GA Commish in Med-Mal Standoff With St. Paul

Georgia Insurance Commissioner John Oxendine has taken issue with the St. Paul Companies over their intentions to non-renew some of the medical malpractice policies in the state. Oxendine slapped the Minnesota-based company with a three-year suspension of its insurance license, along with a one-year probationary period.

“Basically what St. Paul was doing was they’ve tried to cancel all their physicians and surgeons,” Oxendine told IJ. “Under Georgia law, in a market before you can just cancel a lot of business, you have to get regulatory approval. The reason is you don’t want people jumping in and out of the market—it creates instability. St. Paul just decided they didn’t want to follow the law.

“We had a public hearing (June 7) and what came out was not only were they not complying with the statutes, but they were trying to move their malpractice business in violation of the law to the surplus lines market,” Oxendine noted. “The unadmitted surplus lines market is supposed to be there as a last resort; you’re not supposed to take admitted business and move it to the unregulated surplus market.”

In a hearing in Superior Court of Fulton County June 19, Judge Gail Tusan ruled that St. Paul could not hereafter issue nonrenewal notices to physician and surgeon policyholders pending further order of the Court, according to Wayne Whitaker in the Office of Insurance Commissioner. Tusan also ordered that St. Paul send a notice within 48 hours to the 476 physicians and surgeons to whom petitioners (St. Paul) to date already have issued medical malpractice nonrenewal notices, advising that the petitioners’ challenge to the Commissioner’s Order will be fully resolved by the Court on or before July 13. A final hearing is slated for June 27.

Mike Hamel, a spokesman for St. Paul, said the company had a book of business that was losing a lot of money. “We talked to Mr. Oxendine about the situation we were confronting in Georgia, and he made it clear he would not entertain any kind of an increase. For the physicians and surgeons we have down there, it was very unprofitable and we needed to make changes and very quickly.”

St. Paul accounts for about 15 percent of the medical malpractice policies written in the state, according to Oxendine. St. Paul indicated it was paying out $1.79 for each $1 received in medical premiums. Not many companies could sustain that kind of a combined ratio and remain profitable for very long.

“We needed to take dramatic actions to turn that around and that’s what we decided to do,” Hamel said. “We’ve filed for rate increases in more than two dozen states, and in many of those, we already received the increase and the approvals. It’s only in Georgia that we’ve been put in this position.

“The message we had was we wanted to continue serving these customers with these policies, but not without an adequate premium. We made it clear we needed an increased premium rate and [Oxendine] made it clear that would not be entertained. We non-renewed a number of policies as they were coming up for renewal and shortly after that, he called this hearing [June 7].”

Topics Georgia