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

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.

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.

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."

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.

After a Commerce Department investigation found what Johnson Piper called "significant financial and operational weaknesses," the department imposed "administrative supervision" over the group from December 2011 to the end of 2012. Under state law, Commerce could take the action after it found the MJUA's condition "renders the continuance of its business hazardous to the public or to its insureds."

State law allows the Commerce Department to release information about the administrative supervision if it's in the public's best interest. But the department won't provide any other details.

The agency's records were completely open to the public in the 1980s and 1990s. In 1996, 2004 and again in January, the state agency that resolves disputes about access to public data determined that the MJUA is subject to the state's open records law.

The MJUA has argued its records shouldn't be public because it operates like a private business. In February, the MJUA filed suit against the Star Tribune to fight a records request seeking information about ­policyholders.

Malpractice lawyer Brandon Thompson thinks the names of MJUA policyholders should be public. "If my kid's bus driver was in so many accidents that he couldn't get private coverage, I'd want to know that."

Being insured by the MJUA "is not a place you want to be," said Mark Kulda, vice president of public affairs for the Insurance Federation of Minnesota.

"It usually means you've gotten denied, and you get denied because you have a bad record or have large claims against you," Kulda said.

"You have to think about why a doctor gets an award against them. … Is it because a nonmedical person in the liability system had to make a decision on what was the right call?"

Some MJUA-covered physicians have not only faced lawsuits, but also disciplinary and corrective action by the state medical board, according to court and Board of Medical Practice records.

Neurosurgeon Dr. Stefan Konasiewicz, who previously practiced in Duluth, was covered by the MJUA from 2005 until at least 2008 after he had multiple malpractice suits filed against him.

Following an allegation of patient harm by a county medical examiner, Konasiewicz was sanctioned by the Board of Medical Practice in September 2010. The board reported that his treatment led to the death of one patient, and left another patient paralyzed from the neck down. Konasiewicz is now practicing in Texas and was disciplined by that state's medical board in February for failure to "maintain adequate medical records" and "safeguard against potential complications."

Konasiewicz did not respond to requests for comment.

He lost his coverage when he couldn't afford the MJUA's premiums, according to lawsuits. In 2011, both the North Dakota and Minnesota medical boards suspended his license, noting that he frequently prescribed narcotics but failed to monitor those prescriptions.

He also took a clinical skills assessment that showed that he "failed to demonstrate sufficient medical knowledge in the field of general practice."

Wasemiller could not be reached for comment. His attorney, Dan Krassin, said after losing his MJUA coverage, Wasemiller was able to find insurance through a California company, but couldn't afford the rising premiums. Krassin said that didn't make him a bad doctor.

Twelve years before he sought coverage from the MJUA, Pietrafitta, of Maple Grove Surgical Specialists, was ordered by the Minnesota medical board in 1998 to take a course in postoperative management. In its order, the board described three cases of patient harm and $1.2 million in malpractice payouts.

Pietrafitta completed the course, and the case was dismissed in 1999. He has since been sued at least three times. In a suit filed last year, Stefani Hemenway of Zimmerman claimed she lost the ability to use her right hand after Pietrafitta lacerated a median nerve in her wrist in what was supposed to be a routine surgery to relieve carpel tunnel pain. That case was settled.

According to the complaint, the three are accused of failing to clear out a bowel obstruction in Osorio-Smith before operating on him for a ruptured appendix. The obstruction caused Osorio-Smith, 23, to aspirate on the operating table.

The next day, neurosurgeons concluded that he was progressing toward brain death. His family decided to take him off a ventilator.