Saying Nevada's current medical malpractice insurance crisis was precipitated when the St. Paul Cos. stopped selling the coverage to the state's doctors, Nevada Attorney General Frankie Sue Del Papa has filed a complaint against the insurer for alleged unlawful business practices.

The complaint claims the insurer "engaged in conduct to withdraw from the State of Nevada in specific classes," including surgery in obstetrics/gynecology and emergency medicine, without the required 60-day notice. It also alleges unauthorized policy modifications and unlawful policy cancellations and nonrenewals.

Nevada physicians, especially obstetricians and speciality surgeons, say they've been forced to retire early, close their practices, or limit their services because of skyrocketing malpractice insurance rates. According to insurers, frivolous lawsuits, large jury awards, and the bankruptcies of medical liability insurers — or their flight from the market — has forced the remaining insurers to triple and quadruple their rates.

"This is a grave situation where already there are expectant mothers who cannot obtain the services of physicians due to the difficulty OB/GYNs are having in obtaining medical malpractice insurance," Del Papa says. "That's just one example of the ripple effect of unlawful behavior in the marketplace."

St. Paul Cos. spokesperson Andrea Wood says she appreciates Nevada's "difficult position" because the insurer formerly wrote 40 percent of the medical malpractice insurance sold in the state. However, Wood says it's "ludicrous" that the state is blaming the insurer for Nevada's medical malpractice insurance crisis. "We're not the only insurance carrier struggling with this problem," she says. According to Wood, St. Paul has been cooperating with the Nevada Department of Insurance and intends to work with the department to address the allegations.

The St. Paul Cos., the nation's second-largest business insurer, announced in 2001 it would exit the medical malpractice market, leaving 750 hospitals, 42,000 physicians, and 73,000 other health care workers nationwide to look elsewhere for coverage. The company also suffered $941 million in losses from the Sept. 11 terrorist attacks.

Administrative action

According to Del Papa's office, the complaint itself is an order to "show cause" whereby St. Paul must produce evidence to an impartial hearing officer (appointed by the Nevada Insurance Commissioner) who then determines whether or not the commissioner is justified in taking appropriate disciplinary action based upon the allegations contained in the complaint.

There are eight allegations in the complaint and each one carries a fine of $5,000 to $10,000.