California gives insight on medical malpractice;

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The Tallahassee Democrat

Michael Staszel aimed to be the classic family doctor. When he started a solo practice in Deerfield Beach, he limited the number of patients so he could devote plenty of time to each one.

Despite a lack of claims against him, his annual medical malpractice insurance premium shot up from $7,000 to $20,000 in a few years and was headed for $30,000. Staszel restricted his exposure to lawsuits by no longer seeing patients in the ER, hospital or nursing home, but it didn’t reduce his premium.

So he left Florida.

Today Staszel, 35, works in a walk-in health clinic in rural Anderson, Calif. His malpractice bill, paid for by his employer, is $28,000 – but provides four times as much insurance coverage as it would have in Florida.

“In training, I worried about how to treat people and improving my skills. Then I was thrown into a business arena that eats you alive,” Staszel said of his Florida days.

California is the land of lower medical malpractice insurance rates.

A California obstetrician/gynecologist in 2001 paid on average $45,000 for medical malpractice coverage, half what this high-risk specialist was billed on average in other major states such as Texas, New York, Florida, Illinois and Michigan, according to a California Medical Association survey.

As Florida prepares for a legislative special session starting June 16 on medical malpractice reform, California is worthy of examination as a laboratory on how lawmakers and voters dealt with the issue.

Damage awards to California malpractice victims are much lower than the nation as a whole. California malpractice victims find it more difficult to get legal representation. And, believe it or not, many California physicians are unhappy and want to leave the profession – despite lower malpractice premiums.

Two separate reforms

Twenty-eight years ago, California passed a $250,000 cap on noneconomic, “so-called “pain and suffering,” damages in medical malpractice lawsuits. Gov. Jeb Bush, when introducing his 51-page bill containing a $250,000 cap on noneconomic damages, complimented the Golden State for doing something right.

But if one expects easy answers, California is a cautionary tale.

Debate still rages in California about whether affordable malpractice premiums are due to the legislature’s decision in 1975 to impose a $250,000 cap or voter-mandated insurance reform in the 1980s that rolled back rates.

For John Whitelaw, past president of the California Medical Association, there is no doubt what works.

“The cap is the key,” said this Sacramento obstetrician/gynecologist who has been in practice since 1974. “You don’t have these huge lotteries with the trial bar trying to convince the jury to award huge noneconomic damages.”

Less well-known is that the 1975 law implementing the cap on noneconomic damages (known as the Medical Injury Compensation Reform Act, or MICRA) contains other provisions substantially affecting how medical malpractice awards are decided in California.

The law doesn’t limit compensation for medical care. But it allows economic damages compensating for lost wages to be paid by the insurer on an installment plan, rather than a lump sum. If the patient dies before the amount is fully paid, unpaid economic damages evaporate – a blow to survivors and a boon to insurers.

Additionally, the law limits attorneys’ fees on a sliding scale. Attorneys collect only set percentages of the damages, and the percentages go down as the award goes up.

From 1975 – when the cap on damages was OK’d by the California Legislature – to 1988, medical malpractice premiums in the state soared 450 percent.

Those who like the cap say those were shakeout years, as the law was challenged piece by piece in the state Supreme Court. Finally, they say, the law was upheld, and its impact was felt.

One result of the cap and other restrictions: California medical malpractice victims receive significantly less compensation than victims in other states.

“Our state is blessed with the fact the average settlement is 53-percent less than the average U.S. settlement,” Whitelaw said.

Bruce Brusavich, president of the Sacramento-based Consumer Attorneys of California, called that “a disaster for the victims of malpractice.”

The cap on noneconomic damages “hurts women, stay-at-home parents and the elderly – people who can’t show an economic wage loss – regardless of the outcome and how blatant the malpractice,” Brusavich said.

A recent survey of 100 California lawyers who represent victims revealed they routinely reject potential medical malpractice clients with apparently meritorious cases purely for cost reasons, Brusavich said. Small cases yield too little to attorneys – and the big cases require lawyers to do so much that they don’t generate enough money to make them worth the effort, he said.

Insurance reform

Another view of why malpractice insurance rates have dropped is that tough insurance reform, including a 20-percent rate rollback, is the real reason insurance is affordable in California.

“We are the poster child for the nation, but everyone is looking at the wrong poster,” said Doug Heller, senior consumer advocate for the Santa Monica-based Foundation for Taxpayer and Consumer Rights. “The solution to soaring medical malpractice rates is not to limit injured victims’ rights but a real-solution limit to insurance companies’ rates.”

California voters in 1988 passed an insurance reform ballot measure known as Proposition 103. Aimed at curtailing costs in various types of property and casualty insurance, not only medical malpractice, it established an elected insurance commissioner; mandated the rate rollback; required rate increases of more than 15 percent to be justified; and allowed consumers and policyholders to independently challenge rate increases (with the insurer required to pay the
cost of the challengers’ actuary).

“The important part of Proposition 103 is consumers have the right to challenge,” Heller said. He observed that by contrast, “Doctors don’t have any tool to fight back against insurance companies, so they fight back against their patients.”

Compromise tough

A proposed $250,000 cap on noneconomic damages in Florida remains the major obstacle to political compromise on medical malpractice reform.

Bush and the House have refused to accept any legislative solution without the absolute cap on noneconomic damages, and they have the powerful medical lobby behind them.

“Probably slim or none,” said Senate Majority Leader Dennis Jones, R-Seminole, of the chances that the Senate will budge from its opposition to a flat $250,000 cap on “pain and suffering.”

Jones, a chiropractor assigned by Senate President Jim King to take the lead in the upcoming session on medical malpractice, said the Senate instead may look at a cap that is “reversible by a jury or a judge.”

During the regular session, one of the Senate’s malpractice bills did have a $100,000 cap on all damages, but only for emergency-room physicians.

Bush in his new bill has for the first time embraced a rate rollback – but one with strings.

It would require an average 20-percent rate rollback as of Oct. 1, yet the 20 percent would not have to apply equally to all doctors.

Essentially, insurers could bring relief to relatively low-risk physicians such as dermatologists and shortchange the surgeons. And if insurers contend they are not being allowed a reasonable rate of return, the governor’s rollback would not take effect.

The Senate approved its own rate rollback in legislation during the regular session. It will begin working off its own medical malpractice bills in the special session – not Bush’s.

King urged independent thinking Wednesday when he e-mailed all 40 senators to alert them about a six-hour briefing from stakeholders on the issue scheduled for the session’s opening day.

“There is no question that Florida is facing a serious crisis in health care. What is in question is how to remedy it….Whoever can get 21 votes – and hold them – will get the opportunity to shape the ultimate Senate product,” King said. “The issue before us is extremely complex. Each of the stakeholders can prove ‘beyond a shadow of a doubt’ the correctness of their position. It will be up to each senator to balance the problems versus the solutions.”

Over in the House, Policy Chair and Procedures Committee Chairman Dudley Goodlette, R-Naples, is leading the charge and doesn’t expect his chamber to deviate significantly from its previous malpractice bill. The governor’s bill has “some aspects we like, some aspects we think the approach in the House was a more palatable resolution,” said this attorney.

Of California’s success with curbing medical malpractice rates, “That’s why our own approach in the House contemplates both caps and insurance reform to establish a more robust market,” Goodlette said.

Unhappy docs

In meditative moments, Staszel wonders whether more is going on than a medical malpractice crisis. Soaring premiums were the final insult that drove him from Florida. But the stress of fighting for insurance reimbursements, dealing with managed care and being forced to crowd in more patients to stay solvent disillusion many doctors besides himself, Staszel said.

His thinking is borne out by the results of a 2001 survey of California doctors. It found that despite affordable malpractice premiums, 43 percent of the 2,307 doctors polled plan to leave medical practice in the next three years, 58 percent have difficulty attracting physicians to their practice and two-thirds advise their children to avoid the profession.

Low reimbursement, managed care hassles and government regulation are their greatest sources of dissatisfaction.

And Staszel muses, “If you are in a rush, you are overlooking something. Now the patient doesn’t trust you. He is dissatisfied with the care. And a patient is a lot more willing to sue if he doesn’t get what is promised. It’s contributing in my opinion to the courts’ being cluttered with more cases.”


  • Imposes $250,000 cap on noneconomic “pain and suffering” damages
  • Orders 20-percent rate rollback no later than Oct. 1, 2003 (not required to apply to all policies or risk classifications)
  • Provides sovereign immunity for doctors and hospitals providing emergency care
  • Allows for payment of noneconomic and economic damages in installments
  • Requires health-care providers to inform patients about unanticipated outcomes resulting in serious harm
  • Makes it easier for Board of Medicine to discipline doctors
  • Repeals clause in medical malpractice policies allowing insurers to settle cases without permission of the insured
  • Establishes “bad faith” by insurers that fail to pay claims
  • Removes prohibition on doctors’ self-insurance funds
  • Senate’s bills (SB 560,562 and 564) passed in regular session:
  • Caps damages awarded against emergency room doctors at $100,000 and against hospitals providing ER care at $2.5 million
  • Requires rollback of medical malpractice insurance rates to Jan. 1, 2002, levels
  • Allows rate increases only if Office of Insurance Regulation determines rates are inadequate
  • Requires new rate filing Jan. 1, 2004, to reflect impact of new medical malpractice legislation
  • Defines excessive insurance profits and requires refunds to policyholders
  • Requires Web posting of closed claims, financial information on insurers and final disciplinary actions against physicians
  • Allows for creation of Florida Medical Malpractice Insurance Fund if insurance is unaffordable, unavailable on private market

House bill (HB 1713) passed in regular session:

  • Imposes $250,000 cap on noneconomic “pain and suffering” damages
  • Requires physicians to notify patients of adverse outcomes
  • Defines excessive insurance profits and refunds them to policyholders
  • Requires insurers to file rates annually
  • Creates Health Care Professional Liability Insurance Facility to provide excess coverage
  • Removes prohibition on doctors’ self-insurance funds

Contact Capitol reporter Diane Hirth at (850) 599-2243 or [email protected]

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