PLATTSBURGH -- New York State's Insurance and Health departments are hoping their efforts to reform the state's medical-malpractice system will stave off any need for across-the-board physician fees.

Doctors across the region have voiced concerns that Insurance Superintendent Eric Dinallo had suggested assessing a $50,000 fee for all state physicians to help correct a deficit in medical-malpractice insurance costs.

In reality, Dinallo said New York needs to find a better way to manage the malpractice system, or state law will mandate that he establish a physician fee to offset medical-malpractice costs.

"Essentially, we have a problem with the financial condition of medical-malpractice insurance (in the state)," said Martin Schwartzman, director of Policy Initiatives for the Insurance Department.

"There are only a few licensed companies in New York State that underwrite malpractice coverage, and they have accumulated a significant deficit that is causing a financial strain (on the funds available to cover the cost of malpractice payments)."

There are several factors impacting the medical-malpractice system, Schwartzman noted, including a rise in the size of awards being granted to patients coupled with inadequate premium increases over the past several years.

In 2007, Dinallo granted a 14-percent increase in the cost of malpractice coverage for the state's doctors, but in preceding years the rate increases were either in the single digits or did not increase at all.

"The superintendent had no choice (but to raise the cost of premiums 14 percent last year), given the financial condition of malpractice insurance," Schwartzman said. "But any rate increase has been suppressed over the past number of years.

"The insurance companies have literally paid out more money than they've taken in," he added. "That's one of the issues that is before us: What can be done to reform medical malpractice?"

Dinallo and State Health Commissioner Richard Daines have co-chaired a medical-malpractice-liability task force that has been charged to identify the causes of high malpractice costs and propose solutions to the problem.

"They are expected to come out with a set of recommendations shortly," Schwartzman said of the task force's progress. "When the recommendations come out, it will include a menu of options for what legislation can do (to reform the system)."

Schwartzman said he could not comment on what kinds of recommendations the group has targeted but did say that members are confident that they will be able to address the issues in a productive manner.

Under state law, the insurance superintendent is required to establish malpractice rates and to impose a surcharge to offset any deficit in the malpractice system.

"The $50,000 fee is what the superintendent has said will be forced into law unless the legislature takes action to address the issues," said Moe Auster, spokesperson for the Medical Society of New York, one of the organizations represented on the superintendent's task force.

"What he said is there would have to be an average surcharge of $50,000 per physician collected over a period of years, in addition to any increase in premium fees."