Despite Financial Conflict of Interest, Frist Fails to Address Call to Recuse Himself From Damage Cap Vote

Santa Monica, California — Senate Majority Leader Bill Frist should recuse himself from any vote on legislation which would impose a damage award cap on medical malpractice victims due to conflict of interest, according to a letter sent by the Foundation for Taxpayer and Consumer Rights (FTCR) Thursday. Senator Frist has failed to respond to FTCR’s letter, which cites the Frist family-founded HCA hospital chain, and the company’s medical malpractice insurer, Health Care Indemnity (HCI), that stand to gain millions if their liability for medical mistakes is limited.

The Frist family fortune was built on HCA, and Senate financial disclosures reveal that Senator Frist and his immediate family hold at least $25 million in HCA stock, according to a report in USA Today.

“While HCA hospitals and doctors would benefit were Congress to limit malpractice liability, its gains pale in comparison to those of HCI. The insurer’s risk would plummet while profits soared if a medical malpractice cap to limit the company’s losses were imposed nationwide,” said FTCR’s letter, below. “HCI, HCA and your entire family, stand to profit directly from the passage of malpractice caps legislation.”

Senator Frist brought Nevada Senator Ensign’s S. 11 to the Senate floor today, circumventing customary public hearings and debate. The bill is modeled after H.R. 5, malpractice cap legislation which passed the House of Representatives in March and would limit non-economic damages for victims of medical malpractice to $250,000.

“If you can explain why your actions, which would increase your family fortune, your own investments and perhaps your inheritance, are not a conflict, we urge you to bring that explanation to the public at once,” continued the letter. “The only alternative is to immediately recuse yourself from the upcoming vote on S. 11, to refrain from advocating for the proposal or otherwise participating in the malpractice debate, and to abstain from any vote on similar legislation in the future.”

HCI is the nation’s fifth-largest medical malpractice insurance company, and stands to save millions in claim payouts on the approximately $260 million in malpractice premiums it writes annually. HCA is the nation’s largest for-profit hospital chain with approximately 200 hospitals and 70 surgery centers nationwide. Malpractice cap legislation would substantially reduce HCA’s liability; the company currently pays approximately $300 million in claims each year.

FTCR has urged Congress to pass strong insurance reform, not limits on victims’ rights, to stabilize doctors’ increasing malpractice premiums. Industry data in the group’s recent report on California medical malpractice premiums show that rates rose 450% after the passage of a malpractice cap. Only after the voters approved insurance reform initiative Proposition 103, which included strict rate regulation and a mandatory rate rollback, did malpractice premiums drop and then stabilize for California physicians. Read the report.

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FTCR’s Letter to Senate Majority Leader Bill Frist

July 3, 2003

Senate Majority Leader Bill Frist
United States Senate
Washington, D.C. 20510

Via facsimile and US mail

Dear Senator Frist:

We are deeply troubled by the conflict-of-interest between your active support for legislation that would impose a damage award cap on medical malpractice victims, and your personal financial interest in companies that will profit from limits on medical liability. We believe that you should immediately recuse yourself from pending votes on liability caps and further involvement in the medical malpractice debate.

As reported by USA Today*, your family’s vast fortune is thoroughly intertwined with that of the nation’s largest for-profit hospital chain, HCA , founded by your father and brother. Though most of your personal assets are in a blind trust, Senate financial disclosures reveal that you and your immediate family own more than $25 million in HCA stock.

We have previously called to light the dubious position your financial and familial attachments to HCA put you in with respect to healthcare-related legislation. The company’s integrity was impugned, perhaps indefinitely, when it paid a combined $1.7 billion penalty in the largest fraud case in United States history.

However, we have only recently become aware of the full extent of your conflict-of-interest with respect to the upcoming Senate debate on medical malpractice liability caps. HCA’s wholly-owned subsidiary, Health Care Indemnity (HCI), is the nation’s fifth-largest medical malpractice insurance company, writing $260 million in medical malpractice premiums. The company provides liability insurance for HCA-affiliated physicians, hospitals and other facilities.

While HCA hospitals and doctors would benefit were Congress to limit malpractice liability, its gains pale in comparison to those of HCI. The insurer’s risk would plummet while profits soared if a medical malpractice cap to limit the company’s losses were imposed nationwide. HCI, HCA and your entire family, stand to profit directly from the passage of malpractice caps legislation.

You have used your prominent public position to be a primary advocate for medical liability caps. If you can explain why your actions, which would increase your family fortune, your own investments and perhaps your inheritance, are not a conflict, we urge you to bring that explanation to the public at once.

The only alternative is to immediately recuse yourself from the upcoming vote on S. 11, to refrain from advocating for the proposal or otherwise participating in the malpractice debate, and to abstain from any vote on similar legislation in the future.

As Majority Leader, you have an obligation to uphold and protect the integrity of the United States Senate. If you remain involved in the medical malpractice debate, without clearing all appearance of a conflict, the vote, and the Senate itself, will be tarnished by your personal economic interest in the outcome of this contentious legislation.

As the malpractice cap proposal is expected to be introduced as early as the beginning of next week, we expect your response by Monday, July 7.

Sincerely,

Carmen Balber Douglas Heller

*”Few question Tenn. senator’s ability to lead; Frist’s toughness impresses members of both parties,” USA Today Dec 23, 2002