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Medical Malpractice Liability Reform - No Easy Task


Few people would disagree that the current state-specific medical liability systems throughout the United States are slated for significant changes to address what many have termed the "medical malpractice crisis." (1) Although there seems to be consensus regarding the breadth of the so-called crisis and the need for successful reform, there is little agreement regarding which methods of change will result in the most effective strategy for medical malpractice reform. The fact that more than 400 legislative bills on this topic were filed in 48 states in 2005 is indicative of the diverse, and oftentimes contentious, solutions to reform. (2)

The numerous solutions suggested by state legislators illustrate that medical malpractice reform is a multidimensional issue that cannot be resolved with one distinct strategy. Legislators must take a number of factors into consideration when proposing medical malpractice reform strategies, making the task both complex and controversial. Among the many elements that factor into the reform strategies are economics (eg, rising health care costs, increased medical malpractice insurance premiums, jury awards in malpractice lawsuits); patient rights (eg, access to quality health care, compensation for negligent medical acts); regulatory aspects (eg, of physicians, the insurance industry, attorneys); and the affect of the proposed law on existing laws both at the state and federal levels.

Current Medical Malpractice Laws

This article explores some of the reform strategies that state governments have adopted, including the elements of the medical malpractice system the state legislatures intended to change. It also provides a brief discussion regarding the states in which medical malpractice reform initiatives are anticipated to continue during the 2006 state legislative session. Overall, this article explores the extreme complexity and political polarization that state legislators face in attempting to successfully achieve medical malpractice liability reform.

Damage caps. One of the common approaches to medical malpractice reform adopted by states is to implement damage caps. Damage caps limit the amount of money a patient can receive as compensation for injury(ies) suffered as a result of an alleged negligent medical act. Approximately 32 states have laws that cap specific types of compensatory damage awards in medical malpractice cases. (3) Many of these laws restrict the amount of money that a patient can receive for noneconomic damages or what is often referred to as "pain and suffering." (4)

For example, Alaska, California, Idaho, Kansas, Montana, Ohio, Texas, and West Virginia laws prohibit a patient from receiving more than $250,000 for noneconomic damages. (3) One rationale behind noneconomic damage caps is that because such damages are extremely difficult to quantify, a jury often will inflate the award to the injured patient. In turn, such awards are believed to increase the costs associated with medical malpractice insurance (eg, increased medical insurance premiums that then create increased health care costs). (4)

Other states, including Colorado, Indiana, Louisiana, Nebraska, New Mexico, and Virginia, have laws that apply in all injury-related cases, medical liability Included, that cap the monetary amount that an injured patient can receive for all damages, both economic (eg, lost wages) and noneconomic. (4) Further, a number of states have adopted laws that restrict the amount of and the conditions under which monetary damages are awarded to punish the health care provider for a "wanton disregard of [patient] safety" (ie, punitive damages). (3,5)

Although they are popular in the medical malpractice reform arena, damage caps are not without their critics. Opponents of damage caps, including attorneys and patient rights and safety organizations, contend that damage caps penalize the most seriously Injured patients while reducing health care providers' accountability for negligent acts. (4)

Modifying the collateral source rule. A second approach to medical liability reform that a number of states adopt is modifying the collateral source rule. Intact, the collateral source rule prohibits defendants from introducing information at trial or during negotiation for the purpose of off setting the damages awarded by asserting that the plaintiff may have received compensation from another source (eg, worker's compensation, another Insurer). (5)

Connecticut, Hawaii, Maryland, Missouri, North Carolina, Oklahoma, Oregon, Tennessee, and Vermont permit consideration of collateral source payments received by the patient when damages are awarded in medical malpractice cases. (6) Proponents of this type of reform argue that "[w]hen a plaintiff receives compensation from their insurance company and again at trial, the Insurance proceeds do not represent actual compensation for an Individual's injuries, but rather a source of windfall." (7)

Alternatively, those who oppose modifying the collateral source rule assert that plaintiffs do not receive double recovery if they are paid up front by another source because many insurance companies, especially public payers, require that the plaintiff essentially pay back any money that is subsequently recovered in a medical malpractice case. (8) Opponents also contend that elimination or modification of the collateral source rule helps health care providers avoid paying for the full amount of the actual damage(s) they caused, thereby decreasing full accountability for their actions. (8)

Joint and several liability. A third strategy that states frequently employ to reform their medical liability system is to modify another legal doctrine, joint and several liability, which is common to cases in which more than one person caused the harm. The joint and several liability doctrine permits holding a single defendant responsible for the entire damage versus being held responsible for the percentage of the damages that can be reasonably attributed to them.A number of states have modified this doctrine by separating joint liability from several liability, thus establishing a mechanism of proportionately assigning harm among the defendants. (9)

Only 13 states still use the combined form of the joint and several liability doctrine for medical malpractice cases. (3) Many states that have modified the doctrine will enforce joint and several liability, however, when the health care provider is found to have acted "in concert with others" or with "intentional malice" or when the health care provider's acts attributed to more than 50% of the harm. (3) Additionally, states such as California and Ohio apply joint and several liability to only the economic portion of the damages and not to the noneconomic portion. (3)

One rationale for maintaining the original application of joint and several liability is to protect patients from having to bring cases against every health care provider who participated in the act that resulted in harm. (10) Conversely, the rationale for modifying the joint and several liability rule is to decrease the number of additional court cases that will result when the single defendant attempts to recover damages from the other health care providers involved. In addition, although joint and several liability may encourage defendants to settle out of court to avoid being found responsible for the entire damage award, proponents of the rule-modification strategy contend that "it has had the effect of turning lawsuits into all out searches to find the most financially lucrative defendants." (11)

Restricting conditions for medical malpractice claims. A fourth strategy used by many states for medical malpractice reform is specifying at what point in time it is appropriate for an injured party to bring a claim against a health care provider. States restrict these claims in a variety of ways, three of which are discussed below.

First, every state sets in statute a period of time, usually from the date of the incident or the reasonable date of discovery of the injury, during which a claim for damages must be brought against a health care provider. These laws are known as statutes of limitations. Traditionally, medical malpractice cases had a five-year statute of limitations from the date the patient discovered the injury. (12) Over time, some states have shortened the statute of limitations for medical malpractice cases to decrease the number of unexpected claims for damages filed against health care professionals because the time lapse often renders the claim difficult to prove or disprove. (12) Approximately 31 states have a statute of limitations for medical malpractice cases of two years from the date of the injury. (3) A number of states have special provisions in the statute of limitations that extend this time period for minors up to a certain age and/or extend the period of time for the discovery of foreign objects negligently left in the body. (3)

The second way that states limit the number of claims for damages brought against health care providers is by requiring the plaintiff to submit a pretrial certificate of merit from a medical expert validating the claim of malpractice. (11) About one-third of the states currently have certificate or affidavit of merit requirements for medical malpractice cases. (13) It is widely believed among proponents of medical malpractice reform that the certificate of merit requirement will prevent excessive filings of weak claims. (13) A number of patient-rights advocates assert, however, that this requirement places an undue burden on plaintiffs. (13)

Another method that states require as a prerequisite to restrict the time period when a claim for damages can be filed is to require that alternative dispute resolution negotiations, such as arbitration and/or mediation, occur before the claim is filed. Alternative dispute resolution requirements vary considerably from state to state. For example, Hawaii, Illinois, and New Jersey require that cases for claims less than a specified amount must participate in an arbitration proceeding despite the fact that the decision can be nonbinding for the parties involved. (3) Alternatively, Michigan permits parties to agree voluntarily to arbitration, but if the claim is for $75,000 or less, the decision of the arbitrator is binding. (3) Another variation of the alternative dispute resolution requirement is found in Oregon where all parties must participate in some form of dispute resolution unless the case is settled or all parties have voluntarily waived, in writing, the right to enter into such negotiations. (3)

Reasons to resolve medical malpractice claims through alternative dispute resolution include the parties' ability to control the procedure (eg, time, place); reduced costs; shortened time to resolve the dispute; reduced emotional trauma compared to litigation; and preservation or maintenance of the relationship between the parties. (14) Alternative dispute resolution requirements do pose some concerns, however, including whether patients receive full compensation for their injuries such as they might through litigation, whether patients are intimidated into premature settlements, and whether these pretrial negotiations serve merely to delay inevitable litigation. (14)

Other strategies. The strategies described above do not constitute an exhaustive list of tactics implemented by states to achieve medical malpractice reform. For example, a number of states are encouraging health care providers to apologize to the patient for the medical error by prohibiting such action from being considered as an admission of guilt in future legal actions. (15) Furthermore, states are increasingly searching for new ways to address this issue as a means not only to reduce costs but also to promote patient safety, ameliorate the potentially litigious nature of the provider-patient relationship, encourage the consistent use of best practices, and to evaluate how the practices of other interested parties, such as insurance companies, affect the crisis of medical malpractice liability.

State Medical Malpractice Reform Initiatives For 2006

Undoubtedly, the 2006 legislative sessions will continue to focus on medical malpractice reform. A number of states concluded their 2005 sessions with pending medical malpractice liability reform bills that are likely to resurface and serve as a springboard for additional reform legislation. A Government Affairs Department survey of states' legislative activity at the end of the 2005 session identified the following six states as likely candidates for continued reform efforts: Georgia, Massachusetts, Minnesota, South Carolina, Tennessee, and Wyoming.

By far the most aggressive state legislature in the medical malpractice liability reform arena in 2005 was Tennessee. The Tennessee legislature introduced 11 bills aimed at reforming the state's medical malpractice liability system by implementing a variety of the strategies discussed. Additionally, in 2005, South Carolina proposed a comprehensive medical malpractice liability reform bill that also included many of these reform strategies in addition to a provision requiring the establishment of a pretrial medical review panel to validate the merit of the patient's claim. (16)

Although both South Carolina and Tennessee proposed only the traditional strategies of medical malpractice liability reform, there remains an opportunity for these states to modify, amend, and implement their proposals with more innovative approaches during the upcoming legislative session.

Georgia is another state with medical malpractice liability reform on its agenda. In House Bill (HB) 274, Georgia legislators proposed the standard $250,000 cap on noneconomic damages, as well as requiring the Georgia Department of Human Resources to "undertake a study of claims and develop patient safety standards which will be funded in part by a fee paid by medical malpractice insurers." (17) Thus, while relying on one of the more common medical malpractice liability reform strategies, Georgia's legislators seem to also be considering how to implement reform measures that are aimed at patient safety initiatives and not just cost reduction.

Likewise, the Massachusetts legislature proposed HB 3904 to implement the $250,000 damage cap, to require only several liability, and to require annual reports by insurance companies to the Betsy Lehman Center for Patient Safety and Medical Error Reduction in order to develop "evidence-based best practices to reduce medical errors and enhance patient safety." (18)

The Minnesota legislature also considered a $250,000 damage cap and proposed that a health care provider acting within established best practices would be entitled to use evidence of the best practice as a defense against a patient's claim of injury. (19) This approach to limiting medical liability, while not new, highlights the advantages of establishing and providing care within accepted medical practices.

A Complex Issue

Medical malpractice liability reform can be daunting for all parties involved. The complexity of the issue leads both proponents and opponents of reform into a quagmire of options with any number of outcomes and little hard evidence of success of any one specific solution. For a medical malpractice liability reform initiative to be successful, it must achieve a number of goals, including equitable consideration of all parties involved, decreasing the cost of health care, increasing the quality of health care, protecting patient safety, ensuring an efficient and equitable legal system to handle medical malpractice claims, and encouraging a stable and competitive market for medical insurers as well as providers. (20) As the 2006 legislative session begins, it is likely that additional reform options will be proposed, implemented, and evaluated with the intention to achieve these successes and streamline the system while avoiding the roadblocks of complexity and politics. No easy task, indeed.

Catherine Becker MSPH, JD
Legislative and Regulatory Research Analyst
Government Affairs Department


NOTES

(1.) US General Accounting Office, Medical Malpractice: Implications of Rising Premiums on Access to Health Care, GAO-03-836 (Washington, DC: GAO, August 2003) 3. Also available at http:// www.gao.gov/new.items/d03836.pdf (accessed 29 Dec 2005).

(2.) "Medical malpractice tort reform," National Conference of State Legislatures, http://www.ncsl.org/standcomm/sclaw/medmaloverview.htm (accessed 29 Dec 2005)

(3.) "State medical malpractice tort laws," (Oct 21, 2005) National Conference of State Legislatures, http://www.ncsl.org/standcomm/sclaw/statelaws1.htm (accessed 29 Dec 2005).

(4.) Public Citizen's Congress Watch, Medical Malpractice Briefing Book: Challenging the Misleading Claims of the Doctors' Lobby (Washington, DC: Public Citizen, August 2004) 68. Also available at https://www.cttriallawyers.org/pdfs/reports_5.pdf (accessed 29 Dec 2005).

(5.) "Restoring the Balance between Plaintiffs and Defendants," Insurance Information Institute, (accessed 29 Dec 2005).

(6.) "State medical malpractice reform: 2005 numbers at a glance" (June 24, 2005) National Conference of State Legislatures, http://www.ncsl.org/standcomm/sclaw/medmalataglance.htm (accessed 29 Dec 2005).

(7.) "Collateral source rule reform," National Association of Mutual Insurance Companies, http://www.namic.org/reports/tort Reform/CollateralSourceRule.asp (accessed 29 Dec 2005).

(8.) "The collateral source rule--Helping to balance the scales of justice," Public Citizen, http://www.citizen.org/congress/civjus/tort/articles.cfm?ID=831 (accessed 29 Dec 2005).

(9.) "Joint and several liability rule reform," American Tort Reform Association, http://www.atra.org/show/7345 (accessed 29 Dec 2005).

(10.) R S Peck, "The development of the law of joint and several liability," FDCC Quarterly (Summer 2005).

(11.) "Joint and several liability reform states," National Association of Mutual Insurance Companies, http://www.namic.org/reports/tortReform/JointAndSeveralLiability.asp (accessed 29 Dec 2005).

(12.) G T Mueller, "The medical malpractice statute of limitations: In need of reform," Journal of the Missouri Bar 53 (November/ December 1997). Also available at http://www.mobar.org/journal/1997/novdec/mueller.htm (accessed 29 Dec 2005).

(13.) C T Struve, "Expertise in medical malpractice litigation: Special courts, screening panels, and other options" (October 2003) The Project on Medical Liability in Pennsylvania, http://medliabilitypa.org/research/struve1003 (accessed 29 Dec 2005).

(14.) A H Nevers, "Medical malpractice arbitration in the new millennium: Much ado about nothing?" Pepperdine Dispute Resolution Law Journal 1 no 1 (2000). Also available at http://www.arb-forum.com/resources/pdf/nevers-01.pdf (accessed 29 Dec 2005).

(15.) C A G Sparkman, "Legislating apology in the context of medical mistakes," AORN Journal 82 (August 2005) 263-272.

(16.) "Bill information for session 116 (2005-2006)" South Carolina Legislature Online, http://www.scstatehouse.net/cgi-bin/web_bh10.exe (accessed 29 Dec 2005).

(17.) "HB 274-Torts; medical malpractice insurance rates; certain financial limits; provisions," Georgia General Assembly, http://www.legis.ga.gov/legis/2005_06/sum/hb274.htm (accessed 29 Dec 2005).

(18.) "An act relative to professional liability insurance," Mass.gov, http://www.mass.gov/legis/bills/house/ht03/ht03904.htm (accessed 29 Dec 2005).

(19.) "SF No 376, as introduced--84th legislative session (2005-2006)," Minnesota Senate, http://www.revisor.leg.state.mn.us/bin/bldbill.php?bill=S0376.0&session=ls84 (accessed 29 Dec 2005).

(20.) W P Gunnar, "Is there an acceptable answer to rising medical malpractice premiums?" Annals of Health Law/Loyola University Chicago, School of Law, Institute for Health Law 13 (Summer 2004) 465-500.

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