting a "frosty demeanor" while insurance industry representatives answered questions about the "loss-cost multiplier."
It is this attack that tells the true motivation of the state Chamber's anger against Sen. Thomas. The state Chamber is representing the interest of its big dues-paying insurance company members. Because the state Chamber and the insurance industry cannot defend the practice of carriers manipulating workers' compensation rates through the "loss-cost multiplier," they indiscriminately throw mud at the bulldog investigating the issue.
The Small Business Chamber congratulates Sen. Thomas on his important work to uncover the real reason for rate increases and gives him two "thumbs up."
Frank Knapp Jr. is president, chief executive officer and co-founder of The S.C. Small Business Chamber of Commerce. For more information, visit www. scsbc.org or e-mail him at sbchamber@scsbc.org.
By Frank Knapp Jr.
Recently many of us who are trying to address the rising costs of workers' compensation
insurance were shocked when the South Carolina Chamber of Commerce sent out a newsletter and e-mail to its members attacking specific state senators who they contended were deliberately delaying progress on workers' compensation reform legislation. This attack, reported in a March 14 GreenvilleOnline.com story, was not only unfounded but was revealing in its motivation.
As president and chief executive officer of the SC Small Business Chamber of Commerce (which is not affiliated with the state Chamber), I have been immersed in all factors driving the increase in workers' compensation premiums. The Small Business Chamber has successfully proposed systemic legislative reforms that have addressed fraud, provided resources needed to speed up the system and created an assessment of how rate-making data is processed. The Small Business Chamber successfully intervened in the most recent court hearing to have an insurance industry-proposed increase in workers' compensation reduced by about 44 percent. The Small Business Chamber was the only business organization that fought the insurance industry on this increase.
This legislative session, the state Senate is addressing workers' compensation cost drivers in two paths. The Senate Judiciary Committee looked at the costs of claims as a driving force. Insurance carriers collectively file medical and indemnity claim costs to the state Department of Insurance. Based on this data and often through a court hearing, the state determines allowable rate increases related to these costs. A bill dealing with this issue, S. 332, has been vigorously debated by parties representing business, attorneys, state agencies and workers.
It is in regard to the progress of this bill that the state Chamber fired off its "Thumbs Down" attack accusing four senators, including Greenville Sen. David Thomas, of being "Trial Bar-friendly" and delaying progress on S. 332.
The truth is Sen. Thomas doesn't even serve on the Judiciary Committee and therefore he had absolutely no responsibility for the progress of that bill. There is no evidence Sen. Thomas has in any way wielded his influence on the committee's work. That bill has now moved to the full Senate.
So why would the state Chamber launch an attack on Sen. Thomas?
Because the senator has shown the willingness to investigate a second issue that certainly is driving up workers' compensation rates -- the little-understood and obscure-sounding "loss-cost multiplier." It is critical the public understand what this means and what is at stake. As chairman of the Senate Banking and Insurance Committee, David Thomas, does understand the significance of the "loss-cost multiplier."
Here is how this cost driver works:
After the state determines workers' comp rates related to the actual cost of claims, insurance companies themselves can add to the approved rate increase additional costs not related to the cost of claims. This additional charge is called the "loss-cost multiplier" and is easily manipulated to increase premiums because it is not regulated by our Department of Insurance.
The insurance companies do not even give the Department of Insurance documentation explaining what expenses they have included in the "loss-cost multiplier." South Carolina is the only state in the country that does not at least require insurance carriers to show how they arrived at their "loss-cost multiplier," let alone regulate this add-on charge.
Consequently, we do not know that the insurance carriers aren't driving up premiums on their own over and above covering their legitimate expenses. A rate increase they can't convince a judge to accept can simply be achieved by increasing their "loss-cost multiplier."
This is the issue that Sen. Thomas has bravely undertaken to investigate in his Banking and Insurance Committee. On this issue, the state Chamber also attacked the senator, accusing him of being unfriendly and presenting a "frosty demeanor" while insurance industry representatives answered questions about the "loss-cost multiplier."
It is this attack that tells the true motivation of the state Chamber's anger against Sen. Thomas. The state Chamber is representing the interest of its big dues-paying insurance company members. Because the state Chamber and the insurance industry cannot defend the practice of carriers manipulating workers' compensation rates through the "loss-cost multiplier," they indiscriminately throw mud at the bulldog investigating the issue.
The Small Business Chamber congratulates Sen. Thomas on his important work to uncover the real reason for rate increases and gives him two "thumbs up."
Frank Knapp Jr. is president, chief executive officer and co-founder of The S.C. Small Business Chamber of Commerce. For more information, visit www. scsbc.org or e-mail him at sbchamber@scsbc.org.
Consumer Groups Say Market Forces, Not Claims, Caused Med Mal Crisis
National News
March 29, 2007
A consumer coalition has released a new study that disputes insurers' contention that the most recent medical malpractice insurance crisis for doctors was caused by rising costs.
The study, Stable Losses/Unstable Rates 2007, by Americans for Insurance Reform (AIR) , a coalition of over 100 consumer and public interest groups, finds that the insurance crisis that hit doctors between 2001 and 2004 was not caused by claims, payouts or legal system excesses as the insurance industry claimed. Rather, the study of the industry's own data, found:
Inflation-adjusted payouts per doctor not only failed to increasebetween 2001 and 2004, a time when doctors' premiums skyrocketed, but they have been stable or falling throughout this entire decade.
Medical malpractice insurance premiums rose much faster in the early years of this decade than was justified by insurance payouts.
At no time were recent increases in premiums connected to actualpayouts. Rather, they reflected the well-known cyclical phenomenoncalled a ''hard'' market. Property/casualty insurance industry ''hard'' markets have occurred three times in the past 30 years.
During this same period, medical malpractice insurers "vastly andunnecessarily" increased reserves for future claims despite no increase in payouts or any trend suggesting large future payouts. The reserve increases in the years 2001 to 2004 could have accounted for 60 percent of the price increases witnessed by doctors during the period.
'This report is proof positive that the huge medical malpractice insurance rate increases between 2000 and 2003 were not related to a jump in claims," said study author J. Robert Hunter, director of Insurance for the Consumer Federation of America.
"'Rather, as in the mid-1970s and mid-1980s, they were simply the result of insurance industry economics, supplemented by insurer hype intended to divert attention away from the mismanagement by insurers that caused the crisis.''
Co-author Joanne Doroshow, executive director of the Center for Justice & Democracy, said the report shows the crisis was a function of market forces.
''This report shows that the real reasons medical malpractice insurance rates rose so dramatically for doctors during this decade was market forces and dropping interest rates, not because of a sudden increase in medical malpractice jury awards or payouts," Doroshow maintained.
She used the report to advocate for stronger regulation of the insurance industry.
"These periodic insurance crises will continue to occur unless lawmakers take steps to reform the insurance industry. State lawmakers must strengthen state insurance regulatory laws and Congress must repeal the decades-old McCarran Ferguson Act, which exempts the insurance industry from anti-trust laws," Doroshow argued.
The full study can be found at: http://insurance-reform.org.
Source: Center for Justice & Democracy
March 29, 2007
A consumer coalition has released a new study that disputes insurers' contention that the most recent medical malpractice insurance crisis for doctors was caused by rising costs.
The study, Stable Losses/Unstable Rates 2007, by Americans for Insurance Reform (AIR) , a coalition of over 100 consumer and public interest groups, finds that the insurance crisis that hit doctors between 2001 and 2004 was not caused by claims, payouts or legal system excesses as the insurance industry claimed. Rather, the study of the industry's own data, found:
Inflation-adjusted payouts per doctor not only failed to increasebetween 2001 and 2004, a time when doctors' premiums skyrocketed, but they have been stable or falling throughout this entire decade.
Medical malpractice insurance premiums rose much faster in the early years of this decade than was justified by insurance payouts.
At no time were recent increases in premiums connected to actualpayouts. Rather, they reflected the well-known cyclical phenomenoncalled a ''hard'' market. Property/casualty insurance industry ''hard'' markets have occurred three times in the past 30 years.
During this same period, medical malpractice insurers "vastly andunnecessarily" increased reserves for future claims despite no increase in payouts or any trend suggesting large future payouts. The reserve increases in the years 2001 to 2004 could have accounted for 60 percent of the price increases witnessed by doctors during the period.
'This report is proof positive that the huge medical malpractice insurance rate increases between 2000 and 2003 were not related to a jump in claims," said study author J. Robert Hunter, director of Insurance for the Consumer Federation of America.
"'Rather, as in the mid-1970s and mid-1980s, they were simply the result of insurance industry economics, supplemented by insurer hype intended to divert attention away from the mismanagement by insurers that caused the crisis.''
Co-author Joanne Doroshow, executive director of the Center for Justice & Democracy, said the report shows the crisis was a function of market forces.
''This report shows that the real reasons medical malpractice insurance rates rose so dramatically for doctors during this decade was market forces and dropping interest rates, not because of a sudden increase in medical malpractice jury awards or payouts," Doroshow maintained.
She used the report to advocate for stronger regulation of the insurance industry.
"These periodic insurance crises will continue to occur unless lawmakers take steps to reform the insurance industry. State lawmakers must strengthen state insurance regulatory laws and Congress must repeal the decades-old McCarran Ferguson Act, which exempts the insurance industry from anti-trust laws," Doroshow argued.
The full study can be found at: http://insurance-reform.org.
Source: Center for Justice & Democracy
Thursday, March 1, 2007
Workers' Compensation Insurance Reform
Senator John Land published an editorial in the Greenville News on March 1, 2007. The letter was great and is copied below:
Workers' compensation makes insurance companies richWe must find out what's causing premium increases and fix that problem to stop seller from setting his own price to a captive buyer.Published: Thursday, March 1, 2007 - 2:00 am
By John C. Land III
Business, and particularly small business, is paying too much for workers' compensation insurance. The insurance industry would have you believe the reason is that greedy injured workers are receiving too much for lost wages and medical care. The truth is that the insurance industry is getting filthy, stinking rich due to a change in the law that allows insurance companies to set their own premiums.
There are only two components to a workers' compensation premium in this state. The first is the "loss cost," which covers medical costs and wage replacement benefits, i.e., the true cost of the claim. Increases in this portion of the premium must be approved by our state Department of Insurance. As in health care, these costs have risen because of increased medical costs. The second factor for these increases is that the cost of living has increased, thus resulting in a number of higher paying jobs over that time.
The second component in pricing workers' compensation insurance is the "loss cost multiplier," or LCM. The LCM includes the insurance company's profit and overhead. Increases in this portion of the premium were similarly overseen by the Department of Insurance until a change in the law that occurred in 2003.
This change, which the insurance industry pushed, allowed insurance carriers to set their own LCM, and thereby set their own premiums, free from any oversight whatsoever. And finding out where the money is going is like trying to push a wet string -- it's frustrating with no oversight. Since that oversight was removed, the average LCM has increased almost 200 percent over the last six years. This is the runaway train in the Workers' Compensation system and is the cause of skyrocketing premiums.
The insurance industry will tell you that overhead is high because of the Second Injury Fund (SIF). I have heard the insurance industry lobbyists many times use the line that our SIF assessments are bigger than California's, and that sounds shocking. Do not fall for it. What they do not tell you is that the SIF does not keep the assessment money; rather, the SIF has to pay it back in reimbursements to the very insurance industry that paid it in. Once the reimbursements are accounted for, net assessments have actually decreased since 2002. In contrast, the loss cost multiplier, which is where assessments are accounted for in the premium, has seen an almost 200 percent increase since 2000, and the insurance industry has not told us why.
The insurance industry will also tell you that costs have increased because of inefficiency in the workers' compensation system. Nothing could be farther from the truth. In 2003-2004 the Commission handled almost 89,000 claims. Hearings were scheduled in less than 10 percent of the claims and actually held in less than 2.5 percent of the claims. The average time it takes to get a hearing from the date requested is less than four months and the average time it takes to get a review hearing of a decision is less than three months.
In 2004 there were only 262 appeals from the Commission to the Circuit Court. That means that out of all the claims filed, only 0.002 percent of the injured workers, the employers and the insurance carriers were dissatisfied with the Commission's review process.
I believe in the free market system. However, workers' compensation insurance is mandatory and the free market system does not work when the seller can name his own price to a captive buyer. We should focus on finding the real cause behind these premium increases and correct whatever that is. Otherwise, all we are going to improve is the size of the insurance executives' bank accounts.
Workers' compensation makes insurance companies richWe must find out what's causing premium increases and fix that problem to stop seller from setting his own price to a captive buyer.Published: Thursday, March 1, 2007 - 2:00 am
By John C. Land III
Business, and particularly small business, is paying too much for workers' compensation insurance. The insurance industry would have you believe the reason is that greedy injured workers are receiving too much for lost wages and medical care. The truth is that the insurance industry is getting filthy, stinking rich due to a change in the law that allows insurance companies to set their own premiums.
There are only two components to a workers' compensation premium in this state. The first is the "loss cost," which covers medical costs and wage replacement benefits, i.e., the true cost of the claim. Increases in this portion of the premium must be approved by our state Department of Insurance. As in health care, these costs have risen because of increased medical costs. The second factor for these increases is that the cost of living has increased, thus resulting in a number of higher paying jobs over that time.
The second component in pricing workers' compensation insurance is the "loss cost multiplier," or LCM. The LCM includes the insurance company's profit and overhead. Increases in this portion of the premium were similarly overseen by the Department of Insurance until a change in the law that occurred in 2003.
This change, which the insurance industry pushed, allowed insurance carriers to set their own LCM, and thereby set their own premiums, free from any oversight whatsoever. And finding out where the money is going is like trying to push a wet string -- it's frustrating with no oversight. Since that oversight was removed, the average LCM has increased almost 200 percent over the last six years. This is the runaway train in the Workers' Compensation system and is the cause of skyrocketing premiums.
The insurance industry will tell you that overhead is high because of the Second Injury Fund (SIF). I have heard the insurance industry lobbyists many times use the line that our SIF assessments are bigger than California's, and that sounds shocking. Do not fall for it. What they do not tell you is that the SIF does not keep the assessment money; rather, the SIF has to pay it back in reimbursements to the very insurance industry that paid it in. Once the reimbursements are accounted for, net assessments have actually decreased since 2002. In contrast, the loss cost multiplier, which is where assessments are accounted for in the premium, has seen an almost 200 percent increase since 2000, and the insurance industry has not told us why.
The insurance industry will also tell you that costs have increased because of inefficiency in the workers' compensation system. Nothing could be farther from the truth. In 2003-2004 the Commission handled almost 89,000 claims. Hearings were scheduled in less than 10 percent of the claims and actually held in less than 2.5 percent of the claims. The average time it takes to get a hearing from the date requested is less than four months and the average time it takes to get a review hearing of a decision is less than three months.
In 2004 there were only 262 appeals from the Commission to the Circuit Court. That means that out of all the claims filed, only 0.002 percent of the injured workers, the employers and the insurance carriers were dissatisfied with the Commission's review process.
I believe in the free market system. However, workers' compensation insurance is mandatory and the free market system does not work when the seller can name his own price to a captive buyer. We should focus on finding the real cause behind these premium increases and correct whatever that is. Otherwise, all we are going to improve is the size of the insurance executives' bank accounts.
Monday, February 12, 2007
Ownership, Maintenance, and Use of Automobile
South Carolina law mandates that all automobiles be covered by automobile liability insurance policies. The law is found at S.C. Code Ann. § 38-77-140. This statute provides, in part, as follows:
No automobile insurance policy may be issued or delivered in this Stateto the owner of a motor vehicle or may be issued or delivered by an insurer licensed in this State upon any motor vehicle then principally garaged or principally used in this State, unless it contains a provision insuring the persons defined as insured against loss from the liability imposed by law for damages arising out of the ownership, maintenance, or use of these motor vehicles ....
The key provision of this liability insurance statute relates to the words, "arising out of the ownership, maintenance, or use" of the car. Thus, South Carolina automobile insurance policies must provide coverage when liability arises due to these activities.
Sometimes the scope of potential liability coverage arises in situations most people would not expect coverage. For example, we have recovered liability payments when the vehicle owner negligently left a part under some leaves in a parking lot. The part caused a passer-by to trip and fall. Since the fall arose out of the maintenance of the vehicle, the automobile liability policy applied and the person was able to obtain a recovery from the insurance company.
Other times, such as when a vehicle is used as a platform to commit an assault on a person, like a drive-by, gangland shooting, our law holds that such injuries do not "arise from the use" of the vehicle. Rather, the vehicle's involvement is just fortuitous and use of the vehicle bears no relationship to the intentional act. Then, the liability insurance policy may not apply to cover the wrong-doer.
No automobile insurance policy may be issued or delivered in this Stateto the owner of a motor vehicle or may be issued or delivered by an insurer licensed in this State upon any motor vehicle then principally garaged or principally used in this State, unless it contains a provision insuring the persons defined as insured against loss from the liability imposed by law for damages arising out of the ownership, maintenance, or use of these motor vehicles ....
The key provision of this liability insurance statute relates to the words, "arising out of the ownership, maintenance, or use" of the car. Thus, South Carolina automobile insurance policies must provide coverage when liability arises due to these activities.
Sometimes the scope of potential liability coverage arises in situations most people would not expect coverage. For example, we have recovered liability payments when the vehicle owner negligently left a part under some leaves in a parking lot. The part caused a passer-by to trip and fall. Since the fall arose out of the maintenance of the vehicle, the automobile liability policy applied and the person was able to obtain a recovery from the insurance company.
Other times, such as when a vehicle is used as a platform to commit an assault on a person, like a drive-by, gangland shooting, our law holds that such injuries do not "arise from the use" of the vehicle. Rather, the vehicle's involvement is just fortuitous and use of the vehicle bears no relationship to the intentional act. Then, the liability insurance policy may not apply to cover the wrong-doer.
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