Award limits won’t cut premiums

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Malpractice report is ‘shallow,’ needs work, senator says

The Louisville Courier-Journal (KY)

Limits on jury awards, which would be permitted by a proposed constitutional amendment supported by physicians, could raise but won’t reduce doctors’ malpractice insurance premiums, according to a draft study by the General Assembly’s staff.

Doctors’ premiums aren’t lower in states with caps on pain-and-suffering and other noneconomic damages in medical malpractice cases, and limits on punitive damages resulted in higher premiums for internists and general surgeons, the study said.

But review panels that evaluate the validity of lawsuits, which also would be permitted by the constitutional amendment, have reduced premiums elsewhere, said the report obtained by The Courier-Journal.

“It sort of throws water on the argument that caps is the solution to the malpractice crisis,” said Sen. Tim Shaughnessy, D-Louisville.

The study, which was requested last July by the Program Review and Investigations Committee, has not been approved and released by the committee, though lawmakers have been debating the amendment and other possible remedies for rising premiums.

The committee was to discuss the report at a meeting last month, but it was canceled. Sen. Katie Stine, a Fort Thomas Republican who heads the committee, said yesterday that she has asked the legislative staff to do more work on the report and that there hasn’t been time during the busy session to hold another meeting. “Frankly, I didn’t feel they answered a lot of questions that we wanted answered,” Stine said.

She and other Senate Republicans support allowing the legislature to limit noneconomic and punitive damages, but she said their views played no part in withholding the report.

“I felt it was a very shallow analysis and there needed to be more work done,” she said.

The proposed constitutional amendment has been defeated in the Senate, but it is still alive in the House, where it awaits a committee hearing. Another measure, House Bill 8, which would create a review panel to screen cases and a state-run medical malpractice insurance company, received committee approval last week and is awaiting action by the full House.

Senate President David Williams, R-Burkesville, sponsored Senate Bill 1, that chamber’s version of the constitutional amendment. Williams said he had not read the draft report, which he described as a confidential working paper.

“I am not pleased with the fact that it’s not done, and I’m not pleased with the fact that the work product was not satisfactory,” he said.

Williams added that he recently talked with the director of the Legislative Research Commission about Stine’s concerns with the quality of the work on the medical malpractice report and another Program Review report and asked him to review them “from a scholarly point of view.”

Robert Sherman, commission director, said he could not comment on the report because it is not public until it is presented to the Program Review committee.

The Courier-Journal requested a copy of the 86-page report from Rep. Jack Coleman, D-Burgin, a Program Review committee member and former chairman.

Coleman said he had not read the draft, but said he respected the legislative staff members who prepared it.

“That staff does an excellent job, and they are very professional and always have been,” he said.

The draft, prepared by the commission’s chief economist and other staff, examined other states’ legal changes and their effect on premiums and the number of physicians, obstetricians, internists and general surgeons practicing in those states.

The study did not assess the impact of nonlegal remedies, such as tougher state regulation of malpractice insurers or creation of a state-run company to compete with private ones.

The study found:

– There was no statistical difference in premiums between states with and without caps on noneconomic damages, but such caps slightly increased the number of physicians per capita.

– States with limits on punitive damages had higher premiums for internists and general surgeons and fewer physicians per capita.

– The authors speculated that in states with caps, juries might be inclined to increase awards to the maximum instead of giving lesser amounts, and that caps are less likely to deter carelessness.

– The only caps that reduced physicians’ premiums were limits on economic damages, which compensate victims for past and future medical expenses and lost wages. Those states had more obstetricians and fewer general surgeons. Such caps have not been proposed in Kentucky.

– States with review panels — including Indiana — had lower premiums, and the number of physicians per capita increased faster in those states than in states without panels.

– In states that repealed the socalled collateral-source rule, which prevents jury awards from being reduced if a victim also receives health insurance or disability payments, premiums were lower and the number of physicians per capita was higher.

The Kentucky legislature enacted such legislation in 1988, but it was ruled unconstitutional by the state Supreme Court.

– Premiums paid by physicians in the United States and Kentucky, when adjusted for inflation, essentially were flat for the 10 years ending in 2001, but increased last year.

– A few physicians have left Kentucky and attributed the decision to the costs of malpractice coverage, and the state has fewer doctors per capita than the national average. But the number of doctors per person in Kentucky has increased faster than in the rest of the nation since the early 1980s.

– The commission report cautioned that any legal changes are not likely to have an immediate impact on premiums or the number of physicians. It noted that other similar studies have reached mixed conclusions about caps on damages, but added that most were based on data from the 1970s or 1980s, and their conclusions might no longer be applicable.

The Kentucky Medical Association and the Kentucky Hospital Association have lobbied for the amendment bills, SB 1 and HB 316. They have been opposed by the Kentucky Academy of Trial Attorneys.

“It kind of contradicts the KMA and KHA position, doesn’t it?” Rep. Steve Nunn, a Glasgow Republican who sponsored HB 316, said of the draft report. He said its conclusions support his HB 8.

Told about the report’s findings, Marty White, a KMA spokesman, said, “We’ve never said that if you pass these reforms (caps on damages) that you’re going to reduce these premiums.” Instead, the KMA’s position is that limits on noneconomic and punitive damages would reduce “lotterylike awards” and give doctors predictable rates that don’t seesaw from year to year.

Charlie Moore, president-elect of the trial lawyers’ group, said the study “validates what we’ve been saying, that caps on damages do not result in a reduction in the doctors’ insurance premiums.”

Asked about review panels, he said that it would be unfair to plaintiffs to have their claims screened by doctors and that he has seen no data showing there is a significant number of frivolous malpractice suits in Kentucky.

“What I’m really concerned about as a citizen is the fact that this report was apparently suppressed,” he said. “When it doesn’t come out the way you want it from this supposedly independent outfit, you don’t let it see the light of day.”


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