President will renew the argument that limits on lawsuit payouts will curb medical costs.

The Los Angeles Times

WASHINGTON: In West Virginia, surgeons in four hospitals walked off their jobs Jan. 1; some have returned to work, but doctors in other facilities are threatening to join the job action.

This unusual method of protesting soaring premiums for medical malpractice insurance is a dramatic example of American health care at a critical juncture.

President Bush will join the debate anew today, calling for legislation to sharply curtail payouts in medical malpractice suits.

The measure, which stalled in the last session of Congress, is seen by its advocates as a key step in holding down medical costs. Its foes view it as motivated more by the GOP’s long-standing desire to limit damages awarded in lawsuits.

The issue sets doctors, whose primary political action committee gave heavily to Republicans last year, against trial lawyers, whose PAC gave even more heavily to Democrats.

After contributing more than $5 million to candidates for federal office, the two groups are trying to sway a debate that will likely become one of the administration’s central domestic policy issues this year.

Consumer advocates, meanwhile, argue that at least some of the fault for the increase in premiums lies not with doctors, or with lawyers representing malpractice victims, but rather with lagging returns on insurance company investments.

Just about the only element on which everyone agrees is that premiums are growing.

In Florida in 2000, internists paid, on average, $34,635 for malpractice insurance; last year, the figure rose to $56,153, according to Medical Liability Monitor, which tracks medical insurance issues. Over the same period, rates increased in Nevada from $15,804 to $23,628 and in West Virginia from $13,726 to $18,477.

And for doctors in such high-risk specialties as surgery and obstetrics, the rates are much higher: Obstetricians pay $210,576 in Florida and $95,282 in West Virginia, for example.

In California, where awards in certain malpractice lawsuits have been limited since 1975 to no more than $250,000, premiums are much lower. Still, some specialties have seen an increase over the last three years — for example, from $32,507 to $57,473 for surgeons.

In addition to the West Virginia walkout, physicians protesting rising premiums forced a 10-day shutdown of southern Nevada’s only trauma center in July.

Bush waded into the thicket of medical malpractice insurance premiums once before.

Six months ago, in a speech in North Carolina, he argued that strict limits on lawsuits would save tens of billions of dollars, lowering insurance premiums across the board. This, he said, would produce a ripple effect that would help senior citizens pay for prescription drugs and extend health coverage to millions of uninsured Americans.

His focus then, as it is likely to be today when he speaks at a hospital in Scranton, Pa., was legislation sponsored by Rep. James C. Greenwood (R-Pa.) that would have limited the number of years a plaintiff has to file a lawsuit; allocated damages in proportion to a party’s degree of culpability; imposed a $250,000 limit on noneconomic damages; and limited punitive damages to $250,000 or twice the amount of economic damages, whichever is greater.

Noneconomic damages are those generally awarded for “pain and suffering,” rather than for medical costs or lost wages. The insurance industry argues that such damages have soared in recent years, with payments of $1 million or more increasing by 600% in the late 1990s.

The House narrowly approved Greenwood’s measure; the Senate did not act on it. Greenwood plans to reintroduce it later this month, a spokeswoman said.

The cost of medical malpractice premiums is the top concern of 29% of doctors, according to a survey last year by the Henry J. Kaiser Family Foundation and the Harvard School of Public Health.

“The American Medical Assn. believes the medical liability system is broken,” said Donald Palmisano, the organization’s president-elect. He said it offers “jackpot” payouts while hampering access to health care across an entire state because large jury awards lead to higher insurance premiums that drive up all doctors’ costs of practicing.

And, say those who favor limiting malpractice awards, the insurance industry itself is put at risk if there are no restraints.

Richard E. Anderson, chairman of the Doctors Co., a physician-owned Napa, Calif., firm that insures doctors in all 50 states, said that in 2001, the average insurance company paid out approximately $1.40 in claims and expenses for every $1 it collected in premiums.

Much of the criticism of the increased premiums is directed at trial lawyers representing plaintiffs.

Carlton Carl, a spokesman for the Assn. of Trial Lawyers of America, said, however, that insurers raised premiums “to recoup investment losses.” The American Insurance Assn., in response, says that in 2000, the most recent year for which data are available, companies writing malpractice policies placed no more than 11.5% of their investments in corporate stocks.

Payouts have been “relatively constant” since 1985, Carl said, while premium rates have increased over the years as interest rates and returns on stocks and bonds have fallen.

He argued that limits on insurance payouts would punish victims of malpractice, and that, in any case, $250,000 was too low.

“For what kind of injuries does a jury give more than $250,000? It’s not a scar on your cheek. It’s someone cutting off the wrong leg,” he said.

Jamie Court, executive director of the Foundation for Taxpayer and Consumer Rights, a consumer advocacy group in Santa Monica, said the plan Bush is supporting is a “payback to medical malpractice insurers, HMOs, hospitals and doctors” for their political support.

“If you want to solve an insurance problem, rein in corporate profits,” he said. “Don’t blame the victims.”