Lawsuit says scheme left doctors without insurance

posted on:
March 27, 2003

author:
Bob Johnson

category:
Fraud

Montgomery – A lawsuit filed in federal court in Montgomery on Wednesday claims a scheme by several insurance companies left thousands of doctors nationwide, including 800 doctors in Alabama, believing they had full malpractice coverage when they did not.

Prominent plaintiffs’ attorney Jere Beasley said the lawsuit by Dr. David Herrick of Montgomery seeks class action status to include thousands of doctors he said were hurt when two insurance companies went into receivership, meaning they were taken over by state regulators.

The lawsuit was filed against Doctors Insurance Reciprocal of America, in receivership in Virginia, and others involved in the alleged scheme. Beasley claims the two companies had an agreement with a third company, General Reinsurance Corp., to help insure the policies, but that there was a secret agreement that the third company would only have minor responsibility for helping the two companies pay claims.

The result, Beasley said at a news conference Wednesday, was that insurance regulators thought the two companies were in good financial condition when they were not.

Officials with the companies could not be reached for comment Wednesday.

Herrick was out of town and could not be reached. Another Montgomery physician, Dr. Steve Allen, said he was left with no insurance coverage.

Allen said he thought he was covered by Doctors Insurance Reciprocal until he read about the financial condition of the company in a newspaper article.

With malpractice insurance already difficult to find, Allen said learning he had no insurance couldn’t have come “at a worse time.”

Beasley said the lawsuit, filed by attorneys in his firm, seeks an undetermined amount of damages from the companies involved.

Beasley said many hospitals and nursing homes were also left without insurance when the two companies went into receivership.

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