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Lawsuit claims Indiana’s high-risk insurance pool hoards cash

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Health care providers who’ve been rejected by private malpractice writers turn to a state-run insurer that typically charges two to three times more for coverage. A class-action lawsuit claims the high-risk pool owes its policyholders a $31 million surplus.

More than 1,000 providers from family doctors to specialty practice groups have been covered since the year 2000 by the Indiana Residual Malpractice Insurance Authority, plaintiffs attorneys say. Marion Superior Civil Division 7 Judge Michael Keele in April certified the class-action suit in which plaintiffs argue IRMIA’s own auditors say the fund has more cash on hand than it could possibly spend to pay claims or cover expenses.

“If IRMIA were a private company, that money would be distributed to shareholders. It’s a profit, but IRMIA wasn’t set up to make a profit,” said James K. Wheeler, a partner with Coots Henke & Wheeler P.C., in Carmel. Wheeler’s firm, with Cohen & Malad LLP of Indianapolis, was appointed as class counsel.

Notices to class members began after Keele approved an order May 23 giving potential members 30 days to opt

out of the proposed class. The suit is Larry J. Ley, et al. v. Stephen W. Robertson, in his capacity as Commissioner of the Indiana Department of Insurance, and the Indiana Residual Malpractice Insurance Authority, 49D07-1203-PL-9386.

IRMIA was created by statute in 1998 and under I.C. 34-18-17 covers practitioners who have been rejected by two or more private carriers, commonly because of prior malpractice suits. The state argues in its response that IRMIA has done no wrong and that its policyholders aren’t entitled to refunds.

Tina Korty, general counsel for the Department of Insurance, referred requests for comment to the Office of the Indiana Attorney General. The office responded to questions about the IRMIA surplus with a statement from spokesman Bryan Corbin.

“We are not able to comment on financial details of the IRMIA fund but will respond in court to the plaintiffs’ legal assertions at the appropriate time. As the lawyer for state government, the Attorney General’s Office will vigorously defend its state clients: the Department of Insurance, Commissioner Robertson and IRMIA itself,” Corbin said.

“Our office opposed the plaintiffs’ motion for class certification arguing that the plaintiffs did not meet their burden on the elements necessary for class certification. Having represented state government previously in various other unrelated class actions, our office now will move forward into this new phase of the case, and we respect the ruling of the court,” he said.
 

irwin levin Levin

Cohen & Malad managing partner Irwin Levin said the money IRMIA lists on its balance sheets as “undistributed funds” represents “tens of millions of dollars more than they will ever, ever need to pay claims, according to two separate actuaries hired by IRMIA.
“I have no idea why IRMIA insists on holding on to the money,” he said. “It should go back to the people who paid it. … All they’re doing right now is hoarding money, and it should be put back into the economy.”

Levin said the suit doesn’t challenge IRMIA’s premiums or the methodology the authority uses to set them. “They can charge whatever rates they deem reasonable,” he said, but IRMIA doesn’t have a right to hold a “big pot of cash sitting in a cave they keep adding dollars to.”

The suit also alleges that IRMIA has failed to segregate surpluses for investment as required by statute under I.C. 34-18-17-8, and it asks the court to mandate compliance.

Barring a ruling of summary judgment, resolution through court-ordered mediation or other settlement, the matter is set to proceed to trial on Feb. 3, 2014.

Terre Haute lawyer Michael Sacopulos, of the firm Sacopulos Johnson & Sacopulos, has defended IRMIA claims for the state in southwest Indiana. He believes the authority could face a challenge in justifying its balance sheet.

“It seems to me that this is a knowable type of equation that’s used in the amount of money that you hold in reserves,” he said, noting IRMIA’s coverage limits and the often years-long maturity horizon for malpractice claims in process give the authority a good level of claims predictability. “You cannot hold excessive amounts.”

At the same time, Sacopulos said IRMIA may be able to prevail on its posture as a carrier of last resort. “Is it a reasonable amount given their exposure? … Pools of the physicians (IRMIA compared to those privately insured) are not apples-to-apples,” he said. “Higher-risk pools, not just in Indiana, but nationally, if you’ve been sued, statistically you’re more liable to be sued again.”
That’s in line with some of the 22 affirmative defenses proffered by the state in response to the suit. “But for IRMIA, Plaintiffs would have been significantly limited in their ability to practice medicine in Indiana, and, accordingly, Plaintiffs have received significant benefits including, without limitation, all income remuneration that they have earned during the periods of time that they were covered by IRMIA,” the response says.

But Levin and Wheeler said IRMIA has accounted for all known risks and costs of coverage and has built a surplus that climbed from nothing around 2000 to $7 million in 2007 and $16 million in 2009. IRMIA’s most recent balance sheet from Dec. 31, 2011, shows a total of $31,790,424 in undistributed funds. The authority’s total of reserves, liabilities and undistributed funds for 2011 was $64.3 million.

“Indiana is different from almost every other state,” Wheeler said of its malpractice pool. Because IRMIA covers only the first $250,000 of a practitioner’s liability per claim with an annual aggregate limit of $750,000, its worst-case scenarios are known.

“That makes it easier for the actuaries because of the limits of liability in the state of Indiana,” Wheeler said.

Meantime, attorneys are still unraveling the exact number of practitioners covered by IRMIA policies. In 2012, there were 135 policies, the fewest since 2001, but there have been as many as 664 in prior years. Wheeler said because many of the insured were in the pool for five years or more, compiling a complete list of those insured by the fund since 2000 has been difficult.

Wheeler believes that IRMIA may have over collected premiums in the early 2000s during what he described as a national malpractice scare. Fewer claims than expected may have resulted, producing the surplus. “As claims matured into the later 2000s a

 

malpractice

nd went away, that’s what caused this number to grow,” he said.

The richness of the fund also might say something about practitioners who’ve found themselves with no place else to go for coverage, Wheeler hypothesizes. “I think doctors who got put into the fund ended up being a better risk,” he said.

“I think they got the bejeezus scared out of them and probably were more careful.”•

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  1. Am I the only one who sees that the City is essentially giving away the MSA site AND giving millions to build new buildings on the site when this site would be the perfect place for the Justice Complex? Across from City-County, check; keeping it centrally located, check, etc. It's my understanding that the GM site must be purchased by the City from Motors Liquidation Company. STOP WASTING WHAT WE ALREADY HAVE AND OUR TAX DOLLARS! The Ballard Administration has not been known for it's common sense...never voted for him and never will!

  2. This guy sounds like the classic molester/manipulator.

  3. Louis D. Brandeis was born in 1856. At 9 years of age it would have been 1865. The Brandeis family did not own slaves. My source Louis D. Brandeis: A Life, by Melvin L. Urofsky.

  4. My name is Matthew Lucas Major, I recently went through a jury trial in Bloomington , In. It was the week of Feb 19-21. Although I have been incarcerated since August 5, 2014. The reason I 'am writing to you sir is on the 21 of February the jury came in with a very excessive and wrongful verdict of guilty on 6 child molesting charges against my daughter who was 9 at the time I was accused. I also had 2 other Felonies one of Intimidation and 1 of Sexual Vicarious Gratification. Judge Marc Kellam on the second day of trial gave me a not guilty on those 2 felonies. The jury was sent out during that time and when brought back Judge Kellam told them to not concern themselves with the 2 Felonies that he ruled on them. They were told to not let evidence they had already heard influence there verdicts. I never in my life touched any child sexually and definitely not with my own daughter. When I was arrested Detective Shawn Karr told me I would be convicted guilty just on my daughters word even without evidence. That's just what happened. my public defender did me so wrong he never once proved to the court and jury all the lies the child told, and Jeremy Noel my public defender could of proven the lies easily. The stories in Serenity's depositions and Forensic interview changed and were not consistent as Prosecutor Darcie Fawcett claimed they were. Yet my attorney never mentioned that. The facts that the child accused me of full penetration in her vagina and rectum was proven lies. Doctor Roberta Hibbard of Riley hospital in Indianapolis confirmed Serenity's hymen intact, no scars, no tearing, no signs of rape to her. Yet my attorney didn't use that knowledge . the DNA was all in my favor. I tell you I will spend my entire life in prison going through rape and beatings etc. even Judge Kellam abused his authority by telling the jurors to listen and believe what the prosecutors side in evidence like my daughters testimony. In one interview with the detectives my daughter got flustered with her mom and said on camera " I'm saying what you told me to mom"!! Yet Mr. Noel said nor did anything to even resemble a defense attorney. Judge Kellam allowed edited version of a taped conversation between the child and her mother. Also Judge Kellam allowed the Prosecutor too bring in to my case a knife found under my seat, the knife wasn't part of my case. She was allowed by my attorney and the judge to put a huge picture of it on the screen and huge picture of my naked privates in a full courtroom and open court. Ms. Fawcett says to jury see how easy Mr. Major could reach the knife and cut his Childs throat. Even though I had no weapons charge against these cases. This gave the jurors prejudice thought against me thinking I threatened her with that knife and how scared she would of been knowing i could get it and kill her. On my sentencing court March 19, 2014 my public defender told Judge Kellam he wish to resign from being my attorney and wished for the court to give me outside council to file a error to trial or appeal. We were denied. Now after openly knowing my public defender don't want to represent me he has to. Well when as parents we make our kids clean a room when they really don't wish to, well the child will but don't mean she will do a good job, that's where I'm at with Mr. Noel. please dont ignore mine and my families pleas for your help . we have all the legal proof you could need to prove Im innocent. Please dont make my spend years in prison innocent when you can fix this wrong. Im not saying Im a perfect man or that I was a perfect dad to my 2 children none of us are. Ive made some bad choices in life and I paid for them. But I didnt ever touch or rape my daughter . I love my children with all my heart. And now through needing attention and a ex-wife who told my granny several times she wish she could put me in prison to get me out of their lives. Well my ex finally accomplished her goal. Sad part is she is destroying our daughter with all this horrific lies and things she taught my daughter to say. My daughter will need therapist to ever hope for a chance of a normal life after what she had done to her by her mom and their side of the family. My daughter told everyone even on stand she had a dream months before i supposedly molested her in this dream I was molesting her and when I finally did it matched her dream perfectly. She admitted to watching movies about little girls being molested and watching U-Tube videos about child molesting all before it happened supposedly to her. Doesn't that sound very unusual that a non molested 9 yr old would need to know so much about being molested? The only reason I could think a 9 year old would need so much information is to be prepared to know what to say and be able to say how it felt what took place etc.. So when questioned by authorities she would be prepared. And there again sir if a parent is pre grooming a 9 year old child she would need intimate details . Like telling her daughter about a couple moles on my private area. The child admitted to sneaking my cell and looking many many times at nudes of me and my girlfriend even one where my penis was entering my girlfriends vagina. In that picture my moles are obvious. Yet when prosecutor showed everyone in court my privates and pictures of the moles she said the only way the child would know about them is if she saw them for herself. My attorney once again said nothing about the pictures my child saw. Or could a ex-wife be able to describe my moles to help her case against getting rid of me? I beg you help me. This is my very existence. Ive lost everything , a good job, a wonderful girlfriend, my freedom, but worse thing Ive lost is my children. They were my reason to get up every morning and strive to be better. The wonderful bond I had with my Serenity is gone. After this I would be afraid to even hug her for fear of what next can they do to me. I'm not afraid to tell you I sit here in this cell and try to hold back my tears. Everyone knows you cant show weakness in prison. My life has already been threatened here at Wabash Valley Prison. After only 3 days of arrival. I was tricked into signing a waiver now Im in G Block General Population with 6 child molesting felony charges. Mrs. Hart as a 18 year old I almost died hooked to machines in hospital almost 1 month and now I know that fear was childish compared to this . I cant help but put emotions in this, after all Mrs. Hart Im human and God help Me I never been more afraid in my life. I didnt hurt my little girl I didnt touch her sexually. As much as it shreds me and fills my mind what Im facing I worry more about my mom and granny because of their great love for me mam they are suffering so deeply. I aint done this things but my loved ones suffering right along beside me and If you take my case you will be in essence freeing them also. I sent momma this letter and asked her to email it to you. I'm scared I have been done so unjustly by our legal system and I need you to fix this and give me freedom. I ask you please don't just ignore my pleas. Here in America its nice to be able to trust our legal justice system, well they destroyed my and my loved ones trust in our justice system . And I'm trusting in You !!! My entire family is suffering this nightmare with me. My 77 year old granny had a stroke and isn't doing so well. My single mother that raised 3 kids alone is dying from Lupus and since my arrest has stayed so sick and weary. Our lives torn to peices by a government I was taught I could trust in. my momma has tried so many innocent project and wrongfully accused and cant get anywhere. please please help me. A quote from the late Nelson Mandela: To be free is not merely to cast off ones chains, But to live in a way that respects and enhances The Freedom Of Others. I have Faith in you and your clinic to cast my chains off and give me freedom I do deserve as a wrongfully accused Man, son, brother, father, friend. Matthew Major DOC# 246179 Cause # : 53c02-1308-FA-000779 God Bless you. Please contact me with your decision so I know you made a life changing decision for me , just please at least write me so I know you care enough about your citizens to respond to cries for your help. You can speak openly with my mother Charlotte Spain (828) 476-0406: 71 Lakeview Dr. Canton, NC 28716 Thank You Matthew Major I know yall get thousands of request and inmates claiming innocence, and each person who are innocent deserve to have organizations like yours willing to fight for them and I give yall so much Thanks and I thank God everyday yall are out there caring enough to help free the innocents. Since discovering firsthand how easily lives and families can be destroyed by Poor Defense attorneys not doing their job . And Prosecutors allowed to do as they please in court

  5. Frankly, it is tragic that you are even considering going to an expensive, unaccredited "law school." It is extremely difficult to get a job with a degree from a real school. If you are going to make the investment of time, money, and tears into law school, it should not be to a place that won't actually enable you to practice law when you graduate.

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