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States Take Lead on Medical Malpractice Reform

January 1, 2003

The United States Senate killed by inaction a malpractice reform bill approved by the House of Representatives.

stethoscope and insurance docs


The United States Senate killed by inaction a malpractice reform bill approved by the House of Representatives. But the federal government’s inability to act failed to deter several states from taking the matter into their own hands, acting to rein in excessive jury verdicts.


Senate Fails to Act

On September 26, the House passed by a 217-203 vote H.R. 4600, the “Help Efficient, Accessible, Low Cost, Timely Healthcare” (HEALTH) Act. The bill, introduced by Reps. Jim Greenwood (R-Pennsylvania) and Christopher Cox (R-California), would cap non-economic damages at $250,000. It also:

  • limits contingency fees paid to attorneys;
  • imposes time limits on filing new lawsuits;
  • limits punitive damages to the greater of either $250,000 or twice a plaintiff’s economic damages;
  • deducts insurance payments from damages awards;
  • limits a defendant’s liability to his or her share of culpability; and
  • respects preexisting state damages ceilings, whether higher or lower than caps set by the HEALTH Act itself.

Senator John Ensign (R-Nevada) introduced a bill similar to the House version (S. 2793), but the Senate has failed to act on the measure. Despite House passage of the HEALTH Act and strong support from the Bush administration, federal malpractice reform will not become a reality without Senate action.


California

The House measure mirrors in many important aspects the California Medical Injury Compensation Act (MICRA), which has been in effect for more than 25 years. MICRA caps non-economic damages at $250,000. It also:

  • specifies a three-year statute of limitations on medical malpractice claims;
  • permits defendants to make periodic payments rather than a lump sum in cases where awards are made for future economic damages of more than $50,000; and
  • limits contingency fees to 40 percent of the first $50,000 recovered; 33 percent of the next $50,000; 25 percent on the next $500,000; and 15 percent of any amount exceeding $600,000.

MICRA appears to have immunized California from a legal crisis driving physicians from many other states. Due to steep increases in malpractice insurance premiums, which now often exceed $100,000 per year, physicians in states without malpractice reforms are increasingly cutting back on their areas of practice, moving to other states, or retiring from the medical profession at the peak of their careers.

Despite--or perhaps because of--the U.S. Senate’s inaction on malpractice reform, several states have followed California’s lead, taking it upon themselves to protect physicians from excessive jury verdicts and related malpractice insurance costs.


Florida

A malpractice insurance task force is currently analyzing the Sunshine State’s spiraling malpractice insurance premiums. It will present a proposed solution to Governor Jeb Bush (R) in January.

Malpractice insurers report they paid out more than $250,000 in malpractice cases more than 300 times in 2001. Without curbs on these high awards--many of them far in excess of the $250,000 threshold--insurers say they cannot slow down escalating premiums.

“The only thing that will bring premiums down is to cap non-economic damages at some level,” said Robert White of First Professionals Insurance Company.

Bush agrees action is needed to curtail the rising premiums that are driving many practicing physicians to other states. He reported many of the doctors who do stay are refusing to perform certain procedures deemed by insurers to be especially risky.

“This will be, if not our highest priority, it will be in the top one or two” during the coming year, said Bush in remarks to the Select Task Force on Healthcare Professional Liability Insurance. “I’m for caps on non-economic damages,” he said after the Task Force meeting. “If you look at the states that have meaningful caps and you compare it to the states like Florida that don’t, and you compare insurance premiums, you’ll see.”

Proponents of malpractice reform point out that Florida doctors pay significantly higher malpractice premiums than doctors in California, even though Florida’s cost-of-living is significantly lower than California’s.

Both houses of the Florida legislature are controlled by Republicans, and the leaders have expressed support for malpractice reform. The recommendations of the insurance task force are expected to significantly shape the language of any bills originating in the legislature. The legislature, currently in recess, reconvenes in March.


Mississippi

Democratic Governor Ronnie Musgrove signed a malpractice bill into law on October 8, culminating a special session of the Mississippi legislature and ending months of deadlock on the issue of tort reform.

The compromise legislation caps pain-and-suffering damages at $500,000, with incremental increases to $1 million in 2017. The legislation also requires plaintiffs to file malpractice suits in the county where the alleged injury occurred, and limits physician responsibility in cases where multiple persons are to blame for an alleged injury.

“Today, Mississippi’s health care crisis has been addressed,” said Musgrove after signing the bill. “The end result of this long special session was a piece of legislation offering a foundation for better health care in Mississippi.”

The governor added the new bill sends a message to the rest of the country that “Mississippi is a good place to practice medicine.”

Mississippi Trial Lawyers Association President David Barrie vowed to challenge the law in court. “I’m terribly unhappy,” said Barrie. “It does nothing to fix the doctor’s problem of getting affordable insurance.”

“It’s a good piece of legislation,” countered Dr. John Cook, president of the Mississippi State Medical Association. “This will open the door for insurance companies to come back to Mississippi.” Cook predicted malpractice insurance rates will stabilize within two years as a result of the new law.

The legislation passed the Mississippi House by a vote of 87-32. The Senate passed the measure 41-6.


New Jersey

The Medical Society of New Jersey predicts 3,000 physicians in the state will lose medical malpractice coverage this year as insurers pull out of the market. Medical liability insurers are also lowering insurable limits, and some are offering only claims-made policies.

Currently there are as many as 20 liability bills pending in the state legislature.


Nevada

In Senator John Ensign’s (R) home state of Nevada, Republican Governor Kenny Guinn called a special legislative session to address skyrocketing malpractice insurance rates and the resulting exodus of physicians from the state. In response, the legislature passed a tort reform package that took effect last October. The legislation caps pain-and-suffering damages at $350,000, but allows exceptions for gross malpractice and cases where a judge finds “exceptional circumstances.”

Physicians have asserted the compromise legislation has not gone far enough, and that malpractice insurance premiums have failed to moderate. Medical liability insurance companies have not lowered their rates, at least in part because trial lawyer groups and other opponents of the new law have launched legal challenges to the legislation, which could take years to conclude. Insurance companies are wary of lowering rates only to later discover the legislation has been invalidated.

“The bill we all passed provided long-range remedies that everybody knew were long-range,” said attorney Gerald Gillock, an opponent of malpractice reform.

To solve the short-term problem while the October legislation is resolved in the courts, Nevada citizens have drafted a Keep Our Doctors in Nevada petition and acquired enough statewide signatures to force the legislature to consider further malpractice reforms. The petition calls for limits on attorney fees for malpractice trial lawyers and would abolish the exceptions to the pain-and-suffering caps under the October 1 legislation. Additionally, the petition would ensure doctors pay for only the percentage of a malpractice award that is related to their culpability.

With the petition acquiring more than 77,000 signatures, the legislature now must either pass the proposal or reject it within 40 days after the legislature reconvenes in February. If the legislature rejects the proposal, it will appear on a statewide ballot in 2004. The legislature could recommend alternative legislation, which would also go before the voters in 2004.

With insurance premiums still rising despite the October legislation, doctors continue to shut down their practices or leave Nevada entirely. According to the Clark County OB/GYN Society, nearly 30 obstetricians have left Las Vegas, and others are refusing to accept new patients. “We have only about 80 doctors delivering babies now in Clark County,” said Dr. John Nowins, president of the society.

With 42 of the 80 remaining obstetricians facing insurance renewal in the first half of 2003, Nowins fears one-third or more of those doctors will leave the area if the legislature fails in February to enact the proposed legislation.

“This package would help keep people in town,” said Nowins. “Some feel they can stay and somehow afford to pay over $100,000 a year in premiums, but others are choosing not to.”

“An unprecedented number of doctors are leaving Las Vegas,” added Dr. Tom Purdon, former president of the American College of Obstetricians and Gynecologists. “Southern Nevada has become the worst place in the country for women trying to find prenatal care.”

“With the sudden shift in the number of OB patients, it’s making gynecological appointments harder and harder to come by,” agreed Las Vegas obstetrician Brent Oliver. “Even in the last six months it’s gotten worse. There are so many people calling for appointments, there’s no way you can take everybody.”

“We’re optimistic that with the support of the people of Nevada, the Senators and Assembly people will actually listen and take action to pass the initiative,” said Dr. Rudy Manthei. “We hope this passes in February, but if not, at least it goes to the voters and we have something to fall back on.”

“I’m going to do everything I can to make sure this measure gets defeated in the legislature,” responded attorney Gillock. “It’s not fair to those that are injured.”


Ohio

The Ohio House of Representatives passed its own version of malpractice reform on December 3. By a 64-33 vote, the House approved a substitute for Ohio Senate Bill 281, which offered various protections for doctors accused of medical malpractice. The Senate will now consider the House version of the bill and, if it approves, will send the bill to Governor Bob Taft (R).

The proposed legislation attempts to thwart a crisis in rising insurance premiums driving insurance companies and local physicians out of the state. In addition to capping pain-and-suffering awards, a key provision of both the House and Senate versions of the proposed legislation is the creation of a cash pool to cover 30 percent of $500,000 awards and 50 percent of $1 million awards. Responsibility for funding the pool remains to be determined. In neighboring Indiana, a similar pool is funded solely by physician contributions. In Ohio, contributions may be more broadly based.

The House made several key changes to the Senate bill. These include:

  • increasing a part of the cap on catastrophic damages from $750,000 to $1 million;
  • cutting another part of the catastrophic damages cap from $35,000 per year of life expectancy to $15,000 per year of life expectancy;
  • eliminating a cap on attorney fees;
  • instructing the Ohio Department of Insurance to recommend how to implement the proposed cash pool; and
  • extending the period for plaintiffs to file malpractice claims.

House Speaker Larry Householder (R-Glenford) predicted the bill would halt steep increases in malpractice insurance premiums and provide physicians with incentives to remain in the state. Just as importantly, the bill would still allow people to take their cases to juries and would not limit economic compensation, such as lost wages.

“I think it’s an effective way to address the problem that we have,” said Householder.

Representative Timothy Grendell (R-Chesterfield), who introduced the House bill, said he doesn’t care whether the state adopts the Senate bill or his House bill. “I’m not into pride of ownership,” said Grendell. “We’re just running out of time, and this is the quickest way to do it.”


Pennsylvania

A reform bill signed in March 2002 by Governor Mark Schweiker (R) allows periodic payouts for judgments, requires claims to be filed within seven years of injury, and caps punitive damages at two times actual damages. The law also requires lawsuits to be filed in the county where the alleged malpractice occurred. Pennsylvania does not cap pain-and-suffering awards, and joint and several liability--which holds each defendant responsible for the entire amount of the plaintiffs’ damages--remains in place.

The reform measure was the result of recommendations for short-term reform made by a Schweiker-appointed task force of doctors, trial lawyers, hospital administrators, and insurance executives. The group has until May 2003 to craft long-term policies.

The March reform bill did not keep Phico, one of the state’s largest writers of medical liability coverage, from going into liquidation. Miix Group and Princeton Insurance have ceased writing new business in the state.

“This is a serious problem,” observed Governor-elect Ed Rendell (D). “We are taking it seriously.”


West Virginia

In December 2001, a bill guaranteeing all health care providers in the Mountain State access to liability insurance was signed by the governor. The measure is a variation on the California MICRA bill, providing for a $1 million cap on non-economic damages and not permitting defendants to make periodic payments on economic damage awards.

The bill does not appear to have improved the state’s medical malpractice climate. Physicians are ceasing to practice there due to rising medical liability premiums, and trauma centers are closing at a rapid pace.


James M. Taylor is an attorney and managing editor of The Heartland Institute publication, Environment & Climate News. Conrad F. Meier, managing editor of Health Care News, contributed to this report.


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James Taylor is president of The Heartland Institute.
jtaylor@heartland.org

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