Tort Reform Bill To Lower Malpractice Awards

Legislation that would limit the amount of money juries could award in medical malpractice cases passed the House of Representatives last month. The bill is supported by the AMA, APA, and other physicians groups, as well as President George W. Bush.

A companion bill in the Senate (S 2793) is not expected to move out of committee before Congress adjourns this month. The Senate rejected a less-sweeping measure in July.

The Health Efficient, Accessible, Low-Cost, Timely Health Care Act (HEALTH) would limit the amount of noneconomic damages, including pain and suffering, to $250,000. Punitive damages would be capped at $250,000 or twice the amount awarded for economic damages, whichever amount is greater. Unlimited economic damages are allowed by the legislation (HR 4600), which was introduced by Rep. Jim Greenwood (R-Pa.) in July.

“The AMA has always held that patients who have been injured through negligence should be compensated fairly. Unfortunately, the current liability system has failed. The United States has created a liability lottery, where select patients and their lawyers receive astronomical awards, causing all of us to pay more for health care and many to suffer from a lack of access to quality health care,” said AMA President Yank Coble, M.D., in a press release.

The median malpractice award was $800,000 in 1999, a 7 percent increase over the 1998 figure, according to a July report titled “Confronting the New Health Care Crisis” by the U.S. Department of Health and Human Services (HHS). The number of million-dollar-plus awards has increased dramatically in recent years. During 1999-2000, 52 percent of all malpractice awards assessed were in excess of $1 million, the report states.

The bill, which is opposed by the vast majority of Democrats, consumer groups, and the Association of Trial Lawyers of America, would set a sliding scale for lawyers’ contingency fees, preempt state laws with lower malpractice caps, and limit the period during which patients could bring a medical malpractice lawsuit to three years from the date of injury or one year from the time the injury was discovered, according to the legislation.

The bill is modeled on the Medical Injury Compensation Reform Act, enacted in California in 1976. According to the AMA, physicians in California pay premium rates that are about a third of the national average.

Liability insurance premiums for psychiatrists nationally have risen approximately between 20 percent and 40 percent in the last year, Philip Reischman, executive vice president of Gallagher Health Care Insurance Services in Houston, told Psychiatric News.

Physicians in such high-risk specialties as obstetrics/gynecology, surgery, and internal medicine have experienced sharper annual increases in medical liability premiums than psychiatrists. This is evident in 11 states without legislation that caps malpractice awards, according to the HHS report. Among the states with the highest average medical malpractice premiums are Florida, Illinois, Ohio, Nevada, New York, and West Virginia.

Physicians in high-risk specialties have been forced to limit or leave their practices in some of these states. The University of Nevada Medical Center closed its trauma center in Las Vegas for 10 days in July after several surgeons quit because they could not afford to pay medical liability premiums that in some cases rose from $40,000 to $200,000 annually, according to the report.

Numerous small cities in Mississippi with fewer than 20,000 residents no longer have doctors who deliver babies because many of them are relocating to Louisiana, where medical liability premiums are lower, the report states.

“Everyone in the medical malpractice industry agrees that tort reform is needed. The federal legislation should restore some stability to the industry, which has suffered major losses in the last 18 months,” said Reischman.

The number of medical malpractice insurance carriers offering coverage to physicians has shrunk by about 20 percent in the last 18 months, leaving doctors with fewer choices, said Reischman.

The HEALTH Act can be accessed on the Web at http://thomas.loc.gov by searching on the bill number, HR 4600. The HHS report “Confronting the New Health Care Crisis” is posted at http://aspe.hhs.gov/daltcp/reports/litrefm.pdf. ▪