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Public Citizen Calls on District of Columbia’s Insurance Commissioner to Delay Hearing on Medical Malpractice Insurer Takeover

May 18, 2005

Public Citizen Calls on District of Columbia’s Insurance Commissioner to Delay Hearing on Medical Malpractice Insurer Takeover

Group Files to Intervene in Proposed ProAssurance Acquisition of NCRIC; More Study Needed to Ensure Patient Care Won’t Suffer

WASHINGTON, D.C. – The proposed takeover of NCRIC Group, Inc., a District-based medical malpractice insurer, is likely to reduce competition and raise prices in the District’s medical malpractice insurance market, Public Citizen said today. The consumer advocacy organization has filed a motion to intervene in the case, saying the District should delay consideration of the matter.

“It is important to both doctors and patients to carefully examine whether this merger will have a detrimental effect on the price of insurance premiums and thereby affect patient care,” said Frank Clemente, director of Public Citizen’s Congress Watch. “We have significant concerns about this company’s market practices. Allowing our intervention will enable us to delve into important issues through the information discovery process the law makes available to parties in the case.”

Public Citizen filed the motion to intervene in the case with Lawrence Mirel, the commissioner of the District of Columbia’s Department of Insurance, Securities and Banking. The consumer group, which filed on behalf of its 802 members in the District, asked the District to delay consideration of the proposed takeover of NCRIC by ProAssurance Corp. of Alabama.

The acquisition stands to hurt doctors and their patients. ProAssurance’s basic business plan is to acquire other companies, such as NCRIC, thereby diminishing the number of competitors in the marketplace. In addition, ProAssurance’s business plan calls for restricting the number of policies it issues and charging higher premiums for those policies it does issue. ProAssurance’s tactics have enabled it to become a leading malpractice insurer nationally.

In February, the two companies announced a deal under which ProAssurance would acquire NCRIC in a stock deal valued at $69.6 million. On May 10, the insurance commissioner’s office announced that a public hearing on the deal was scheduled for June 6.

Public Citizen requested that Mirel postpone the June 6 hearing so that the takeover’s effect on physicians and patients can be closely examined through inquiries of company executives and production of company documents.

NCRIC is the District’s dominant malpractice insurer, and, like most malpractice insurers, has raised its premiums significantly in recent years. Premiums for internal medicine physicians, for example, went up 21 percent in 2003 and an additional 25 percent in 2004, according to the trade publication Medical Liability Monitor. Specialty fields of practice have experienced even greater increases, with some doctors now seeing bills topping $100,000 annually.

As has been true nationally, the premium increases have led doctors to join insurers in urging lawmakers in Washington, D.C., and in the states to enact strict limits on how much injured patients can recover for negligence or medical errors. Public Citizen, however, has produced research showing patients seeking compensation for injuries are not the reason premiums have spiked. Instead, Public Citizen says, the business practices of insurers themselves are responsible.

“We urge the commissioner to grant our motion to intervene and look forward to working with him to produce the best possible outcome for District doctors and the many patients who depend on them,” Clemente said.

To read Public Citizen’s motion to intervene, click here.