Federal lawmakers may cut a provision of proposed legislation that seeks to end the antitrust exemption for medical malpractice insurers afforded by the McCarran-Ferguson Act exemption, according to insurance industry sources.

Rep. Tom Perriello, D-Va., and Rep. Betsy Markey, D-Colo., announced the proposed bill at a press conference on Feb. 5, in anticipation of a House vote last week.

In announcing their plans, the two members said, "It's time for Washington to decide whether we stand with patients or profiteering, whether we believe in market competition or collusion between politicians and insurance monopolies."

But the bill was never actually introduced that day, or even last week, with Congress effectively closed down because of the snow.

In a message to its members asking them to call their congressmen to oppose the bill, the National Association of Professional Insurance Agents said it is unclear whether the bill will have the votes to pass, "even if it comes up on the House floor. In fact, some industry lobbyists think that a vote may not be taken if there aren't sufficient votes to pass it."

Several industry lobbyists said the delay was likely due to the fact that the House Democratic leadership found it didn't have the votes to pass the bill as originally envisioned, and that they are considering removing the med mal provision in hopes of winning the essential votes to pass the bill.

At the same time, they said it is unlikely that the Senate would pass such legislation in any form, especially in the current gridlocked atmosphere.

That would be welcome news to property and casualty insurance trade groups.

Days before the Feb. 5 press conference, a group of 10 trade groups–nine representing property and casualty and medical liability insurers and the National Association of Insurance and Financial Advisers–sent a letter to all members of Congress in anticipation that the House would soon vote on antitrust legislation.

The letter noted that medical liability insurance is not a health insurance product, but is in fact "a property-casualty insurance liability product, underwritten by property-casualty companies for medical professionals and facilities."

In fact, the letter said, "the only thing even health-related about medical malpractice insurance is simply its name and the fact that the medical profession and medical facilities purchase it."

Moreover, the letter said, "Its inclusion in legislation to repeal McCarran-Ferguson for health insurance is misplaced."

It also cited a recent Congressional Research Service study that repealing the antitrust exemption afforded medical liability insurers could result in "many lawsuits challenging some insurer-cooperation practices."

The CRS report added that prohibiting necessary and pro-competitive insurer information sharing could "actually disserve consumers and lessen competition between insurance companies; e.g., if information sharing were categorically prohibited, some small companies that require it could be forced to leave the market."

The letter added, "Some members of Congress have a mistaken perception that the antitrust provisions of the McCarran-Ferguson Act protect anticompetitive activities by medical liability insurers. They do not."

Specifically, it said, the National Association of Insurance Commissioners has stated that "no state insurance regulator has seen evidence that suggests medical malpractice insurers have engaged or are engaging in price-fixing, bid-rigging, or market allocation."

Also welcome news to p&c insurers was the fact that the bill unveiled by Rep. Perriello and Rep. Markey does not include a provision contained in an earlier version providing express enforcement authority to the Federal Trade Commission with respect to "unfair methods of competition" for all types of insurance.

In early December, the House passed its version of health care reform legislation, including much more far-reaching language on antitrust repeal, which is opposed by all segments of the insurance industry.

Separately, med mal issues took center stage in the state of Illinois, in a Supreme Court decision repealing legislative caps on damages for pain and suffering.