High-risk health providers stay in business thanks to state insurance

  • Article by: BRANDON STAHL , Star Tribune
  • Updated: May 6, 2013 - 6:16 PM

A state-created “insurer of last resort” provides coverage for doctors, others who can't get conventional insurance.

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Exterior of the office building in Wahpeton, North Dakota, where Dr. James Wasemiller maintained an office.

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Maple Grove surgeon Joseph Pietrafitta has been sued at least six times for malpractice, leading to $1.2 million in settlements for former patients. The Minnesota Board of Medical Practice also has cited some of the lawsuits in ordering Pietrafitta to take corrective action for “inappropriate” conduct.

In 2010, no conventional insurance carrier would give him malpractice coverage, court records show. That could have put him out of business, but Pietrafitta got coverage from the ­Minnesota Joint Underwriting Association (MJUA), the insurer of last resort.

The MJUA was created by the Legislature in 1976 to provide liability insurance to doctors, nurses and hospitals unable to get it anywhere else.

It won’t release its records to the public, including names of those health care providers, or even how many they cover. A Star Tribune examination of Department of Commerce records and court documents has found that the group has spent at least $32 million over the last decade to settle claims, including $12 million to resolve 169 claims filed against health care providers, some of whom were accused of crippling or killing patients.

The MJUA also covers bars, foster homes, nursing homes and other businesses and organizations that can’t get conventional insurance. In recent years, it has had such ­significant ­financial problems that the state ­Commerce Department, which regulates insurers, took the unusual step of supervising the organization for all of 2012.

Some malpractice lawyers and a former MJUA board member accuse the group of enabling the state’s negligent doctors to continue to practice.

Emily Johnson Piper, Minnesota’s deputy commerce commissioner, acknowledged that the MJUA covers “bad doctors,” but said it provides a crucial protection to consumers.

“What would be my concern is: if [physicians] were practicing without insurance, what recourse would the consumers have that were injured by them?” Johnson Piper said.

Doctors aren’t required by the state to have malpractice insurance. But they need it to practice in hospitals. And the costs of a lawsuit could easily put uninsured doctors out of business.

The MJUA has the authority to reject a provider. Still, Ron Elwood, who served on its board from 2000 to 2008, could remember only one instance when that happened.

“These were agonizingly difficult calls that had to be made,” said Elwood, supervising attorney at the Legal Services Advocacy Project. “It was a balancing act of protecting the public and protecting an individual’s ability to practice and make a living.”

Another board member, former Duluth Mayor Ben Boo, says that balance had swung too far in the favor of “incompetent medical professionals.” Boo said those concerns made him quit the MJUA board in 2007.

“There was a great deal of concern about what to do with doctors who were developing a poor record of performance that came to us,” Boo said.

State Rep. Joe Atkins, DFL Inver Grove Heights and chair of the House Commerce Committee, said he believed the MJUA was turning away physicians who “pose a threat to the public.” Presented with information obtained by the Star Tribune, Atkins said he would conduct his own investigation. If it was keeping bad doctors in business, “it would be inexcusable,” he said.

The MJUA board no longer makes decisions on whether to cover individual practitioners, said chairman Rolf Halstensen, a board member since 2009. He said he assumes staff makes those determinations. Asked if the organization enables bad doctors to keep practicing, Halstensen replied: “I don’t know.”

Financial problems

The MJUA said in court documents that it gets no money from taxpayers, but is funded primarily through premiums paid by its policyholders. Several million dollars in unpaid losses contributed to the MJUA having a $4 million deficit in 2012 and a $5.7 million deficit in 2011, according to records provided to the Star Tribune and analyzed by Frank J. Beil, a senior lecturer at the U’s Carlson School of Management.

Beil said he couldn’t determine if the MJUA had the money to pay the unpaid losses because the records didn’t state when those bills had to be paid.

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