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House Considers Capping Medical Malpractice Judgments

June 12, 2017

Lawyer contingency fees are driving up the cost of health care.

A bill proposed in the U.S. House of Representatives would limit noneconomic damages awarded to plaintiffs of medical malpractice lawsuits and could reduce health care costs by almost $50 billion by 2027.

The Protecting Access to Care Act of 2017, sponsored by Rep. Steve King (R-IA), would cap noneconomic damages awarded to claimants at $250,000 in health care lawsuits brought by patients receiving federally subsidized health insurance. The bill would not override state laws specifying other award amounts.

The bill, House Resolution 1215, would limit attorney contingency fees to 40 percent of the first $50,000 awarded claimants and smaller shares of the remainder.

Limiting payouts in malpractice suits would reduce expenses resulting from so-called defensive medicine—the ordering of unnecessary health care services for the purpose of limiting a provider’s malpractice liability, according to a March 22 cost estimate by the Congressional Budget Office (CBO).

HR 1215 would also result in lower medical malpractice insurance premiums paid by health care providers, reducing the nation’s health care costs by $14 billion by 2022 and $50 billion by 2027, the CBO estimate states.

Defensive Medicine Costs

Dr. Mike Koriwchak, board vice president of the Docs4PatientCare Foundation, says enacting HR 1215 would save patients money, time, and hassle.

“Complete malpractice reform is desperately needed,” Koriwchak said. “The major effect [would be] to reduce the pressure on physicians to practice defensive medicine. Patients would be spared unnecessary labs, imaging studies, treatments, and operations, and we would save lots of money.”

Dr. Hal Scherz, vice president of finance at Georgia Urology and chief of urology at Scottish Rite Children’s Hospital in Atlanta, says doctors overprescribe services to cover their bases so patients won’t sue them.

“Medical malpractice contributes to defensive medicine,” Scherz said. “Conservatively put, defensive medicine accounts for approximately $200 billion of annual health care costs, which is about one-fifth of [the nation’s] total annual health care costs.”

Chasing the Biggest Ambulances?

Lawyers representing patients who have filed medical malpractice lawsuits typically charge clients a contingency fee, a percentage of any damages the court awards their clients.

Scherz says the current system makes it harder for patients with modest malpractice complaints to hire lawyers and win damages.

“If a patient has a claim of less than half a million dollars, a lawyer won’t take it on,” Scherz said. “Worse still is the time it takes to get the restitution that they need. It can take two to five years to get awards.”

Koriwchak says uncapped damages and contingency fees drive up providers’ malpractice insurance premiums, benefitting lawyers more than patients.

“For every dollar that we physicians pay into malpractice premiums meant to help injured patients, only 17 percent of that money actually reaches injured patients,” Koriwchak said. “The rest goes to malpractice lawyers, etc.”

System Failure

Scherz says special interests benefitting from extremely high damage awards will resist HR 1215.

“It may not hardly make a dent, but it will be fought tooth and nail by the insurance carriers, people invested in the process, and people who will oppose it under the banner of federalism,” Scherz said.

The bill’s proposed protections for providers won’t stop doctors from overprescribing services, Scherz says.

“[HR 1215 is] a step in the right direction, but it’s not the solution,” Scherz said. “[It is] not going to solve the problems of defensive medicine. The only way to do that is to fix the system.”

Fair Is Fair

An alternative system proposed by the nonprofit organization Patients for Fair Compensation would reduce litigation costs, increasing the share of awarded damages patients actually receive. The plan would distribute 80 percent of provider malpractice insurance premiums to patients and spend the remaining 20 percent of premiums on administration.

Koriwchak says the Patients for Fair Compensation proposal would cost providers less and reduce waste.

“This is a workers’ compensation type of system that is far less expensive and far more efficient than the tort system at compensating injured patients,” Koriwchak said.

The proposal, The Patients’ Compensation System, would save providers up to $650 billion per year, the Patients for Fair Compensation website states.

Hayley Sledge (hayley@sledges.us) writes from Springboro, Ohio.

Internet Info:

The Patients’ Compensation System, Patients for Fair Compensation: http://www.patientsforfaircompensation.org/media/7142/pfc_wp-0612_lr.pdf

Image via Thinkstock

Author
Hayley Sledge writes from Dayton, Ohio.
hayley@sledges.us

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