Editorial: Six steps to state-based tort reform

May 1, 2004

EDITORIAL

 

EDITORIAL

Six steps to state-based tort reform

On April 7, 2004, the U.S. Senate tried and failed to overcome a Democratic filibuster on S. 2207, the Pregnancy and Trauma Care Access Protection Act. This was very bad news because the legislation would have given ob/gyns modest relief from escalating professional liability insurance premiums, largely by capping non-economic damages (that is, for pain and suffering). The Democratic filibuster was upheld by a vote of 49 to 48, preventing a vote on the bill. Senate Majority Leader Bill Frist promises to soldier on with fresh tort reform initiatives, and we should work through Physicians for Women's Health ( http://www.physiciansforwomenshealth.org ) and its PAC to support his efforts. But it's clearly time to also pursue state-based tort reform.

My state, Connecticut, is representative of both the promise and the peril of state-based initiatives. From 1997 to 2003, professional liability insurance premiums for ob/gyns increased there between 45% and 128%, and some carriers have filed for rate increases of as much as 57.3% in the last year.1 A whopping $54.5 million in malpractice awards were doled out in Connecticut between 1998 and 2002, nearly 80% of which were for non-economic damages.

In response, many of the state's physicians recently rallied in Hartford for caps on non-economic damages. Stagnating managed care payments coupled with escalating professional liability premiums, they alleged, were squeezing physicians out of Connecticut. However, neither the public nor the state legislature has seen material evidence of physician impoverishment. The Connecticut State Medical Society has reported a 17.2% decline in the number of practicing physicians in the past few years. The state department of health, however, says that the total number of licensed physicians is stable and new medical licenses are being issued at a steady rate, including 39 to ob/gyns last year alone.1 In addition, the state department of health has not received one complaint about lack of physician availability nor has there been an increase in the number of requests for requisite malpractice retirement "tail" coverage.1 In short, physicians' arguments about economic hardship and scarcity have fallen on deaf ears.

For state-based professional liability reform to succeed, legislators clearly have to be presented with powerful evidence that it will improve patient safety, serve justice, and be cost-effective. The state's trial lawyers have taken great umbrage at the notion of capping non-economic damages. The caps, they contend, would set medical malpractice cases apart from other types of personal injury litigation, undermine the jury system, and unjustly provide unique protection for physicians at the cost of patients injured through negligence. Some lawyers and allied consumer groups argue that by punishing negligent physicians, non-economic damage awards prevent errors and improve quality of care. But virtually all experts agree that in the current professional liability environment, physicians are less likely to cooperate with quality assurance and patient safety initiatives because of fear of potential litigation. To paraphrase the conclusion of the Institute of Medicine's report "To Err is Human: Building a Safer Health System," we can't learn from errors if we are reluctant to report them.2 Non-economic damages do not improve patient safety, they impair it.

Whatever the other components of state-based professional liability reform, capping the ever-escalating costs of non-economic damages is key. Caps were part of California's Medical Injury Compensation Reform Act (MICRA) of 1975. MICRA arguably has improved patient outcomes and held premium increases to one third the level seen in the rest of the country.3 Indeed, estimates suggest that a $250,000 cap on non-economic damages would reduce the nation's malpractice premiums by 18%.3 Trial lawyers will argue that victims in desperate need of such payments will be harmed by the cap. My counter offer would be to cap plaintiff attorney fees associated with non-economic awards at 33.3% of the first $300,000 and 0% thereafter. Limiting exorbitant trial lawyer fees can only enhance justice by giving victims a larger share of non-economic damages.

Here are my other suggestions for state-based tort reform:

1. Create professional liability insurance premium relief funds. These funds would be established by assessing an annual fee to all physicians and attorneys in a given state. In Connecticut, for example, a $1,000 fee would generate $45 million each year (a little over $32 million from the state's lawyers and $13 million from doctors). The fund would cover the costs of professional liability insurance payments that exceed two multiples of the median (MOM) for all physicians in the state.

2. Allow evidence of collateral income sources to be presented in court. Many states prohibit consideration of other sources of compensation for a person's injury (such as health and disability insurance). These laws are patently unjust and serve only to mislead jurors. Knowing about collateral sources would encourage juries to reduce economic damage awards.

3. Set strict statutes of limitation. It's logical for an injury caused by negligence to be temporally related to a specific negligent act. The more time elapses before an injury comes to light, the more difficult to pinpoint the proximate cause. No more than 2 years should elapse between an injury and a claim.

4. Eliminate offers of judgment (aka prejudgment interest). These provisions sanction defendants who do not take advantage of a plaintiff's "offer" of settlement. Interest usually is assessed on the ultimate award; some states (including Connecticut) charge 12%. The original intent of offers of judgment was to encourage settlements, but now plaintiffs' attorneys are using this mechanism to "fatten the pot" by making outrageous settlement offers.

5. Certify good faith. There are now 125,000 malpractice cases in the nation's court systems, 70% of which will be closed without payment.4 This is prima facie evidence of widespread abuse of "negligence" claims by plaintiffs' attorneys and their "experts." Plaintiffs' attorneys should be required to furnish the defense and court with a formal analysis of a case documenting area(s) of negligence. The analysis should be drafted by a board-certified physician currently practicing in the defendant's field and in good standing with his or her professional body. Such a "good faith" certification would reduce the number of frivolous suits now clogging the system.

6. Hold managed care companies liable. Physicians do not practice in a vacuum but rather within the restrictions of patients' managed care plans. They are also encumbered by reduced reimbursement to hospitals, which can lead to inadequate hospital staffing, informatics, supplies, and equipment. We need legislation that makes managed care companies "partners in liability." It would encourage insurance companies to focus on patient safety, weed out problem physicians, and help mitigate escalating professional liability insurance premiums.

I believe these six reforms would enhance patient safety, bring real justice and efficiency to the tort system, and reduce costs. But let's not forget the law of unintended consequences. Trial lawyers are already trying to circumvent tort reform before it has been enacted. A lawsuit recently filed in Ohio alleges that a physician did not do enough to help a man lose weight and stop smoking, and thus indirectly caused his heart attack.5 Another suit has been brought against a hospital, alleging that a woman's pancreatic surgery should have been done at a different facility with a higher surgical volume, and by inference, better quality.6 Even more extraordinary was a recent suit filed for "emotional pain and suffering" against a physician because a lab received a frozen section that had thawed. But no physical harm was done to the patient!

Clearly our battle to achieve justice in the nation's tort system—and with it, the best possible care for our patients—will be a long one as it pits us against some of civilization's most potent and durable foes: selfishness and greed, each masquerading as justice.

REFERENCES

1. Legislative Program Review & Investigations Committee, Connecticut General Assembly. Medical Malpractice Insurance Rates. Hartford, CT: Connecticut General Assembly; December 18, 2003.

2. Committee on Quality of Health Care in America, Institute of Medicine. Kohn LT, Corrigan JM, Donaldson MS, eds. To Err Is Human: Building a Safer Health System. Washington, DC: Institute of Medicine; 2000.

3. Saxton J. Liability for Medical Malpractice: Issues and Evidence. Washington, DC: Joint Economic Committee, US Congress; May 2003.

4. Biondi RS, Gurevich A. Citizens Allied for Pennsylvania Patients: Projected Effect of Capping Non-Economic Damages On Pennsylvania Physician Professional Liability Costs. New York, NY: Milliman USA Consultants and Actuaries; July 17, 2003.

5. Palmisano DJ. Lawyers who play the liability lottery must be stopped. Am Med News. Feb. 16, 2004, p. 17.

6. Albert T. Lawyers try new tacks in malpractice suits. Am Med News. Feb. 9, 2004, p. 17.

Charles J. Lockwood, MD

Charles J. Lockwood, MD, Editor in Chief, is Anita O'Keefe Young Professor and Chair, Department of Obstetrics and Gynecology, Yale University School of Medicine, New Haven, Conn.

P.S. Don't miss Nanette Santoro's article "What a SWAN can teach us about menopause" for a practical update on the latest findings from the SWAN study of menopause. For a concise review of PMDD, "A short course on PMDD." CME credits are available online for this month's article on hyperprolactinemia, "What's the best approach to hyperprolactinemia?"

 

Charles Lockwood. Editorial: Six steps to state-based tort reform. Contemporary Ob/Gyn May 1, 2004;49:11-15.