LIABILITY UPDATE by Donna Baver Rovito

by Donna Baver Rovito, Editor, "Liability Update"
Author, "Pennsylvania's Disappearing Doctors"

This LIABILITY UPDATE "newsletter" is a free service which I provide, as a volunteer, to help provide medical liability reform and crisis information to physicians, patients and physician advocates.  I do not work for any physician advocacy organization.

Opinions and clarifications are my own, and do NOT reflect the official position of any physician or patient advocacy organization unless stated as such.  Opinions are placed in double parentheses ((xxxxxx)), italicized and appear in blue. 

This Update is emailed to approximately 7,500 health professionals and physician and patient advocates.

PLEASE FORWARD THIS IMPORTANT INFORMATION TO EVERY HEALTH CARE PROFESSIONAL YOU KNOW AND SEND ME MORE EMAIL ADDRESSES

1...Commentary
2....Best's Review
Doctors' Orders
3....Congressional Record
Success of the Texas Medical Liability Trust
4...Best Wire
Gains Realized With Texas Med-Mal Reforms  

((Items 5-8 are in Part 2))

5....WSJ Opinion Journal
In Mississippi, tort reform works.
6....Modern Physician.com
W.Va. med mal insurers seek rate cuts as lawsuits decline
7...Atlanta Business Chronicle
Tort reform expected to bring more specialists to Georgia
8....Arkansas Democrat Gazette
Arkansas medical malpractice rate slows

1...Commentary

There's a LOT of good news in this Update, as well as ammunition for you to use when the Dark Side argues against liability reform "because it won't work anyway," or when they blame the medical liability crisis on those evil, greedy insurance companies.  Because in states where substantive reforms have been passed, medical liability premiums HAVE started to go down.  It's hard to argue with facts - but don't worry, those who oppose reform don't let facts get in the way of their profits....

DBR

2....Best's Review
Doctors' Orders
September 2005 Issue

Physicians have wielded their clout to bring about medical-liability reform, but what lies beyond caps on damages?

In early 2002, the medical-legal framework in Texas was strained to the limit. On one side were personal injury lawyers advertising heavily and juries returning awards in medical-malpractice lawsuits that ranged into the millions of dollars. On the other were trauma centers closing their doors, medical-liabilityinsurers rapidly exiting the market and doctors retiring early or moving their practices elsewhere.

Across the state, there were murmurings of a doctors' strike.

"We had reached a breaking point," recalls Corpus Christi radiologist Burk Strong. "But we decided we needed to do something else."

So instead of striking, the doctors ordered up a cure.

Armed with bumper stickers and buttons, pamphlets to distribute in their waiting rooms and yard signs to post on the lawns of their homes, medical professionals affiliated with the 50,000-member Texas Medical Association joined others in a rally for change. In Strong's region, 200 doctors, with busloads of supporters and friendly legislators in tow, held an awareness day at the Nueces County Courthouse. At the Texas Capitol, 180 miles away in Austin, doctors began showing up on the first Tuesday of each month, donning white coats and meeting with policymakers to state their cause.

The efforts "paid off big time," said Strong, who was president of the Nueces County Medical Society at the time. On June 11, 2003, Gov. Rick Perry signed into law House Bill 4, which contained sweeping tort reforms, including a $250,000 limit on noneconomic, or "pain and suffering" damages and a $750,000 overall limit per case. The public backed up the bill by approving Proposition 12, which allowed liability insurance premiums to immediately decrease by circumventing a possible 10-year wait for the state Supreme Court to determine whether caps were permitted under the Texas Constitution. Washed out with the turning of the tide were huge jury awards, including one that topped out at $10.5 million in 2000.

So far, the doctors' activities helped to drive an initial 12% cut in medical-liability premiums by the Texas Medical Liability Trust and a subsequent 5% reduction. In addition, 11 new insurers have entered the Texas medical-liability market.

What happened in Texas is just one example of how, in recent years, doctors across the country have set the stage for legislative reform, particularly in the area of capping noneconomic damages. Since 2002 alone, those efforts, coupled with advocacy by the insurance industry and other groups, have led to reforms in a number of states, including Alaska, Arkansas, Connecticut, Florida, Georgia, Idaho, Illinois, Missouri, Nevada, Ohio, Oklahoma, South Carolina and West Virginia.

The lobbying skills used to get there, however, weren't something doctors picked up in medical school.

"A lot of doctors had always hated bringing politics into the office. The doctor and patient relationship is very important," Strong said. "But most of them realized the importance of doing that. So doctors began talking to patients."

National Efforts

Christian Shalgain, manager of legislative affairs for the American College of Surgeons, said those efforts have been felt at home as well as on Capitol Hill, where federal medical-liability reforms are currently on the burner.

"We have seen doctors become much more active in the political process and getting medical-liability reform," Shalgain said. "They've come to testify, bringing their patients with them and meeting representatives. The combination of the doctors' stories and the patients' stories (in terms of scarcity of access) have gone to show legislators what the true need for medical-liability reform is."

And while the need for reform has been subject to great debate, with some blaming the current medical-liability crisis on exorbitant jury awards and others alleging profiteering by liability insurance companies, one thing most agree upon is that doctors are facing a problem, Shalgain said.

According to the American Hospital Association, 45% of hospitals reported that the professional-liability crisis has resulted in the loss of physicians or reduced coverage in emergency departments. Moreover, a Harris Poll found that more than 75% of doctors believe medical-liability litigation has negatively affected their ability to provide quality care in recent years.

In response to the argument that medical-malpractice insurers are swimming in reserves, Connecticut Insurance Commissioner Susan Cogswell wonders why the number of such insurers doing business in her state dropped in the past decade from 19 to the current three. "Many insurers are leaving the market either because they can't provide at profitable rates or because they are going insolvent," she said.

According to A.M. Best Co.'s 2004 Best's Aggregates & Averages, over the past decade the profitability of medical-liability insurers has been on the decline and was lower than that of other property/casualty insurers. Between 1996 and 2003, the combined ratio of medical-liability insurers increased from 106.6 to 136.9, meaning that for every $1 insurers received in premiums in 2003, they paid out about $1.37 in claims and expenses. In contrast, the 2003 combined ratio of all property/casualty insurers was 100.1.

Caps or No Caps

However, as doctors go about trying to solve the issue of soaring medical-liability premiums, those in line for harm are the innocent victims of medical malpractice, represented by lawyers, said Carlton Carl, spokesman for the Association of Trial Lawyers of America.

"Who does tort reform hurt? It hurts people injured by, not the fault of their own, but by the neglect or greed of others. The proposal to cap damages applies to every case, no matter how severe the injury, no matter how outrageous the neglect of the doctor or hospital or nursing home or drug company," Carl said. "It would, in fact, apply to the mother whose child is killed as a result of malpractice and the children whose parent is killed in a nursing home.

"Caps on damages don't improve the quality of health care, they don't minimize instances of mistakes, they don't increase the availability of health care and they don't reduce premiums. The only thing they do is to put more money back in the pockets of the insurance companies," he said. ((...whereas unlimited jury awards "don't minimize instances of mistakes, they don't increase the availability of health care and they don't reduce premiums. The only thing they do is to put more money back in the pockets of the" trial lawyers...." ))

Robert Detlefsen, public policy director for the National Association of Mutual Insurance Companies, said the bulk of insurers' expenses originate not so much from hefty jury awards -- the average of which, according to the American Medical Association, has doubled in recent years -- but from legal expenses and settlements that are made under the threat of such awards.

"The slogan about the insurance industry deciding on the value of a person's life is really sort of a canard," Detlefsen said. "You're leaving it up to a jury to decide what noneconomic damages to a plaintiff have occurred based on the evidence presented. But the question becomes, should juries have unlimited power to award intangible things such as pain and suffering? The fact is, as long as there's a potential for these very large jury awards, the existence of that phenomenon influences the entire settlement process."

"If you just focus on the parade of horribles, you find yourself on a slippery slope that leads to the situation that we're in today, where doctors are subject to potential ruinous litigation expenses and damage awards to the point where it becomes next to impossible for them to obtain affordable malpractice insurance, and they have to shut down their practices," Detlefsen said.

As doctors continue their quest, the legal landscape will likely change as well, said John Salvucci, an insurance lawyer for the Philadelphia-based law firm Cozen O'Connor. No longer will a $250-an-hour defense lawyer be up against a $2,500-an-hour plaintiff's lawyer who collects medical-malpractice cases as an investor does stocks and bonds, knowing that the risk is bound to pay off in at least a few cases, Salvucci said.

"If you put caps in place on medical-malpractice cases, that ends. The plaintiff's attorney who is used to making multimillions of dollars, they're going to switch and do something else," Salvucci said. "Lawyers are fighting these measures through political action committees, but states are passing laws anyway. There has been a change in the philosophy of the consuming public, led by the disenfranchisement of physicians."

And while caps may accomplish a certain result for insureds as well as insurers, and physicians are likely to remain vocal on the topic, in the end, alternate reforms may be necessary to usher in a lasting cure.

One option, Detlefsen said, may be the adoption of "loser pays" rules, which exist in Europe and Japan and require a losing party in a lawsuit, whether it be the defendant or plaintiff, to pay the legal expenses incurred by the other side. Another answer may come though creating medical-malpractice courts, which so far have seen consideration in Pennsylvania, Illinois, Maryland and Massachusetts.

"Logic will tell if (placement of caps for noneconomic damages) is an effective remedy. But experience doesn't always follow logic. We haven't accumulated enough experience yet to know just how effective caps are going to be," Detlefsen said.

3....Congressional Record
Success of the Texas Medical Liability Trust
Michael Burgess (R-TX)
September 21, 2005

Mr. BURGESS. Madam Speaker, just a little over 2 years ago Texas passed a constitutional amendment that allowed for caps on noneconomic damages in medical liability lawsuits. And what has been the experience in Texas over those 2 years?

Well, we have seen insurance and doctors come back to the State. Texas had gone from 17 down to two medical insurance companies, and now they are back up to 12. Not-for-profit hospitals have seen significant increases in the money that they are now able to invest in plants and equipment, money that otherwise would have gone for their self-insurance programs.

And perhaps most importantly, the rates of liability insurance for Texas doctors has come down. Texas Medical Liability Trust has reduced rates three times since the passage of House bill 4 and proposition 12, 12 percent in 2004, 5 percent in 2005, and now a recently announced 5 percent decrease in 2006, and, coupled with that, a 5 percent dividend rebate. So that now there is a total of 27 percent insurance savings for Texas doctors in medical liability.

Speaking to physicians of the Texas Medical Association just last weekend, Dr. Dennis Factor said, “Access to health care and the malpractice environment in Texas has made a healthy recovery since the Texas legislature passed medical liability reform.''

I urge this body to take it up and get it done.

4...Best Wire
Report: Gains Realized With Texas Med-Mal Reforms  
August 3, 2006

AUSTIN, Texas - According to a 357-page article in the latest edition of Texas Tech Law Review, Texas' two-year-old House Bill 4 and Proposition 12 reform measures could turn the tide toward sanity and stability in the state's medical liability system.

"We believe the law review article will undergird the work of the legislators and probably dissuade appeals, as the legislative intent is made clear," said Jon Opelt, executive director of Texas Alliance for Patient Access, which, along with its 300 affiliate organizations, pushed for the landmark liability reforms in 2003. ((That's what we need here in PA and at the national level - 300 affiliate organizations!  They did it RIGHT in Texas....))

"On the surface, House Bill 4 had more than 200 changes in the law. So it's a dramatic rewrite," Opelt said. "As such, it's difficult for practitioners to understand all of the changes, and so they set out to produce a reference guide to help (the legal community) better understand the changes."

On June 11, 2003, Gov. Rick Perry signed into law House Bill 4, which introduced a $250,000 limit on noneconomic, or "pain and suffering" damages, as well as a $750,000 overall limit per case. The public backed up the bill by approving the state constitutional amendment Proposition 12, which allowed liability insurance premiums to immediately decrease by circumventing a possible 10-year wait for the state Supreme Court to determine whether caps were permitted under the Texas Constitution.

"Two years ago, Texas lawmakers passed arguably the most expansive rewrite of the state's civil justice laws since the adoption of the Texas constitution 140 years ago," Walter Huffman, dean of the Texas Tech University School of Law said in a statement. The law review article "is intended as ... a road map to what lawmakers intended to enact," he said.

The review, written by six Texas attorneys, weaves together legislative testimony and debate, commentary during floor votes, and research submitted for the record to capture what legislators had in mind when they made the decisions they did.

State Rep. Joe Nixon, a civil litigation attorney who co-authored the article, said the reforms put in place by HB 4 went beyond medical-malpractice liability, to include everything from class action and product liability to emergency-room care and immunity for school teachers. Nixon often travels the United States, giving speeches and visiting legislators on the subject of tort reform.

What happened in Texas, Nixon said, proves civil justice reforms work to the benefit of insureds as well as insurers.

"I do think it's that big of a deal. If you saw how hard it was fought by trial attorneys, you would understand," Nixon said. "Over the years, things slowly eroded in Texas. We had 40% to 60% of all asbestos claims in the United States filed here. Since the reforms, we have seen a 50% drop in civil lawsuits."

From the perspective of how bad things were prior to the reforms, the article cites the hospitals that were turning away ambulances due to a shortage of doctors and nurses; a quadrupling of the average medial liability awards, from $472,932 in 1989 to $2 million in 1999; a departure of 13 carriers from the market between 1999 and 2003, and a legal system in which 85% of medical-liability claims against Texas physicians were closed with no payment made to the patient.

Early returns show a growing list of benefits that are being realized as a result of the reforms, according to the report. These include:

- Since May 2003, more than 3,000 new doctors have established practice in Texas

- From four carriers in 2002, the market has seen the arrival of 22 new carriers

- The number of physicians enrolled in the Joint Underwriting Association, the state pool of last resort, has seen a steady decline, while the number of practicing neurosurgeons and emergency care, orthopedic physicians has grown dramatically

-The Texas Medical Liability Trust, the largest physician liability insurer in Texas, experienced a total rate reduction of 16.4%, representing a $34 million rate savings for doctors   ((Math 101 - Keep in mind that a previous 100% INCREASE in premiums is wiped out by a 50% DECREASE....))

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