Attempts to Divert Focus from Effective Tort Reform

by Leona Egeland Siadek, Vice President, Government Relations

Premium costs have escalated in crisis states, and legislators who are opposed to caps on noneconomic damages continue to introduce bills on venue shopping, expert witnesses, punitive damage caps, “I’m Sorry” legislation, and medical courts, to name a few. Labeled as tort reform, legislators introduce these bills instead of addressing the cap issue. Certainly, a bill addressing a state’s muddled statutes about joint and several or just several liability is a worthy goal. But we should never be fooled into believing that instituting such measures will have the sought-after objective of lowering risk and, thus, lowering premium costs.

Doctors must continue to tell their legislators that they understand the differences between the bills, and legislators must be reminded that the goal is to stabilize premiums.

The American public has spoken out through several substantial polls. Three-fourths of the voting public believes that lawsuits have had a negative effect on access to quality care. Most people have heard about the issue of rising medical malpractice insurance costs for doctors, and trial lawyers are listed most often as being responsible for the number of lawsuits filed. Our job is to make sure that elected officials are aware of these poll results and that they hear from the health care providers in their districts.

State Activity

Many legislatures are addressing legal reform bills. As legislative sessions draw to a close, the debates are in high gear.

Arizona
S.B. 1036 was signed by Governor Napolitano. The measure will tighten credentials for expert witnesses, and doctors will be able to apologize to patients and their families without fear of having the statements used against them in court.

Georgia
Governor Perdue signed S.B. 3. Key provisions include a cap of $350,000 on noneconomic damages with an aggregate cap of $1.05 million against all defendants. The new law eliminates joint and several liability, strengthens expert witness rules, and requires a higher burden of proof to provide evidence of negligence against ER staff.

Missouri
Governor Blunt signed H.B. 393 into law. This bill sets new limits on joint and several liability, restricts venue shopping, and limits punitive damages. It also adds an “I’m Sorry” provision and, most importantly, sets a new limit of $350,000 per occurrence on noneconomic damages.

Montana
Governor Schweitzer signed H.B. 24, a bill to allow a doctor to apologize or express sympathy without its being considered an admission of fault in a malpractice case. Also signed was H.B. 64, a measure putting in place strict criteria for determining who can be considered an expert witness for the proper standard of medical care in a malpractice case.

South Carolina
Governor Sanford signed S. 83, a medical liability reform bill that limits noneconomic damages in medical liability cases to $350,000 per provider, with an overall aggregate limit of $1.05 million. The new law also increases standards for expert witness testimony, provides clean-up language of the joint and several liability reforms passed in another bill, and contains a provision allowing for an offer of judgment.

Virginia
Governor Warner signed a bill that allows doctors to apologize without the apology being used as an admission of error in court. The bill also addresses the issue of expert witness qualifications. Virginia retains its total damage cap of $1.75 million.

West Virginia
S.B. 418, a bill to end third-party bad faith, and S.B. 421, a bill requiring that a party be held responsible for only the degree of fault and amount of damages as determined by a jury, have been signed by Governor Manchin.

Federal Activity

The Class Action Fairness Act of 2005 was signed by President Bush in February. This was the culmination of many years of struggle in Congress between the business community and the trial lawyers. Attention now turns to asbestos and medical liability. The Doctors Company joins hands with the medical community in continuing strong efforts to urge the Congress to pass effective tort reform.

Several bills on medical liability reform have been introduced to date. In the House, H.R. 534 (Cox) was introduced with over 125 House co-sponsors. The measure is identical to the House measure passed in the last two consecutive years. House Republican Leadership appears to wish to wait for the U.S. Senate to act first this year.

Three bills have been introduced in the Senate: S. 354 (Ensign) has a no-exceptions cap of $250,000 for noneconomic damage awards. S. 366 (Gregg) would provide reforms to physicians involved in the delivery of ob/gyn services, and S. 367 (Gregg) would assist doctors involved in emergency room and trauma care services.

A coalition of moderate Senate Democrats have indicated through their leader Senator Durbin of Illinois that they will support medical liability reforms but only without caps on damage awards. They have threatened to filibuster any legislation with caps. There must be 60 votes to pass a good bill, and we are at least seven votes shy of that number.

H.R. 420 by Lamar Smith (Texas) was introduced on January 26, 2005. Titled the “Lawsuit Abuse Reduction Act of 2005” (LARA), the bill would impose mandatory sanctions against attorneys or other parties who file frivolous suits and would extend federal court rule sanctions to state cases that affect interstate commerce. LARA is designed to reduce venue shopping by requiring that a plaintiff may only sue where he or she lives or was injured. Smith’s 2004 bill passed the House but was not taken up in the Senate.

Patient safety is also being addressed in S. 544 (Jeffords), an act known as the Patient Safety and Quality Improvement Act of 2005.

Third-Party Bad Faith

West Virginia is attempting to reduce third-party bad-faith lawsuits by making a third-party claimant’s sole remedy against a bad-faith settlement practice the filing of an administrative complaint with the insurance commissioner. If the complaint is found valid, the commissioner would then issue a cease-and-desist order and might levy fines.

A third-party bad-faith suit is one in which the plaintiff is not a party to the insurance contract. The typical pattern is that a claimant accuses a health care provider of negligence. If the non-negligent doctor declines to settle the case, the claimant then sues the insurer. A suit against the insurer can result in enormous claims costs even in cases where the malpractice suit results in a defense verdict. Another effect is that the threat of a bad-faith action pressures doctors and insurers to settle claims for more than they are worth, increasing both the frequency and severity of claims. These effects distort the liability system, push premiums higher, and threaten access to care.

There are only six states in the country that currently allow third-party bad-faith lawsuits. These states are Kentucky, Massachusetts, Montana, Nebraska, New Mexico, and West Virginia.