PCI: Ill. Medical Liability Proposal – One Step Forward, One Step Back

May 27, 2005

The Property Casualty Insurers Association of America (PCI) is expressing mixed emotions over the medical liability proposal likely to pass in the Illinois Legislature.

SB 475, which focuses on several key aspects of the issue including caps on non-economic damages and prior-approval for ratemaking, would both help and hurt state consumers, according to PCI.

PCI supports the provision relating to caps on damages, which would set a limit of $1 million on pain-and-suffering awards (also called non-economic damages) from hospitals and a $500,000 limit from doctors.

“While we would have liked to have seen a lower cap on pain-and-suffering awards, we are pleased that Illinois state leaders are finally taking action to control the skyrocketing costs of non-economic damage claims,” said Greg LaCost, regional manager and counsel for PCI. “Without the caps, consumers in Illinois were losing skilled and experienced physicians to neighboring states. This measure will help stabilize the market and bring physicians back to Illinois.”

However PCI is not on board with other parts of the legislation including a provision that would require hearings for rate approval in various circumstances before medical liability carriers could change rates.

“Illinois has benefited from an open-rating environment for years,” said LaCost. “In fact, we have long been considered the standard for a competitive and successful insurance market. Requiring carriers to gain prior-approval through hearings would drop Illinois down several rungs on the insurance regulation evolutionary ladder. This would most likely mean less competition and increased premiums for consumers. We hope legislators remove that provision for the betterment of consumers.”

Additionally, PCI is concerned with several provisions regarding consumer privacy. One provision would require that a carrier provide proprietary information that may be obtained in forming rates for consumers. Under the new provision, this information would be made available to an insurer’s competitor and to the general public at large.

Another provision would require all claims filed against the carrier to be provided. PCI is concerned that personal, identifiable information will be made available to the public under these provisions. “We are hopeful that legislators will consider these concerns and modify the bill accordingly,” added LaCost.

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