States cautious about tort reform success
■ Laws seem to be helping improve the liability market, but court challenges still lie ahead.
By Amy Lynn Sorrel — Posted Sept. 11, 2006
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Physicians in Arkansas and Nevada say they are seeing the fruits of their labor as tort reform efforts take root and help stabilize the medical liability climate. But doctors are curbing their enthusiasm, knowing that legal challenges still menace the recently enacted measures.
The two states are among 21 that the American Medical Association has declared to be in crisis because rising liability premiums are forcing doctors to retire early, give up high-risk procedures or move out of state.
But doctors in Arkansas and Nevada credit reforms passed in 2003 and 2004 respectively with improving the overall liability climate. In Arkansas, doctors say an affidavit of merit is abating medical liability case filings; in Nevada, caps on noneconomic awards seem to be inviting more insurers into the market.
An August Arkansas Insurance Dept. report found that rate increases had "slowed" since the passage of a 2003 statute that caps noneconomic damages at $1 million and requires plaintiffs to submit an affidavit of merit from a medical expert with the filing of a medical liability case.
But state Insurance Commissioner Julie B. Bowman concluded that it is "premature to expect [reforms] to have had a significant impact on rates" because data were based on claims filed before the law took effect, or relatively young claims filed since.
David Wroten, executive vice president of the Arkansas Medical Society, pointed to the state's largest physician insurer as evidence that the law is having an impact. In May, State Volunteer Mutual Insurance Co. announced that there would be no rate increase for the year. That follows a 5.5% increase in 2005. The company also reported a 50% dip in claims filed per 100 of its insured doctors between 2002 and 2006. The company attributed the decline to "the deterring effect" of the affidavit requirement on claims that lack medical merit.
"If you're the state's biggest insurer and claims dropped 50%, it does show it's having an impact," Wroten said.
The measure's positive effects prompted the state medical society to file a friend-of-the-court brief in an appeals court case challenging the law's constitutionality, he said. The AMA/State Medical Societies Litigation Center joined the AMS brief in support of the reform.
In Summerville v. Thrower, plaintiff attorney R. David Lewis is challenging the affidavit requirement, arguing that it discriminates against patients and violates the state constitution, which permits only the judiciary, not the Legislature, to change court rules.
The certificate rule "will keep a lot of valid cases from getting filed," Lewis said.
Doctors and insurers say Nevada's $350,000 cap on noneconomic damages, which has yet to be contested in court, has attracted more medical liability carriers to the state where physicians in 2002 experienced a severe shortage of available coverage.
That year, the state created the nonprofit Medical Liability Assn. of Nevada to provide doctors with the insurance they needed to continue caring for patients. This July, MLAN filed papers with the Nevada Division of Insurance seeking to become a private insurer by the year end. If approved, it would be renamed the Independent Nevada Doctors Insurance Exchange and would be owned by its insured physicians.
MLAN General Manager Jean-Paul Rebillard said Nevada had become "a competitive marketplace, so the need to continue MLAN in its present form has abated."
He added that the passage of the cap was "pretty significant" and likely has encouraged commercial carriers to re-enter the state. "But we are still waiting until it's tested in the appellate courts to see its full impact," Rebillard said.
In addition to MLAN, 17 other entities offer medical liability insurance to Nevada physicians and surgeons, according to the Nevada Division of Insurance.
Also, more physicians have moved into Nevada since the cap was adopted, said Nevada State Medical Assn. Executive Director Lawrence P. Matheis. He said he hoped MLAN's conversion would offer doctors even more choice.
"It's a very good sign that our reforms have taken hold and we are rebounding," he said.
Doctors, however, have yet to see significant premium cuts, "because at some point, we expect legal challenges to one or more parts of the tort reform," Matheis said.