NAIC Casualty Actuarial and Statistical Task Force Issues Group Meeting Report

Recently, the National Association of Insurance Commissioners (“NAIC”) Casualty Actuarial and Statistical Task Force Statistical Issues Group (“Group”) met to discuss the Guideline for Implementation of Medical Professional Liability Closed Claim Reporting (“Guideline”) and offer recommendations on the ongoing collection of additional medical professional liability data to the Casualty and Actuarial and Statistical Task Force.

The meeting was called to order by Group Chairman Lee Barclay with a quorum of members in attendance.

The following parties submitted written comments in advance of the meeting:

• Law Professors (“Professors”) from the University of Texas at Austin, University of Illinois, and Georgetown University Law Center
• Suggested Revisions to the Guideline and related Codebook by Brent Kabler from the Missouri Department of Insurance, Financial Institutions and Professional Registration
• Comments Regarding Economic vs. Non-Economic Damages by Mr. Kabler
• Revisions to the Guideline and Codebook from Tom Hess of Ohio
• Mr. William Burgess, Vice President of Association Services, Physician Insurers Association of America (“PIAA”)
• A Representative from Kentucky

Bernard S. Black, Professor of Law and Professor of Finance at the University of Texas at Austin spoke on behalf of the attending Professors, saying that Guideline changes proposed by Mr. Kabler are a good starting point. The Professors see two major areas of weakness in the Guideline:

1. Data collection requirements for cases that go to verdict. Mr. Black stated that verdicts and court judgments should be reported for tried cases, as well as the amount paid after the verdict. The verdicts should be broken down by damages type, such as economic, non-economic, or punitive. Pre-judgment interest and the total court award also should be reported. If a court judgment differs from the verdict, this should be explained.
2. Data collection requirements in cases with multiple settling defendants. Insurers should be asked to report the number and type of other defendants, and any payments made subsequent to the trial verdict by the other defendants. Information about defendants who are not health care providers also should be provided. Also, an insurer should be asked to report whether a claim has been closed to all defendants, or whether it remains open to some. Mr. Black also stated that the actual settlement/judgment amounts should be reported, rather than the payment range.

Group members expressed concern about the wording of such requirements if they should be included in a form, and that doctors and insurance companies may not submit correct information inasmuch as they have no monetary impetus to do so.

Mr. Kabler spoke about economic vs. non-economic damages, stating that, in his opinion, there is no easy way to ensure that the amounts reported by insurers would be accurate and/or meaningful, as well as consistent across all insurers. Mr. Kabler stated that he has come to the conclusion that, in order to avoid inaccuracy, the apportionment of the total indemnity between economic and non-economic damage categories would be accomplished best by regulators or analysts, rather than insurers.

Chairman Barclay inquired about the practicality of gathering economic and non-economic damage information. Mr. Kabler stated that the information should be readily available and reiterated his prior submission of a document combining the Guideline and Related Codebook that also addresses issues of data quality.

Potential data quality problems could arise because the definition of what constitutes required data varies by entity, individuals employed by the entity, by state insurance departments, by researcher, and by users of data-driven reports. Mr. Hess stated that he would like to avoid the possibility of data providers fabricating data in order to complete a survey.

Mr. Burgess suggested that an allocation of total indemnity payments only should be reported for verdicts where actual apportioned amounts are specified by the courts. He suggested that this would help avoid the manufacture of unreliable economic and non-economic damage award amounts for individual claim payments.

Mr. Burgess stated that, if the current proposal to have insurers apportion settlement amounts is adopted, it is likely that researchers will not rely on this information, thereby defeating the purpose for which the data was collected.

Written comments from the State of Kentucky were not discussed, inasmuch as there was no designated representative in attendance at the meeting.

Chairman Barclay stated he would like to slow the Guideline approval process down in order to fully consider all comments received. Chairman Barclay offered the following suggestions as underlying principles to be considered when examining revisions to the Guideline:

1. The Guideline cannot require data that is not required by the Model Law it supports.
2. The Guideline cannot state that data required by the Model Law will not be collected.
3. Regulators cannot collect data that is not required by the Model Law.
4. Because some states will have to create Rules to adopt the Guideline–if accepted–the information required must be clear.
5. The Guideline must be consistent with the overall NAIC goal of regulatory modernization.
6. The Guideline should recognize that the data required should not be so narrow in scope that it is useless to researchers.

The Group had no suggested changes for the collection of additional medical professional liability data to present to the Casualty Actuarial and Statistical Task Force.

Chairman Barclay informed the Group that a report on the automobile insurance database will need to be approved in the future. It is anticipated that a draft will be released shortly.

The meeting was then adjourned.

Should you have any questions or comments, please do not hesitate to contact Colodny Fass.