By Bruce Schreiner
The Associated Press
FRANKFORT - A House committee Wednesday took up legislation to create a state-run medical malpractice insurance business aimed at offering relief for physicians facing runaway insurance costs.
The proposal seeks to replicate the state's entry into the workers' compensation business nearly a decade ago.
The malpractice insurance business would be operated by the same board now overseeing the workers' compensation business.
The bill ran into some resistance during a hearing before the House Banking and Insurance Committee. The panel took no vote but was expected to review the measure again today. The measure is sponsored by Reps. Steve Nunn, R-Glasgow, and Rob Wilkey, D-Franklin.
The bill would create the Kentucky Physicians' Medical Malpractice Insurance Co. Skeptics worried that an expansion into the costly medical malpractice business might harm the workers' comp business.
"Make no mistake about it, it's not a sure thing," said Nunn, who is running for governor. "We've got to take some chances in state government to correct this crisis."
Rising malpractice insurance costs have forced some doctors to give up high-risk specialties or leave for states where rates are lower.
Another key feature of the bill would require that any medical malpractice case go to mediation to try to ferret out frivolous claims. Agreements reached in mediation would be legally binding.
It also would require plaintiffs to file sworn statements by medical experts stating that they reviewed the cases and that they had merit. Without the statement, defendants could move to dismiss suits.
Those features were incorporated from a bill introduced by Sen. Jerry Rhoads, a Madisonville Democrat.
Nunn said doctors face the same dilemma encountered a decade ago by employers - rising insurance costs and few choices among insurers.
At that time, the General Assembly created the Kentucky Employers' Mutual Insurance Authority to offer workers' comp insurance. Nunn said KEMI has been a success, and now covers about 19,000 policyholders.
Nunn's bill would expand KEMI into the medical malpractice business. The KEMI board would be expanded by three members to a total of 10. Two members would be physicians and at least one would have expertise in medical malpractice insurance. The malpractice insurance business would start no sooner than Dec. 1.
Nunn said the workers' comp and malpractice businesses would be kept separate. But the malpractice insurance business would draw upon the existing structure at KEMI, he said. Also, the board could chose to dip into KEMI's $45 million in reserves to lend to the medical malpractice business to help cover startup costs.
Rep. Steve Riggs, D-Louisville, expressed reservations about such a transfer, saying it ultimately could effect KEMI's workers' comp rates.
"What will we say to employers who are buying workers' comp, and taking their premium money to start an insurance company like this?" Riggs said.
He also wondered why the state would want to get into the medical malpractice business when some private insurance companies have reported losing hundreds of millions of dollars.
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