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Tempers flare in Georgia medical malpractice insurance controversy

Editor's Note: Fulton County Superior Court Judge Gail Tusan overturned Georgia Insurance Commissioner John Oxendine's June 13, 2001, cease-and-desist order on July 12, 2001. The St. Paul Cos. replied that they were "pleased and gratified" by the court's decision. Oxendine, on the other hand, views the ruling as no more than "a slight delay" and has filed for an immediate, expedited appeal.

An ongoing dispute over medical malpractice insurance heated up with Georgia Insurance Commissioner John Oxendine's order to the St. Paul Cos. to renew more than 1,000 policies.

"Greed and avarice seem to be their corporate motto. They're showing no regard for the policyholders."

Prompted by what the insurance commissioner called "an apparent disregard for Georgia policyholders," the order would force the St. Paul Cos. to renew 1,262 medical malpractice policies to physicians and surgeons, place the insurer under probation for one year, and suspend its license to write new policies for three years.

According to Oxendine, the Minnesota-based insurer had attempted to nonrenew the medical malpractice policies and switch them for unregulated surplus lines policies, which would allow the company to double its premiums without state authorization.

"It's an attempt to do an end run to not having any regulations," says Oxendine. "Greed and avarice seem to be their corporate motto. They're showing no regard for the policyholders."

St. Paul responded by calling Oxendine's actions "outrageous," "off the wall," and "loony." According to Patrick Hirigoyen, a spokesperson for St. Paul, the insurer has been losing money on these policies. The nonrenewal was part of an effort to combine medical malpractice with other types of commercial coverage for physicians and surgeons.

"This is really a case of cutting off your nose to spite your face," says Hirigoyen "He's forcing us to renew policies at a loss, and preventing us from new writing."

The insurer also believes that it has acted within the bounds of all of Georgia's laws, and plans to vigorously oppose Oxendine's actions.

"This is really a case of cutting off your nose to spite your face. He's forcing us to renew policies at a loss, and preventing us from new writing."

Oxendine, however, contends that St. Paul's attempt to either pull out of the market or to move their policies to surplus lines was illegal and without state approval. According to the commissioner, if St. Paul had needed a rate increase to cover its costs, the increase would very likely have been granted.

"The last time they asked for a rate increase, we gave them substantially what they wanted," says Oxendine. "They just want to jump ship."

The suspension of St. Paul's license would begin on Sept. 1, 2001, and would apply to all lines of insurance written in Georgia by the insurer, but would still allow consumers to make modifications to existing policies. The delay is intended to give agents a chance to write new St. Paul policies and to secure insurance from other companies for the future.

St. Paul currently has approximately $200 million in net premiums written in Georgia in various commercial policies. The physician's and surgeon's medical malpractice insurance policies that sparked the conflict represent about $23 million in net premiums.

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