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September 27, 2005

Actuaries Find that Medical Malpractice Report Misled the Public

medmal.pngIndependent actuaries with the firm Towers Perrin find that a July 2005 report released by the Center for Justice and Democracy and five other "consumer groups" is incomplete and unsound. Jay Angoff, an attorney employed by a personal injury law firm, performed the analysis for the six "consumer groups" and claimed that medical liability insurers have overcharged doctors and hospitals and accumulated record amounts of surplus over the last three years. However, an analysis of Angoff's report by actuaries James Hurley and Gail Tverberg finds that those claims are not supported by the data, nor do they pass a common sense test.

Towers Perrin's comments released today find Angoff's "analysis is incomplete and unsound" and his statistics "are:

1) meaningless and unsound in the case of paid loss to written premium
2) materially incomplete, in the case of incurred loss to earned premium
comparisons; or
3) incomplete and taken out of context, in the case of the change in

The Towers Perrin analysis documents that malpractice insurers have lost money in each of the years 1999 through 2003 even after considering investment income from their bond portfolios. In 2001, financial results were the worst in approximately 30 years. Hurley and Tverberg, through a succinct and thorough review, demonstrate that Angoff's conclusions cannot be supported by the facts.

Furthermore, Hurley and Tverberg find that Angoff's analysis fails the common sense test in that insurance regulators and analysts do not look at the statistics that Angoff derives because they are "meaningless, incomplete and inappropriate to form the conclusions made in the [Angoff] Report. If medical malpractice is as profitable as implied by the report, more companies would be competing to write the coverage."

PIAA President Larry Smarr applauded the actuaries' comments. "The Angoff report is a hoax and inappropriately twists numbers to claim that medical malpractice insurers have increased premiums at a rate more than 20 times the increase in claims payments. Towers Perrin has taken a critical step toward setting the record straight and stopping Angoff and these groups from further misleading the public."

Mr. Angoff's report is entitled, "Falling Claims and Rising Premiums in the Medical Malpractice Industry."

The PIAA is an association of doctor/provider owned and/or operated medical liability insurance companies which insure over 60 percent of America's private practicing physicians as well as dentists, hospitals, and other healthcare providers.

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Lawrence E. Smarr

Source: Physician Insurers Association of America

Posted by Tom Troceen