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September 24, 2004

One last word on caps and premiums: problems with the Weiss Ratings report

By Ted Frank

It's worth noting that the two pieces of evidence that Dr. Chusid cites is actually two conclusions from one single Weiss ratings study -- and a severely flawed study at that. Several of the states that Weiss grouped in its "capped damages" group had caps several times greater than the $250,000 caps at issue here. Worse, more than half the states in the Weiss study's "cap" group did not have caps in 1991, the baseline year from which it is measuring insurance rate increases. Other results were manipulated by using median figures instead of means. Weiss Ratings also failed to account for the fact that policyholder dividends were more common in 1991 than in 2002.

In short, the Weiss Ratings study has no credibility whatsoever. Indeed, in a July 7, 2003 e-mail to Senate Majority Leader Frist, Medical Liability Monitor editor Barbara Dillard objected to the "misleading" data in the Weiss Ratings study. The National Practitioner Data Bank also objected to the Weiss Ratings misuse of its data.

The American Academy of Actuaries, which has no dog in the lawyers vs. doctors fight, and takes no official position on tort reform, has submitted congressional testimony that such caps will reduce insurance rates. (The testimony also rebuts the Kerry-Edwards urban legends that the stock market, rather than increased liability awards, are responsible for the crisis.)

Dr. Chusid tells only a misleading fraction of the story of Ohio. Caps did not pass there until 2003, and Ohio Department of Insurance Director Ann Womer Benjamin has expressed no disappointment whatsoever: rather, she stated that one could not expect to see results immediately, as opposed to five to ten years down the line. The ODI certainly does not oppose caps; rather, it calls them an important step in resolving the malpractice crisis.

One reason state caps don't take effect immediately (except, as in Texas, where they are enacted into the state constitution) is that the plaintiffs' bar immediately challenges them in court, and insurance companies cannot be sure that the caps won't be retroactively repealed by an activist plaintiff-friendly court. (It was years before California's caps were affirmed by its court system.)

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Medicine and Law



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