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Medical Malpractice Resource Articles

The Senate bill, similar to one the House passed in March, would have limited awards for pain and suffering to $250,000. By a largely party-line vote of 49-48, the bill fell 11 votes short of the 60 required to break a Democratic filibuster. Republicans cast all 49 votes in favor of the measure. Two Republicans--Senators Lindsey Graham (S.C.) and Richard Shelby (Ala.)--joined 45 Democrats and one independent in voting against the measure.

Majority Leader Bill Frist, who has made malpractice-reform his signature issue, brought the bill up for a vote in the Senate without committee hearings or public testimony--a move reminiscent of Lyndon Johnson in his Senate days. By bringing the bill up for a vote, even if it would not pass, Frist forced Democrats to take a stand, exposing them to more pressure from lobbyists and the public.

The issue is not dead for this Congress, with a second vote corning perhaps as early as this fall. Even if that vote fails, the issue will have been framed for Campaign 2004. To paraphrase the Wall Street Journal's July 9, 2003, editorial, voters know the difference between a lawyer and a physician. Democrats have gone on the offensive with their own plans for medical malpractice change, focusing on insurance-industry reforms and tax benefits for providers. Alternative medical liability legislation sponsored by Florida Democratic Senator (and presidential candidate) Bob Graham would not cap noneconomic damages in malpractice lawsuits; instead, Graham would provide tax credits for physicians and hospitals to help cover the cost of malpractice insurance.

The Graham-sponsored bill also would repeal malpractice antitrust exemptions for the insurance industry, provide $10 million in grants to help local governments attract physicians in areas with high malpractice insurance premium rates, and establish a system to penalize attorneys who rile frivolous malpractice lawsuits. In addition, the bill would establish a commission to study increased malpractice insurance costs.

Legislative Impasse

How did we get to this impasse? With a Republican in the White House and Republicans controlling both houses of Congress, proponents of malpractice-law changes should have had their case already made for them.

But in February, just as the House was planning to take up its bill, Jessica Santillan, a 17-year-old transplant patient, died after physicians at Duke University in North Carolina gave her a heart and lung of the wrong blood type. Opponents of the bill cited the death in arguing that a $250,000 cap for pain and suffering was too low. Critics, including some Senate Republicans, began to argue that any malpractice legislation would need an exemption for catastrophic cases.

For a time, it seemed that Republicans and Democrats might be able to broker a deal. But the lead Democrat in the negotiations, Senator Dianne Feinstein of California, dropped out when physician groups refused to support a proposal that would limit jury awards for pain and suffering to $500,000.

What Is Causing the Crisis?

Solving the problem requires that we look beyond the politics of passing legislation to the cause. Since 1999, medical malpractice premium rates have increased dramatically for physicians in some specialties in a number of states. Much outcry has targeted trial lawyers, accompanied by anecdotal allegations of frivolous lawsuits and run-away juries awarding outlandish judgments.

But in a General Accounting Office (GAO) report this past July (GAO-03-702), the blame was spread much more widely. Multiple factors, including falling insurer investment income, depressed stock-market values, and the insurance industry's rising reinsurance costs, have contributed to recent increases in premium rates.

The GAO did find that losses from medical-malpractice litigation, both in judgments and settlements, made up the largest part of insurers' costs. These costs have been, the GAO said, the primary driver of rate increases over the long run. But while losses for the entire industry have shown a persistent upward trend, insurers' loss experiences have varied dramatically across the several states, resulting in wide variations in premium rates.

The economic boom of the late 1990s, and the high return insurers received on their investments, allowed many malpractice insurers to price their insurance below the expected cost of paying claims. In a competitive marketplace, this strategy created a lag between collecting premiums and paying claims.

Now the economic boom is over, and the market is mandating large premium rate hikes to cover the losses masked in earlier years. In some areas particularly hard hit by malpractice rate changes, providers are just now catching up with other market areas, and the premium adjustments are severe.

From Lofty Rhetoric to Practical Solutions

Of course, the issue is still political and may end up being decided solely in the political arena, but nonpartisan contributions to the debate are needed if only to bring the political debate down from the clouds of rhetoric and into the realm of practicality.

The idea of a true "no-fault" medical malpractice indemnity system needs to be resurrected from the ashes of the 1993 Clinton health plan. We also need to look again at the market forces behind the current imbroglio. Are physicians really no longer able to afford malpractice insurance, and will they realistically be forced to curtail or discontinue providing certain services? Can we assist them and other providers to remain viable players? Can we both improve the policing of physicians and rein in "cowboy" lawyers? What are the market demands for the profitability that have led some insurers to stop selling medical malpractice insurance? What changes in the insurance system can be made to help maintain coverage and ensure that insurers are not bankrupted?

Merely capping awards is like freezing prices in times of inflation. We've tried that and it doesn't work.

Jeanne Schulte Scott, JD, is a healthcare lobbyist in Washington, D.C. Her e-mail address is jeanne.scott@health-politics.com.

© 2003 Healthcare Financial Management Association
© 2003 Gale Group