The News & Advance (Virginia)
As a young doctor, Stuart Harris never thought his colleagues would face costly legal battles for treating patients.
The few malpractice lawsuits he had heard about involved doctors who shouldn’t have been practicing medicine in the first place.
Back then, he said, “if the patient had a bad outcome, it was almost considered God’s will.”
But that was in 1958 when Harris was fresh from medical school at the University of Virginia and starting his residency, first at Brigham and Women’s Hospital in Boston and later at the UVa Medical Center in Charlottesville.
Nowadays, he said, doctors spend tens of thousands per year to protect themselves against patients who are willing to sue if they think, rightly or wrongly, that they’ve been hurt while under a doctor’s care.
Lynchburg doctors, on average, spent almost $50,000 on medical malpractice insurance this year, nearly a 40-percent jump from 2002 when rates hovered around $34,000, Harris said.
Such high insurance costs, doctors say, may force them out of the profession altogether. Those who stay have fewer choices among insurance carriers who are increasingly finding medical insurance underwriting unprofitable.
In fact, two companies have left Virginia. The St. Paul Fire and Marine Insurance Co. left last year and the Reciprocal Group announced last month it was leaving.
One solution that state and federal lawmakers are considering follows a 1975 California law known as the Medical Injury Compensation Reform Act, or MICRA, which caps jury awards for pain and suffering at $250,000.
Tangible costs, such as medical bills and lost income, aren’t capped to ensure victims are adequately compensated for serious injuries.
To curb frivolous malpractice lawsuits, the plan also bases attorneys’ fees on a sliding scale that decreases as jury awards increase.
“It stands as a point of reference,” said Sen. Steve Newman, R-Lynchburg, who has announced plans to host a series of medical malpractice insurance summits starting next month. The summits will include physicians, business leaders and attorneys to discuss whether Virginia should adopt the California plan.
Consumer groups, who were left off Newman’s initial list, will be added before the advisory committee’s first meeting, he said.
Virginia currently limits total jury awards to $1.6 million for both economic – loosely defined as lost wages and medical bills – and non-economic damages.
Newman proposes removing the cap on economic damages to ensure that people suffering from a doctor’s negligence are compensated, while limiting non-economic awards.
Details have yet to be worked out, but Newman said he expects the non-economic damage cap to be some level above California’s $250,000 limit to keep awards in line with inflation.
A federal plan approved by the U.S. House of Representatives in March expands California’s program nationwide. The U.S. Senate has yet to take up the proposal.
“These companies insure across the country,” said U.S. Rep. Bob Goodlatte, R-6th. “The effect of that has been to raise rates in virtually every state.”
If the state has a separate system of capping liability, he added, the federal provisions wouldn’t apply.
In the end, the burden gets passed to policy holders.
Rob Taylor of Taylor Brothers, a Lynchburg lumber and building company, sees firsthand how malpractice premiums affect his company’s health care policy.
In the past three years, Taylor Brothers’ health care costs have undergone double-digit increases, which he partially blames on malpractice insurance costs.
His company has absorbed them thus far, but future rate hikes will likely be passed on to his employees, he said. Unless something changes, they may decide health care coverage is beyond their reach financially.
“The employees can’t afford another increase,” he said. “If they have a choice they’re going to have money to go to the grocery store.”
Personal injury attorneys disagree with the medical and business communities, saying caps aren’t the answer to reducing high insurance premiums.
Capping non-economic awards unfairly singles out the most vulnerable people in society, said Jeff Krasnow, a personal injury lawyer in Roanoke.
Children, the elderly and low-income individuals who are hurt would lose without adequate jury awards that take their losses into consideration.
“My concern isn’t how this affects my colleagues and I. My concern is how it is going to affect the people who are injured,” he said. “It’s going to affect people who don’t have wages and weren’t working when they were injured.”
He cited a case involving a man who is paralyzed because of a doctor’s negligence.
“Do you seriously believe that $250,000 is fair and adequate compensation for having to spend the rest of his life in a wheelchair, unable to care for himself?” he asked. “Would you think that way if it was you?”
Personal injury lawyers get paid by the case, not by the hour like their counterparts who defend doctors and the insurance industry.
And unlike California’s sliding scale system, Virginia attorneys generally negotiate their fees with the client. There is no regulatory oversight over how much they receive from an award. The usual cut is 40 percent plus expenses, and they only get paid if they win.
Krasnow said he can easily invest $60,000 in a lawsuit and must consider that cost when he talks to a client.
“You have to choose your cases carefully,” he said.
That philosophy concerns Bevin Alexander and Henry Sackett, both attorneys who get paid by the hour by insurance companies and doctors to defend them against malpractice lawsuits.
“The plaintiff attorneys, in my opinion, are worried about those fees,” Sackett said. “There’s a whole lot of self-interest involved in that.”
While Virginia doctors struggle with double-digit insurance hikes, and lawyers on both sides argue the merits of tort reform to reduce those costs, insurers continued to increase premiums at a rapid pace, regardless of caps, according to a report released last week by Weiss Ratings Inc., an independent analysis group based in Florida.
“We’re not necessarily against caps, we just don’t think caps are the one simple answer. It’s not the silver bullet that will solve all the problems,” said Stephanie Eakins, an analyst with the independent ratings group.
Eakins was one of three authors of a nationwide study on malpractice caps, released the same day Newman announced his plan.
The report unexpectedly found that from 1991 to 2002, physicians in the 19 states with caps, including Virginia, witnessed a 48.2 percent jump – $20,414 in 1991 to $30,246 in 2002 – in median premium payments. Premiums increased less in states without caps, rising from $22,118 to $30,056 over the same period, or 35.9 percent.
As expected, the report states, insurers paid out less to victims in states with caps than states without them. The median payout in states without caps increased 71.3 percent to $150,000 in 2002, while payouts increased by 37.8 percent to $110,000, in states with caps.
“Tort reform has failed to address the problem of surging medical malpractice premiums, despite the fact that insurers have benefited from a slowdown in the growth of claims,” said Martin D. Weiss, chairman of Weiss Ratings. “The escalating medical malpractice crisis will not be resolved until the industry and regulators address the other, apparently more powerful, factors driving
premiums higher.”
Doug Heller, senior consumer advocate for the Foundation for Taxpayer and Consumer Rights in California, said one of the factors should involve regulatory oversight of the insurance industry to stabilize the rates.
“It’s not the behavior of victims that affect premiums, it’s the behavior of the insurance companies,” he said.
The MICRA plan, he warns, failed to lower premiums by itself. It needed a boost from a 1988 proposal, known as Proposition 103, which rolled rates back to pre-1987 levels and froze them for a period of time to stabilize them.
Insurance companies must now justify rate increases to the California insurance commissioner and offer the public an opportunity to challenge rate increases before approval.
As a result, he said, California’s insurance premiums move “at a relatively stable rate as opposed to wild fluctuations” that doctors see today in other states.
Newman didn’t address a similar proposal when he announced his intention to tackle medical malpractice insurance in Virginia, saying it’s not the right time to look at that measure.
He said states like West Virginia that tried to regulate insurance companies ended up driving them away, leaving even fewer choices for doctors.
He acknowledged, however, that some oversight may be necessary to fix the problems.
“I’m most pleased to look at them both,” he said.
For Taylor, who is facing increased premiums for a fourth year, reforms can’t come soon enough.
“Somebody’s got to put all this together before the government runs it,” he said.
