GREENSBORO, N.C. (BestWire) – President Bush wants to address the crisis of rising medical-malpractice premiums by putting caps on awards in malpractice lawsuits.
One of the main reasons health-care costs are rising is a “broken” liability system, Bush said during a July 25 visit to High Point University, Greensboro, N.C. Bush said he didn’t want to take away a patient’s right to a fair trial and fair compensation and wouldn’t cap economic damages, according to a transcript of his speech. But the president wants jury awards for noneconomic damages limited to $250,000 and wants the same limit for punitive-damage awards. He said that type of standard has worked in individual states.
The president unveiled a new Health and Human Services study that said dozens of physicians are ending their practices in New Jersey, Pennsylvania and West Virginia. In Mississippi, no doctors are available to deliver babies in many communities.
During his speech, Bush talked about Dr. Shelby Wilbourn, a Las Vegas OB/GYN, who had never been sued and never had a claim filed against him but saw this year’s insurance premium rise to $108,000 from $33,000. “He’s closing his practice in Nevada and he’s moving to Maine, because the costs of doing business are about a quarter of what they were in Nevada,” the president said.
Bush’s proposal would also ensure that old cases can’t be brought years after an event; ensure that juries are informed if a plaintiff has other sources of reimbursement for an injury; provide that defendants pay judgments in proportion to their fault, and provide payments of judgments over time rather than in a single lump sum, to ensure that appropriate payments are there when patients need them.
His ideas are very similar to those in a bill introduced in the House by Rep. James Greenwood, R-Pa. His bill, the “Help Efficient, Accessible, Low-Cost, Timely Health Care” Act, would impose the same monetary limits on noneconomic and punitive damages that Bush is proposing (BestWire, July 22, 2002). Greenwood’s bill
would also limit the number of years a plaintiff has to file a health-care liability action to ensure that claims are brought while evidence and witnesses are available. The bill has more than 90 co-sponsors and support from advocacy groups representing physicians, hospitals, patients and the insurance industry.
The president’s proposal, as well as HR 4600, represents a common-sense solution, said Ken Schloman, Washington counsel for the Alliance of American Insurers. “The president’s call for medical-malpractice reform should certainly help the bill’s chances,” Schloman said. A brief hearing on the bill was held July 23, but it’s expected to get more attention when Congress returns from its summer break (BestWire, July 24, 2002).
Bush’s speech came in the home state of Democratic Sen. John Edwards, who criticized the president’s proposal as being protective of “big insurance companies.” Bush is proposing some of the smallest limits that have ever been proposed for families who have suffered tragedies, at a time when medical-malpractice premiums constitute “substantially less than 1% of medical-care costs” in the United States, Edwards said on the floor of the Senate, the same day Bush was in North Carolina.
Liability premium increases last year averaged 12% in states with caps and 44% in states without, according to the HHS study. Liability premiums for OB/GYNs in Florida, which has no caps, are $100,000-$200,000, but in California, which has caps, premiums are $46,000 to $57,000. Over the 25 years since California instituted its cap on noneconomic damages, liability premiums have increased by less than one third as much as in the rest of the country, according to HHS.
Jamie Court, executive director of the Foundation for Taxpayer & Consumer Rights, said that Greenwood’s bill mimics California’s medical-malpractice law, which he said has been denying victims of medical negligence in California both adequate compensation for their injuries and legal representation for legitimate claims since 1976. California’s limits for malpractice victims have led to medical-malpractice insurers paying out less than 50% of premiums to victims, Court testified during a July 17 hearing before the House Energy and Commerce Committee’s Subcommittee on Health.
The problem is “bad laws,” Bush said. The HHS study acknowledges that trial lawyers get 40% or more of the money, and most times, victims don’t get any money. For example, there have been more than 20 verdicts of $9 million or more in Mississippi since 1995, and individual cases in Pennsylvania and Mississippi have reached the $100 million level, HHS said.
Lawyers’ fees account for 40% or more of the multimillion-dollar
payouts; less than 30% of all the money that doctors pay in liability
insurance fees goes to patients, and patients must wait five years on average for these payouts–longer in cases that go to trial. This system rewards personal-injury lawyers who adopt a “lottery” strategy: seek out patients and encourage them to file lots of claims, even though the vast majority will have no merit and the patient will get nothing; and then encourage patients to wait it out through years of litigation for a small chance of a big win, HHS said.
The vast majority of medical liability claims –as much as 70%– don’t result in any payments to patients, according to the HHS study. Less than 2% of cases result in trial victories for plaintiffs, but each of these cases costs almost $25,000 on average to
defend, the study said. “Defensive” medicine –unnecessary tests and treatments that help avoid frivolous lawsuits but don’t improve patients’ health –adds many billions more to what’s spent on health care, HHS said.
Altogether, medical liability adds $60 billion to $110 billion to the cost of health care each year, through higher health insurance premiums and higher medical costs, and another $30 billion to $60 billion is added to what the federal government spends on programs such as Medicare, HHS concluded. It’s all money that could be redirected toward paying for drugs and other treatments; toward improving federal programs such as Medicare, and toward adding more than 2 million people to those who can afford health
insurance, HHS said.