Insert: Letter “Senator Slade Gorton ’86 Committee” letterhead
November 7, 1985
Dr. Kirk J. Anderson
801 Broadway Avenue
Seattle, Washington 98122
Dear Kirk,
I wanted to write to you personally to let you know that I plan to kick off my re-election campaign with a major Gala to be held in Seattle on December 2, 1985. I have extended an invitation to President Reagan to attend the Gala and I am extremely pleased to inform you that he has accepted.
Your active support and assistance is of critical importance to me. I would be honored if you would agree to serve as a Co-Chairman for the President Gala.
As a Co-Chairman, you would assume two responsibilities. First, to Co-Host a private reception for the President, and second, to assume the responsibility of selling at least one table of 10 seats at $1,000 per person.
You have many responsibilities that demand your time and effort, but I want you to know how deeply I appreciate your help with President Reagan’s upcoming visit.
Sincerely,
Slade Gordon
United States Senator
P.S. Please RSVP to Lucinda Hagan or Steve Mullin at (206) 343-7887, or by returning the enclosed response card right away. Your help is very important.
The foregoing letter is repugnant to me, but a sign of our political times. In the first place, I do not hold Mr. Gordon in the highest esteem. As my senator, I have written several times to him, but his answers have been uninformed and “stuck” in trade”. Therefore, it is repugnant to me when he addresses me by my first name. It is an honor to me to be called Kirk by those who really mean it and are the “true” and “great” people of the earth. Mr. Gordon does it because he wants something from me and he is appealing to one of the weakest points in man’s armor – his pride. Secondly, this letter represents the the devastating state of our politics – in order to be elected candidates now spend millions of dollars on their campaigns. As far as I am concerned, with such enormous sums of money involved they are easily encumbered by pressure groups with money.
I will not be a party to any of this! No wonder the constitution will come to hang by a thread
Insert: letter
20 November 1985
TO: THE DOCTORS
FROM: LARRY HARMS
SUBJECT: MALPRACTICE RENEWAL FOR 1986
I would like to discuss our options for malpractice coverage in 1986 at tomorrow’s luncheon meeting. Please bring this with you.
OCCURRENCE
Our present occurrence policy expires December 30th and cost $29,940 per doctor, including the 15% surcharge for the high incidence of reported claims. The renewal rate will be $46,315 per doctor, including the 15% surcharge, or an increase of 55%. The surcharge is equal to $6,041 per doctor. It was rumored that CNA might not offer occurrence coverage next year but they are extending it at least one more year and are the only carrier offering it to orthopaedists. In view of the premium, they may be intentionally forcing doctors to consider the claims-made form. CNA has announced that next year it will not accept any new business from single-specialty group practices.
CLAIMS-MALE
Although continuing our occurrence policy one more year would buy us some flexibility and time to see how the market develops, it would be costly. Therefore, I feel we should consider converting to Claims-made. Which is available from CNA, St. Paul, ICA and WSPIE. I would recommend against ICA because of our past deliberations and the size of their reserves viz-a-viz CAN or St. Paul. I would recommend against WSPIE because of their required capital contribution of $7000/doctor, in addition to the premium, and the amount of reserves.
Referencing the enclosed premium comparisons from Fred S. James & Co. you can see that there is a substantial reduction in premium from the first few years until the program “matures” at the 5th year. Although St. Paul starts out lower in the first year, they rapidly overtake CNA in later years. Two other disadvantages to St. Paul is first that they are very particular about reported claims and incidents and may not be willing to cover us. Secondly, their premium for the separate corporate liability limits is 10% of total premium versus $1000 for CNA. Therefore, CNA emerges as the most logical insurer.
BUYING THE TAIL
Although claims-made appears to be inevitable. A decision to convert should be made carefully because of the “tail.” First, it may not be possible in the future to switch to another insurer without “buying” the tail from the first. Second, although both CAN and St. Paul will waive the tail for any doctor who dies, becomes disabled or retires at age 65 with at least five years with the company, provision for purchasing the tail must be made for any physician who retires early or leaves the practice. The cost of the tail is twice the last year’s premium ($82,732 per the enclosed).
The polyclinic has decided to go with CNA-claims-made and has decided that physicians will be personally responsible for purchasing their own tail coverage.
DEDUCTIBLES
At this time no company is willing to consider deductibles over $5000, which would only produce a 1% premium reduction. Additionally, the companies consider self-insurance the same as a deductible.
The preceding letter from the business manger of Seattle Orthopaedic & Fracture clinic depicts the deteriorating and undesirable climate in medicine brought about by the malpractice problem. Surely, it will drive many of the finest surgeons out of practice.
If I had elected to practice one more year, rather than retire Jan 1, 86, I would have had to pay around $46,000 malpractice insurance for the year, and would also had to pay a tail of 82,000 on top the day I retired.
How grateful I am for my blessings, and how my heart cries out for my friends and colleagues who are truly honorable men – desirous of easing the suffering of others.
