After gaining control over the House of Representatives this past November, Republicans have been holding numerous hearings examining various provisions of the Affordable Care Act (ACT) and identifying areas an issues within the health care system that the legislation failed to address or did not adequately provide for. One of those areas, which Republicans recently addressed, was tort reform and the medical liability system.
Specifically, the House Committee on Energy and Commerce, Subcommittee on Health, held a hearing entitled, “The Cost of the Medical Liability System and Proposals for Reform, including H.R. 5, the Help Efficient, Accessible, Low-cost, Timely Healthcare (HEALTH) Act of 2011.”
In his opening statement, Chairman Joe Pitts noted how an article in Health Affairs in September 2010 titled, “National Costs of the Medical Liability System,” estimated that medical liability costs, including defensive medicine, were $55.6 billion in 2008 dollars, or 2.4 percent of total health care spending. He also cited from a study by the Kaiser Family Foundation, which showed that total payments on medical malpractice claims in 2009 totaled $3,471,631,100. The average claims payment for 2009 was $323,273.
At the hearing, the Subcommittee examinee the nation’s medical liability system and approaches for reform. During the hearing, the Subcommittee heard testimony from:
– Lisa M. Hollier, MD, MPH, Fellow, American College of Obstetricians and Gynecologists Professor and Director, Lyndon B. Johnson Residency Program, University of Texas Medical School at Houston
– Allen B. Kachalia, MD, JD, Medical Director of Quality and Safety Brigham and Women’s Hospital Harvard Medical School
– Troy M. Tippetts, MD, Past President, American Association of Neurological Surgeons
Past President, Florida Medical Association
– Brian Wolfman, Visiting Professor, Georgetown University Law Center. Co-Director, Institute for Public Representation
– Joanne Doroshow, Executive Director , The Center for Justice & Democracy
Background
A memo published by the Subcommittee prior to the hearing, provided background on the current medical liability system, examples of successful reform efforts, and comprehensive medical liability legislation. The memo recognized that America’s medical liability system is a significant part of the reason why America’s health care system has become too expensive. They noted that this is largely due to the practice of defensive medicine, which is the ordering of additional and often redundant tests and services to prevent future litigation.
In fact, the memo cited a study by the Massachusetts Medical Society, which found that 83% of the physicians surveyed reported practicing defensive medicine, and that an average of 18% to 28% of tests, procedures, referrals, and consultations, and 13% of hospitalizations, were ordered for defensive reasons. Some have estimated that defensive medicine costs our nation up to $200 billion a year. The memo also noted that the Congressional Budget Office’s (CBO) recent publication, Reducing the Deficit: Spending and Revenue Options, recognized that comprehensive medical liability reform would reduce the budget deficit by $62 billion over 10 years.
Additionally, medical liability also has an effect on the general economy because frivolous lawsuits make it even more difficult for businesses to remain profitable and for employers to create jobs.
Consequently, the memo noted how President Obama, on numerous occasions and speeches, has urged for medical liability reform. One step that was taken towards medical liability reform was Section 10607 of PPACA, which authorized $50 million over five years for the Secretary of Health and Human Services (HHS) to make grants to states for the development, implementation, and evaluation of alternatives to current tort litigation. The section also requires the Secretary, when reviewing a state’s grant application, to consult with a new review panel, which must include trial lawyers. However, Republicans noted that, “many Members do not believe that throwing $50 million at this issue will solve the problem, and in fact the CBO did not attribute any savings to the government because of this proposal.”
The memo did however recognize that some states have adopted comprehensive medical liability reforms, which include caps on non-economic damages, and reported tremendous results. Two examples are Texas and California.
Texas adopted comprehensive reform, including caps on non-economic damages, in 2003, and these reforms have yielded remarkable outcomes, including an increase in new physicians, additional obstetricians, and reduced medical liability premiums. From 2003 through 2009, the Texas Medical Board saw an increase of roughly 60% in their new physician licensure applications. While other states were losing obstetricians, Texas actually gained obstetricians. The number of obstetricians in Texas increased by 218 between 2002 and 2009 to a total of 2,444. Finally, doctors in Texas saw their medical liability insurance rates decrease by over 40% from 2004 through January 2011.
California enacted comprehensive reform, the Medical Injury Compensation Reform Act (MICRA) in 1975. MICRA included caps on non-economic damages, limits on trial lawyer contingency fees, periodic payment of future damages and introduction of collateral source evidence. From 1976 to 2009, while medical liability insurance premiums in the other 49 states rose a total of 945%, those in California only increased by 261%.
Comprehensive Medical Liability Legislation – H.R. 5
The memo then discussed H.R. 5, which the House Judiciary Committee reported on March 17, 2011. H.R 5 mirrors the provisions of MICRA and includes the following provisions:
- H.R. 5 would require a plaintiff to file a lawsuit within 3 years of the manifestation of injury or 1 year after the claimant discovered the injury, whichever occurs first.
- H.R. 5 would enable a plaintiff to recover his or her full economic loss, but it would limit a plaintiff from recovering more than $250,000 in non-economic damages. H.R. 5 also would establish a fair share rule that apportions damages based on a defendant’s degree of fault.
- H.R. 5 would establish sliding scale limits on attorney contingency fees.
- H.R. 5 would allow a party to introduce evidence of collateral source benefits to prevent double recovery.
- H.R. 5 would set standards for the award of punitive damages, including a limit on the amount of punitive damages to two times the amount of economic damages awarded or $250,000, whichever is greater. Punitive damages are not intended to compensate the injured party but rather punish malicious behavior. H.R. 5 would limit punitive damages to instances where a person acted with malicious intent or deliberately failed to avoid injury that was substantially certain to occur.
- H.R. 5 would allow courts to require periodic payments of damage awards.
- H.R. 5 would not preempt any state statutory limit on the amount of compensatory or punitive damages (or the total amount of damages) awarded in a health care lawsuit.
Discussion
Ultimately, meaningful medical liability reform will live or die on fickle politicians who want everyone to like them. In the future we may see this dream come true but for now we have divided government and the division willl work against tort reform from becoming a reality.