Nevada regulator concerned with insurance reform bill

Nevada's top insurance regulator told lawmakers Wednesday she's concerned that medical malpractice insurance reform legislation would overburden her department.

State Insurance Commissioner Alice Molasky-Arman said AB320 is unnecessary and criticized what she called misconceptions about why the bill was crafted.

The measure by Assembly Majority Leader Barbara Buckley, D-Las Vegas, would prohibit approval of malpractice insurance rate increases if insurers are making up for losses in financial markets or poor underwriting decisions.

Those provisions are in response to the abrupt decision by St. Paul Companies in 2001 to stop insuring Nevada doctors. St. Paul lost money on its Enron investments just before ending its coverage.

Molasky-Arman told the Senate Judiciary Committee she currently doesn't allow insurance rate hikes based solely on investment losses, and worried that the legislation would "transpose rate review into an investigation."

The division says that if AB320 is approved it would need an additional $407,000 over the next two years to pay for three new positions and 240 hours of overtime. That amount may hurt the bill's chances as senators try to hold down costs.

The committee took no action on the bill, which the Assembly approved uanimously last month.

Backers of the legislation including Bill Bradley of the Nevada Trial Lawyers Association and Las Vegas cancer specialist Dr. John Ellerton, who told the panel it's worth spending some state money to aid doctors.

Ellerton called the measure "a start to providing us with relief," adding, "It's important to make sure that there is access to care and there are physicians to provide that care."

The bill also mandates that any insurance company with at least 40 percent of the market share would have to provide a four-month notification to the state before withdrawing. Insurers would be required to disclose to doctors how some rates are developed.

Insurers said they had agreed to go along with those provisions, but objected to a separate "bad faith" section prohibiting insurers who reject "reasonable" settlement offers and are then hit with a large jury award from canceling a doctor's insurance.

Judiciary Chairman Mark Amodei urged insurers and bill proponents to work on a compromise.

"We would need to know where the areas of agreement are so we can see what the consensus of the committee is," the Carson City Republican said, adding that the panel would vote on the bill next week.

Jim Wadhams, lobbyist for the insurance industry, criticized the measure for punishing already departed St. Paul. "That cow is out of the barn," he said. "It's critical that we do not punish the responsible companies that are still here."

A separate medical malpractice measure backed by doctors and approved by the Senate is pending before the Assembly Judiciary Committee. That panel will begin review of SB97 on May 13.