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Is capping jury awards the best medicine?

Wilkes Barre Times Leader

As a new governor and General Assembly prepare to address skyrocketing malpractice premiums that doctors say are driving them out of Pennsylvania, lawmakers might heed two lessons from states that have attacked the problem with caps on jury awards and other restrictions:

Number one, tort reform might restrain increases in doctors’ insurance costs, but it’s unlikely to lower them.

Number two, passing tort reform won’t end the debate over tort reform.

In 19 states that have placed restrictions on damage awards to people who sue their doctors, arguments continue to rage about whether those restrictions and other reforms have had the desired effect of preventing frivolous lawsuits, extravagant jury awards and enormous insurance premiums.

“The idea that limiting the constitutional right to civil justice is somehow going to fix the economy or change the level of malpractice premiums is not supported by facts,” said Jesse Green, spokesman for the Michigan Trial Lawyers Association. “I would say the entire concept of tort reform is a misnomer. I call it tort deform.”

Fifteen years ago, doctors in Michigan made the same arguments doctors in Pennsylvania are making now – that rising insurance rates would force them to curtail elective surgeries, stop taking new patients and ultimately give up their practices or move to other states, Green said.

“After legislators had been frightened into enacting tort reform, folks who did studies afterward, usually journalists, found out that doctors had not been fleeing the state. This is nothing more than a propaganda campaign.”

Over the years, Michigan has capped non-economic damages – payments for pain and suffering, separate from payments for lost wages – and passed other rules to make it harder to file malpractice suits.

Despite those changes, malpractice premiums in Michigan are higher, in most cases, than in Pennsylvania, according to the Medical Liability Monitor, an independent Chicago publication that has tracked insurance rates for 26 years.

But Michigan’s doctors saw rates rise by only 8 to 14 percent this year, compared to the 40- to 45-percent increases in Pennsylvania, the Monitor reported.

Monitor Editor Carol Brierly Golin says state-to-state comparisons are tricky, because of differences in populations, economies and legal systems.

But the Monitor’s 2002 report did show that states with caps on damages saw smaller increases in malpractice premiums than other states in the preceding year.

“We don’t have any ties to any organization. We don’t take advertising. We don’t take a position pro or con on tort reform,” Golin said. “We just did it to see how it would shake out. And it shook out just the way we thought it would.

“A cap on non-economic awards seems to hold the rates down.”

Subhead: Doctors look to California system

An awards cap for Pennsylvania is just one of the measures that could be considered in January after the state General Assembly begins a new session and Gov.-elect Ed Rendell takes office. Earlier this year, the state placed new time restrictions on the filing of malpractice suits, gave judges more leeway to lower jury awards and prohibited “jury shopping” – suing in a county other than the one in which an injury took place.

But Pennsylvania doctors say those measures haven’t gone far enough. They advocate legislation similar to California’s Medical Injury Compensation Reform Act, otherwise known as MICRA. The 1975 law caps non-economic damages at $250,000, limits lawyers’ fees and allows for binding arbitration of some suits.

“The California model is the model the AMA recommends for the nation,” said Dr. Donald Palmisano, president-elect of the American Medical Association.

Palmisano acknowledged that rates in California have risen too, but not as sharply as in states without caps.

In California and five other states with caps that are not adjusted for inflation, increases have been relatively flat, he said.

“These states have had stability. It means the rates do not increase at the skyrocketing rates seen in other states.”

California’s law also is the model for pending federal legislation that would impose caps on non-economic malpractice damages in states that don’t have their own caps, Palmisano said.

Still, California’s law has been subject to numerous legal and legislative challenges during the past 27 years.

Critics say the law discriminates against low-income plaintiffs, who typically don’t win large awards for economic damages – damages based on estimates of future wages lost because of injury. And because California juries are not advised of the cap before they deliberate, jurors are unaware that the millions they might award in non-economic damages will be drastically reduced by a judge.

“Caps make taxpayers foot the bill for malpractice,” Jamie Court, executive director of the Foundation for Taxpayer and Consumer Rights, told a Congressional committee recently.

“Malpractice victims receive full compensation only for medical bills and lost wages. But those who are not wage earners – such as seniors, women, and the poor – have no other resource from which to pay for unforeseen medical expenses and basic needs. A cap forces malpractice victims to seek public assistance from state or federal programs funded by taxpayers.”

Court testified that California’s insurance companies haven’t passed on the savings from tort reform to doctors by reducing rates.

“In most years … California malpractice insurers have paid out in claims less than 50 cents of every dollar they have taken in through premiums. By contrast, malpractice insurers nationally have typically paid out in claims more than two-thirds of every premium dollar.”

But Danielle Walters, executive director of Californians Allied for Patient Protection argues tort reform has enabled California insurers to spare doctors the huge premium increases experienced in other states.

“Since … 1975, we’ve gone up 168 percent, whereas the nation has gone up over 400 percent.”

Walters said the critics’ most dire prediction about tort reform – that it would shut injured patients out of the court system – have simply not come true.

The number of malpractice suits, relative to California’s growing population, has remained steady, she said. Every year, one in five California doctors is sued for malpractice.

“We are still a very litigious state.”


Dave Janoski, Times Leader associate editor/investigative reporter, can be

reached at 829-7255 or [email protected]

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