States fired-up on tort reform, cool on $250,000 cap

Only Alaska has passed a limit on noneconomic damages at that level this year. Doctors have had more success getting other liability system changes approved.

By Mike Norbut — Posted July 4, 2005

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Although tort reform has been a popular topic in state legislatures in 2005, physicians have found that convincing lawmakers to support a $250,000 cap on noneconomic damages is a challenging proposition.

Instead, state physician groups are agreeing to higher limits, such as $350,000 or $500,000, or other reforms in the hopes of stemming the tide of increasing medical liability premiums.

So far in 2005, lawmakers in 48 states have reviewed legislation involving some kind of tort reform, with bills passing in 24 states, according to the National Conference of State Legislatures. That's compared with last year "when maybe there were 10 states that actually passed something," said Trina Caudle, an NCSL research analyst.

Some of the legislation is limited, such as in Arizona, which passed bills that tighten rules on expert witness testimony and allow physicians to express sympathy to patients without having it used against them in court. Other states, such as Georgia, passed measures with more sweeping provisions, including a $350,000 cap on noneconomic damages and patient safety requirements.

While many physicians consider any type of liability reform to be helpful, the success of state legislative efforts often is measured by the ability to achieve a cap on noneconomic damages and, if so, how close to $250,000 it can get. That level is considered the gold standard by many because of the beneficial impact it has had on California's liability market since it was passed there in 1975.

This year, doctors in at least one state -- Alaska -- have claimed some victory in this quest for a $250,000 limit. They secured such a cap on medical liability cases not involving wrongful death or a permanent disability.

"This hopefully will increase access to care for the citizens of Alaska," said John Duddy, MD, an orthopedic surgeon and president of Alaska Physicians and Surgeons, an Anchorage-based IPA.

Legislation passed in Connecticut last month falls on the other end of the spectrum. It includes several liability reform provisions, such as expression-of-sympathy language and a reduction of interest rates on judgments. However, a noneconomic damages cap was absent from the measure. Connecticut Gov. M. Jodi Rell has said she is leaning toward signing the bill, but she has not made a final decision, a spokesman said.

Lawmakers' failure to approve a cap "after four years of labor is tantamount to an elephant giving birth to a mouse," said Tim Norbeck, executive director of the Connecticut State Medical Society. "This advances the ball a few feet. I wouldn't even say a few yards."

AMA's fight on Capitol Hill

The AMA continues to push for federal legislation that includes a $250,000 cap on noneconomic damages, said Past President Donald J. Palmisano, MD. However, if a state medical society feels comfortable pursuing a different reform model, "we defer to the states."

"If they come up with a hybrid, only time will tell if that's effective," Dr. Palmisano said. "They know the laws in their states. We know what doesn't work, like a $1 million cap or a cap with exceptions."

The AMA's fight for liability reform continues to get mired in the U.S. Senate. Although the House of Representatives supports it and President Bush has made it a legislative priority, the issue does not have enough support in the Senate to overcome a Democratic filibuster, Dr. Palmisano said.

While federal lawmakers have painted a grim outlook for tort reform legislation passing this year, Dr. Palmisano remains optimistic.

"We only have a minority of U.S. senators who are blocking proven medical liability reform," he said.

"It's only a matter of time. If someone opposes what the AMA wants, it should be their responsibility to come forward with a better idea, as opposed to preventing the AMA's idea from passing."

Latest state actions

While the AMA continues to argue its case to federal lawmakers, there has been action on the state level.

In Alaska, Gov. Frank H. Murkowski signed the tort reform legislation last month. While the law generally caps damages at $250,000, it sets a $400,000 limit in cases involving wrongful death or severe permanent physical injury, defined as being more than 70% disabling.

When it takes effect later this year, it will replace the previous cap, which set limits at the greater of either $400,000 or $8,000 times the number of years of life expectancy. In severe cases, the cap was set at the greater of $1 million or $25,000 times the number of years of life expectancy, said Jim Jordan, executive director of the Alaska State Medical Assn., which supported the new legislation.

Alaska is down to two liability insurance companies, with one being very selective in choosing for whom to write policies, said Dr. Duddy.

"This should stabilize the market," he said.

Meanwhile, New Hampshire's Legislature passed a bill establishing a pretrial screening panel consisting of a judge, attorney and doctor to review medical liability lawsuits.

Physicians in the state also are hoping for a more stable liability market, although they did not seek a cap on noneconomic damages, a concept that has been overturned by state courts three times in the past. The review panel is modeled after one used in Maine, which, despite being served by many of the same liability insurers as New Hampshire, enjoys lower premiums, officials said.

"[Liability] has taken a lot of joy out of practicing," said Gary Sobelson, MD, president of the New Hampshire Medical Society and a family physician from Concord. "We think this is a great opportunity because of the Maine-New Hampshire relationship."

The panel is designed to drain the administrative costs out of the system by compelling more parties to settle before their cases go to trial. Unanimous decisions by the panel are presented to the jury, meaning whoever is on the short end of that recommendation may not want to carry that case to trial, said Palmer P. Jones, executive vice president of the medical society.

Kevin Dugan, chair of the legislative committee of the New Hampshire Trial Lawyers Assn., said the panel will actually increase overall costs. Judging by the experience in Maine, which has a backlog of panel hearings, it's safe to assume the new system will prolong cases and add administrative work, he said.

However, Maine's experience has been earlier settlements, and costs to prosecute or defend a case are front-loaded, Dr. Sobelson said. A good attorney will already have done the preparation work before the panel hearing is scheduled, he said.

"We all were in agreement that the issue in New Hampshire was not frivolous lawsuits, it was the cost of the system," Dr. Sobelson said. "While Maine is not perfect, it was better than our system."

New Hampshire Gov. John Lynch has not yet signed the legislation, though he has pledged to do so, spokeswoman Pamela Walsh said.

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Recurring themes in tort reform bills

Liability bills passed in 24 legislatures so far this year; some are still awaiting signature by the state's governor. Here is a sampling of state action on some of the most common changes.

Noneconomic damage caps: Alaska ($250,000 in general; $400,000 for cases involving wrongful death or severe permanent injury), Georgia ($350,000), Missouri ($350,000), South Carolina ($350,000), Illinois ($500,000)

Expert witness rules: Arizona, Georgia, Illinois, Montana, North Dakota, South Carolina, Virginia

Protection of expressions of sympathy: Arizona, Connecticut, Georgia, Missouri, Montana, South Dakota, Virginia, West Virginia

Affidavits or certificates of merit: Connecticut, Georgia, Illinois, Missouri, South Carolina

Source: National Conference of State Legislatures

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