Democrats Call for GAO To Investigate Insurers’ Role in Malpractice Rate Hikes

In response to "skyrocketing" medical malpractice insurance premiums nationwide, ten Democratic lawmakers have asked the General Accounting Office to investigate "what role insurance companies had in creating" the problem, the Wall Street Journal reports. The lawmakers, led by Reps. John Conyers (D-Mich.), John Dingell (D-Mich.) and John LaFalce (D-N.Y.), sent a letter to the GAO to request a review of the financial statements and other information that malpractice insurers submitted to regulators to determine "how the insurer's declining investment income and past underwriting practices" may have affected premium rates. In addition, the lawmakers have asked the GAO to investigate "how medical malpractice insurers set aside reserves for events that have occurred but not been reported as claims," the Journal reports. The lawmakers set a Sept. 3 deadline for the GAO to report the results of the investigation. "Many in Congress are concerned that the insurance industry itself may be the leading culprit in the most recent medical malpractice crisis," Conyers said. The lawmakers made the request to the GAO one week after the Journal reported that the "pricing and accounting practices" of malpractice insurers have contributed to premium increases in many states (Oster, Wall Street Journal, 7/3). A number of health insurers and physicians attribute the increase in malpractice insurance premiums to multi-million dollar verdicts awarded in liability lawsuits, but the Journal attributed the problem to a malpractice insurance "price war" that began in the early 1990s, which prompted many insurers to sell malpractice coverage at rates "inadequate" to cover the cost of claims (American Health Line, 6/24).