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  President’s Desk Column

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Medical liability reformheats up

September 2002
Paul A. Raslavicus, MD

Show me a physician who has not felt the devastating effect of the medical liability insurance premiums on their lives and on their practices, and I will show you one who is not practicing in the United States. We are now in a period in which jury awards, even in our specialty, frequently exceed $1 million and in which some high-risk specialties are seeing premiums well in excess of the $100,000 per annum level. Many of us are finding it difficult to obtain coverage or the limits of coverage we need.

Reforming the ground rules for medical liability litigation is a top legislative priority for the American Medical Association, and it is high on the list of priorities for the College. We are pleased to see that Congress and the Bush administration are recognizing that something needs to be done.

In the House of Representatives support is growing for H.R. 4600, the Help Efficient, Accessible, Low-cost, Timely Health Care (HEALTH) Act of 2002. As of late July, Rep. Jim Greenwood (R-Pa.) and cosponsor Jim Moran (D-Va.) had recruited 96 colleagues to cosponsor the bill. This is a good bill; the CAP supports it and is working for its passage. I thanked the Congressmen by personal letter and conveyed the College’s support. If passed, this bill could put us well on our way to sanity. It would accomplish the following:

  • Establish a reasonable limit ($250,000) for noneconomic damages, while placing no limits on economic damages.
  • Establish a three-year statute of limitations (except for minors).
  • Establish mechanisms to ensure that only justifiable punitive damages are paid, with a guideline to limit punitive damages to two times economic damages or $250,000, whichever is greater.
  • Structure settlements to be paid in increments rather than lump-sum payments, so that expenses are reimbursed as they occur and earnings as they would have accrued.
  • Establish procedures to ensure that defendants pay damages in proportion to their fault.
  • Establish a decreasing scale for attorney con-tingency fees to discourage frivolous -lawsuits.
On June 12, the House Judiciary Committee held hearings on the HEALTH Act of 2002, and the committee set a September date to mark up the legislation. That means as of Labor Day, when Congress was to reconvene, the progress of this bill will have shifted from simmer to sizzle.

In July, Rep. John Conyers Jr. (D-Mich.) and leading House Democrats asked the General Accounting Office to review malpractice insurers’ financial statements and other documents to assess what role declining investment income and underwriting practices might have played in rising malpractice insurance premiums. Also in July, Sen. John Ensign (R-Nev.) introduced S. 2793, a companion bill to H.R. 4600, which brings the HEALTH Act of 2002 before the Senate.

In mid-July, I heard Health and Human Services secretary Tommy Thompson articulate to some 50 medical specialty society presidents, at our AMA-sponsored annual summer meeting, the administration’s concerns about the medical liability crisis. The following week the HHS secretary released a comprehensive report titled "Confronting the New Health Care Crisis: Improving Health Care Quality and Lowering Costs by Fixing Our Medical Liability System." This important document transforms the climate of discussion from one of physician "errors" leading to bad outcomes and lawyer greed and unscrupulousness to one of protecting patient access to care and limiting government expenses. The old axiom that there is no such thing as a free lunch is operative here as well; eventually Medicare and all the inhabitants of this land pay for this lottery to riches for the few.

One day after the HHS report was released, Paula Szypko, MD, vice chair of the CAP Government Affairs Committee, participated in a roundtable on medical liability with president George W. Bush, Tommy Thompson, and AMA president-elect Donald Pal-mi-sano, MD. Dr. Szypko spoke about a lawsuit concerning an autopsy that resulted in unreasonable damages, and on how defensive medicine works against effective patient care and effective peer review. President Bush made special reference to Dr. Szypko’s remarks at a speech he gave later that same day.

By the time you read this column, September will have arrived, and Congress will be back in the Capitol. It will be time to build on the momentum that has been created. While federal liability reform has failed in the past for a number of reasons, prospects are improving. Physicians are hurting and patients are hurt by the present system. The HEALTH Act of 2002 can work because it is modeled on a California law that has worked well for nearly three decades. It was enacted in circumstances much like those we face today. California suffered a meltdown of its health care system in the early 1970s and physicians saw their premiums soar more than 300 percent. Liability carriers left the state and some physicians closed their office doors. The Medical Injury Compensation Reform Act, or MICRA, which came into effect in 1976, provided a $250,000 limit on noneconomic damages, unlimited economic damages, a statute of limitations on claims, sliding-scale limits on contingency fees, advance notice requirements before claims were filed, binding arbitration of disputes, and periodic payment of future damages.

The effect of this legislation was dramatic. The average liability premiums decreased 40 percent in the 25-year period ending in 2001 (expressed in constant dollars). In 2001 the Medical Liability Monitor published data that demonstrated that the average premium paid by California physicians practicing internal medicine, general surgery, and ob/gyn ranged from 43 percent to 51 percent of the average premiums of their counterparts in Florida, Illinois, New York, Texas, and Michigan. This was supported by a 53 percent lowering in the dollar amounts of settlements in California as compared with the nation as a whole.

Our current liability crisis is not one of increasing claims frequency but one of judgment amounts. Patients are not eager to sue their doctors. In fact, in 1991 the New England Journal of Medicine reported that only 1.53 percent of those injured by possible medical actions even file a claim. Severity is the problem, and severity is what the HEALTH Act of 2002 is designed to address.

We have a window of opportunity this fall. Prepare to participate in the debate. Counter resistance to medical liability reform with facts. One excellent resource for facts and background is the Health Care Liability Alliance, a broad-based coalition for reform. You can find the alliance at www.hcla.org; it’s well worth your time. If you are a member of the CAP’s grassroots program, PathNet, watch your e-mail and be prepared to call and write to your representatives and senators when the CAP alerts you. The College has a toll-free number that PathNet members can use to connect to federal lawmakers from anywhere in the U.S. at any time, Also, check out the remarkable AMA Grassroots Action Center at www.capwiz.com/ama/home/. Contact your legislators to let them know how important it is for them to support the reasonable and reasoned approaches to reform the medical liability scene, as exemplified in H.R. 4600 and S. 2793. You will sleep easier if you do.