The Doctors Co. Challenging Florida’s Order to Decrease Med Mal Rates

By | July 27, 2015

An order by the Florida Office of Insurance Regulation for medical malpractice insurer The Doctors Co. (TDC) to decrease its rates by 15 percent is being contested by the California-based company.

A hearing has been set for Oct. 7, 2015, by the Florida Division of Administrative Hearings in response to a request by TDC. The insurer requested the hearing after FLOIR notified TDC that its rate filings for its “Physicians, Surgeons and Ancillary Healthcare Providers Professional Liability Program,” in which TDC requested no rate changes on both new and renewal lines of business effective June 1, were not approved and the insurer was instead ordered to decrease rates.

“The Doctors Company requested a hearing with the Florida Office of Insurance Regulation (OIR) because, although we followed the same annual rate filing process we have for years and requested a zero increase this year, the OIR recently took the unusual step of ordering The Doctors Company to reduce rates,” Robert E. White, Jr., senior vice president and regional operating officer for The Doctors Co., said in a statement to Insurance Journal.

FLOIR’s “Notice of Intent to Disapprove” was sent to TDC in March to inform the insurer that its December 2014 rate filing would not be approved.

The original Notice of Intent to Disapprove stated that “the trend in the filing appears to be excessive” and that “the loading in the filing for accrual of death, disability and retirement benefits at no additional charge is not supported to be not excessive.”

The Notice of Intent also informed TDC that it had 21 days to file a petition with FLOIR or request a hearing on the matter, which TDC did not do. The December rate filings for both new and renewal business were then disapproved in April.

The subsequent June 2 order sent by FLOIR to the insurer stated that the rate filings did not provide “sufficient documentation or justification to demonstrate that the proposed rates were not excessive, inadequate, or unfairly discriminatory.” The office concluded that TDC’s proposed rates were excessive and that “reductions of 15 percent from the current rates are appropriate for the referenced lines of business.”

FLOIR ordered TDC to submit new filings reflecting the 15 percent decreases from the current rate for all products under the “medical malpractice/physicians & surgeons” and “medical malpractice/other healthcare profs” lines of business within 60 days of the order.

The order further stated that the failure to adhere could result in FLOIR “suspending, revoking, or taking other administrative action as it deems appropriate.”

TDC responded on June 23 with a request for a hearing, which was granted on July 20. In its request, TDC stated it did not originally contest FLOIR’s notice in March because the company was “satisfied operating under its existing rates which had been approved previously by OIR.”

TDC also stated that it denies all facts cited by FLOIR in the order, including that TDC’s existing rates are excessive and the issues of material fact that include “whether TDC’s existing rates are excessive when evaluated under generally accepted and reasonable actuarial techniques; and whether the factors … when evaluated using generally accepted and reasonable actuarial techniques, require a 15 percent reduction in TDC’s rates.”

White added that since TDC’s rates are competitive and in line with all Florida medical malpractice writers, a hearing is the insurer’s best available option to resolve the issue.

“The methodology used by the OIR in reviewing our rates was not consistent with its own usual rate-setting methods and outside generally accepted actuarial principles. We have always enjoyed a positive working relationship with the OIR and are optimistic that the hearing will enable us to resolve the matter amicably.”

FLOIR declined to comment on The Doctors Co. order, saying it cannot discuss pending litigation.

The department did say an e-mail to Insurance Journal there are have not been Orders directing any other insurers to lower rates recently. “During the rate review process, there may have been insurers who have been asked and voluntarily taken more of a decrease or less of an increase based on a review of the company’s filing,” said Amy Bogner, deputy director of Communications for FLOIR.

The Oct. 7 hearing will be overseen by Judge Suzanne Van Wyk at 9:30 am EST in Tallahassee.

About Amy O'Connor

O'Connor is the Southeast editor for Insurance Journal and associate editor of MyNewMarkets.com. More from Amy O'Connor

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