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History shows WV capable of making big changes

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Change can sometimes seem impossible, especially when it involves something large and complex like state government. But West Virginia's government is capable of making big changes, especially in times of crisis. For proof, look no further than workers' compensation and medical malpractice reforms. 

Many readers will recall that in the early 2000s, workers' compensation insurance — a monopoly at the time, run by the state in West Virginia — had become an entitlement program in the eyes of many. It was losing millions of dollars annually. A financial projection completed in April 2003 predicted the system would go bankrupt in 2006. By mid-decade it had amassed a $3.3 billion unfunded liability. 

Employers in West Virginia are required by law to have workers' compensation insurance. They pay the premiums and their premiums were spiraling. Some were saying workers' compensation rates had become the biggest obstacle to economic development in the state.

Under then-Gov. Bob Wise, reforms were passed in 2003 aimed at ensuring employers paid their fair share, workers got what they deserved, and medical providers were treated fairly. But the biggest change came when Joe Manchin became governor and pushed the Legislature to privatize the system.

Since 2006, when the transition from a state government monopoly to a competitive market began, loss cost rates have declined nine consecutive times, by a cumulative total of 69.7 percent. The loss cost is the estimated amount necessary to pay all medical and indemnity costs associated with workers' compensation claims. All insurance carriers use loss costs to calculate rates.

In a July 2013 news release, Gov. Earl Ray Tomblin announced the most recent rate reduction — 8.8 percent, which was effective Nov. 1. With it, "West Virginia employers will have saved $250 million since workers' compensation privatization," he said. "These savings demonstrate our willingness to address problems, within the workers' compensation market years ago, was the right decision for West Virginia employers and employees."

The good news for the state doesn't end there:

 

  • The old fund's unfunded liability has dropped from $3.3 billion to $628.6 million, according to the state Offices of the Insurance Commissioner.
  • More than 200 carriers write workers' compensation insurance policies in West Virginia.
  • BrickStreet Mutual Insurance Co., which has the largest market share in West Virginia, is headquartered adjacent to Charleston Town Center Mall in downtown Charleston. BrickStreet has more than $1.6 billion in assets; an A- rating from the independent rating agency A.M. Best, and now writes workers' compensation insurance policies in seven states.
  • BrickStreet's employees — it currently has 340 — succeeded in transitioning from working for a nearly 90-year-old government monopoly to focusing on customer service in a competitive marketplace. 

 

Another recent game changer: Medical malpractice reforms.

The issue grabbed headlines in 2001 when the state began experiencing a medical malpractice insurance crisis. Some doctors said huge malpractice insurance premiums were hampering the recruitment of doctors to West Virginia and caused others to practice elsewhere.

It was reported in 2002 that West Virginia had lost more than 300 physicians. In a survey, more than 40 percent of West Virginia physicians said they were considering moving out of state and more than 30 percent said they were thinking of quitting  medicine altogether.

Physicians said the problem was a judicial system that favored trial lawyers and plaintiffs.

In 2003, with Charleston's Level 1 trauma center downgraded because of a lack of orthopedic surgeons and a throng of doctors clad in white coats roaming the Capitol, then-Gov. Wise and state lawmakers enacted several reforms, including a lower cap on non-economic damages in medical malpractice cases.

Steve Dexter, chief executive officer of Thomas Memorial Hospital, said following passage of the reforms: "It has already made a difference for us on recruiting." 

Bob Gray, the hospital's chief recruiter, said his goal was to attract eight to 10 new doctors each year. A few months after the reforms he had eight new commitments to practice at Thomas, he said.

"Two years ago I could hear them laugh as they slammed the phone down," Gray reportedly told the hospital's Board of Directors. "Now they're saying, ‘What are you guys doing in West Virginia?'"

One outcome of the crisis was the formation of West Virginia Mutual Insurance Co. in 2004. The company, which is owned by physicians, offers West Virginia physicians medical professional liability insurance coverage.

West Virginia Mutual currently provides coverage to seven out of 10 practicing physicians in the state, according to the company's website.