New medical insurance firm eyes N.J.
Thursday, October 02, 2003
By MARK PERKISS
With the Assembly about to hold hearings on medical malpractice insurance rates and doctors poised to campaign
door-to-door against those lawmakers they feel have not dealt with the high cost of premiums,
organizers of a new company yesterday announced plans to start selling policies in New Jersey.
"We feel that New Jersey is a place where we can make a difference and succeed at insuring doctors," said Joseph
Palumbo, acting CEO of the new company, Physicians Trust Co., which hopes to begin selling policies
as early as the end of December.
The company, which is being formed and will be based in Washington, D.C., would be the fourth new carrier to
enter New Jersey. Several insurers have pulled out of the state, sending doctors scrambling for
coverage.
Yesterday's announcement of the new company came a day before two Assembly committees -which earlier this
year were granted subpoena power - are slated to open hearings into skyrocketing malpractice rates in
New Jersey.
For some doctors, particularly those in high-risk specialties such as obstetrics or neurosurgery, malpractice
premiums have doubled to more than $100,000.
Doctors want to implement a $250,000 cap on noneconomic damages, commonly known as pain and suffering, in
malpractice lawsuits to combat the problem. That demand has been vigorously opposed by trial lawyers
who have argued vociferously against capping awards.
Lawmakers have split on how to deal with the issue.
The Democratic-controlled Assembly has passed a bill creating a $30 million subsidy fund to help doctors pay
rising premiums, while the evenly divided Senate has passed legislation capping the amount malpractice
insurers would have to pay out for so-called pain and suffering in malpractice lawsuits at $300,000 and creating a state fund
that would pay out up to an additional $700,000 in awards.
Doctors have turned their anger on Democrats and have begun urging patients to vote for Republican legislative
candidates. On Tuesday, physicians plan to campaign door-to-door with Republicans in targeted
districts around the state, including the hotly contested 14th Legislative District in Mercer and Middlesex counties.
Palumbo and other Physicians Trust organizers said they are not worried about the dispute over malpractice
insurance legislation. They plan to sign up to 1,000 doctors by the end of next year.
Unlike the three other new malpractice insurance companies, MIIX Advantage, Conventus and New Jersey
PURE, which raised their starting capital from doctors, Physicians Trust plans to get most of the $12 million
to $20 million it needs to start from venture capital firms.
"We see that as the best way to get started and allow us to start selling policies in New Jersey in a short time," said
Bill Megna, the company's chief lawyer.
Once the company wins approval in Washington it will register with the New Jersey Department of Banking and
Insurance, he said.
Dr. Mark Olesnicky, president of the Medical Society of New Jersey,
greeted yesterday's announcement with skepticism, saying it was "big on hype and small on details.
"We see a serious lack of medical liability experience, particularly in the New Jersey market, among the individuals
who will head the company," he said.