A nationwide class has been certified in an action filed against St. Paul Fire and Marine Insurance Company and its affiliate, Commercial Insurance Service, Inc., on behalf of physicians who allege that the companies withdrew their malpractice coverage, breaking their contracts and cheating them of tail coverage that goes into effect when a doctor retires, is disabled, or dies. The action seeks unspecified compensatory and punitive damages.

While the tail coverage was purportedly free, the lawsuit alleges that St. Paul actually charged doctors for it, at a rate equal to 2 percent of malpractice premiums, then terminated coverage when it left the market. Nearly 1,300 West Virginia doctors had policies with St. Paul and when it stopped offering coverage at the end of 2001, it threw the state into a medical malpractice crisis.

It is estimated that as many as 43,000 doctors nationwide may be able to take part in the action.
The physicians say they believe the company could only non-renew them -- as St. Paul did when their contract expired -- for the same "good cause" grounds, not because St. Paul could or would unilaterally fail to renew simply because it could make more money that way. The action alleges that the contract clause that required a 60-day notice if St. Paul decided not to renew or continue a policy was meant to address what would happen if a physician did something that justified nonrenewal, such as not paying a premium. The action goes on to allege that the clause did not warn that St. Paul might want to exit the malpractice business or that St. Paul might want to eliminate doctors in high-risk specialties.