OKLAHOMA CITY (AP) _ A company that provides medical liability insurance to hospitals and nursing homes will stop operations by fall.
Hospital Casualty Co. was placed in voluntary receivership with the State Insurance Department after the department's board determined the company's reserve deficit had grown to $57.9 million at the end of June.
Earlier in the week, the company's board of directors had voted to stop operations. The closure will leave 63 hospitals and 231 nursing homes scrambling for insurance coverage.
State Insurance Commissioner Carroll Fisher said the company's policies will remain active until Oct. 1.
``The reality of their existing claims and outstanding obligations judged against the outstanding premium and existing hospitals and nursing homes they have (as clients) was going to be far in excess of the money they have to pay claims,'' Fisher said. ``They only have about $27 million in the bank, so it becomes pretty obvious.''
Hospital Casualty Co. spokeswoman Sheryl McLain said the company had 420 open claims against it when the board voted for the voluntary receivership.
The company also provided liability insurance to 46 outpatient sites in Oklahoma.
Hospital Casualty Co. is a subsidiary of the Oklahoma Hospital Association and was founded in 1977 by 12 Oklahoma hospitals.
``Hospital Casualty will continue working very closely with the insurance commissioner's office to ensure an orderly and smooth transition for our policyholders during this process,'' said Craig W. Jones, who is president of the insurance company and the hospital association.
In the meantime, sales agents have been asked to immediately begin working with clients to find new coverage.
``There are markets out there,'' Fisher said. ``The ones that will have the most difficulty is the nursing home market. That is probably where the most of claims are coming from that have brought this company down.''
Hospital Casualty also was hurt by competing companies that entered the state market and ``cherry picked'' its best clients, Fisher said.
Earlier this year, the Physicians Liability Insurance Co. was placed under formal supervision of the Insurance Department because the company didn't have money to pay anticipated claims.
PLICO, owned by the Oklahoma Medical Association, is the state's largest physicians medical malpractice insurance carrier.
Formal supervision allows the company to maintain control while trying to fix financial problems.
Hospital Casualty Co. was placed under formal supervision by the Insurance Department at the end of 2003 after an actuary report showed a growing deficit. A recapitalization plan was approved by Fisher in April.
However, when HB 2661 _ a lawsuit reform bill _ became effective July 1, it allowed both PLICO and Hospital Casualty Co. to operate without the supervision of the Insurance Department, Fisher said.
``It only took Hospital Casualty 22 days of living in the forest by themselves to determine that they were in financial distress,'' Fisher said.