House shifts to medical liability overhaul after health reform vote

Washington -- House Republicans followed up their Jan. 19 vote to repeal the national health reform law with the Jan. 24 introduction of medical liability reform legislation that would cap damage awards.

The Help Efficient, Accessible, Low-cost, Timely Health Care Act of 2011 would limit noneconomic damages to $250,000, and punitive damages to the greater of $250,000 or twice the amount of economic damages. It would not preempt state laws that establish higher or lower damage limits.

Rep. Phil Gingrey, MD (R, Ga.), an obstetrician-gynecologist, sponsored the bill as a replacement for the health reform law because he said the legislation would save billions of taxpayer dollars by reducing defensive medicine. "If the president and Congress are truly interested in lowering the cost of health care in this country, the HEALTH Act is a very good place to start."

In his Jan. 25 State of the Union address to lawmakers, President Obama said he would be open to considering "medical malpractice reform to rein in frivolous lawsuits" but did not elaborate. He previously has acknowledged the problem of defensive medicine costs and frivolous lawsuits, but repeatedly has said he opposes caps on damage awards.

The HEALTH Act also would set a statute of limitations on filing health care lawsuits of one year after a patient discovers -- or should have discovered -- an injury, or three years after the injury, whichever occurs first. The bill is modeled on liability reforms that have been on the books in California since 1975. The House has adopted previous versions of the measure numerous times during the past decade, but the Senate has never followed suit.

The American Medical Association and 100 other medical organizations support the bill, according to a Jan. 25 joint letter to Dr. Gingrey. AMA Board of Trustees Chair Ardis Dee Hoven, MD, said total medical liability premiums in the U.S. grew by nearly 950% between 1976 and 2009, but premiums in California grew by just 261%. "Every dollar that goes toward medical liability costs is a dollar that does not go to patients who need care."

But the president of a national organization representing trial lawyers said the bill is "beyond extreme" because of the scope of its damage caps. "By removing legal accountability, attention to safety will go down and more people will suffer injuries and death from negligent care," said American Assn. for Justice President C. Gibson Vance.

Medical liability reform was the subject of the first House committee hearing this year, convened Jan. 20 by House Judiciary Committee Chair Lamar Smith (R, Texas), who co-wrote the HEALTH Act.

Some Judiciary committee members said capping damage awards isn't the cure for climbing liability premiums. State medical boards should better monitor and more stringently discipline physicians who commit gross malpractice, because these 2% to 3% of doctors are tied to the majority of the large damage awards, said Rep. Jerrold Nadler (D, N.Y.). "Capping these recoveries would simply be unfair to people who are very seriously injured."

The medical liability insurance industry is cyclical. Rates increased drastically in three periods during the last 30 years, despite steady liability claims, because of changes in the way the industry calculated its rates, said Joanne Doroshow, executive director of the Center for Justice & Democracy, which advocates for consumers in the civil justice system.

"The solutions to that problem lie with the insurance industry. They should not be solved on the backs of injured patients," she said.

But Dr. Hoven said physicians need relief from the culture of fear in which they are practicing. "When, all of a sudden, you're confronted with a lawsuit over which you have no control or you are part of something else in the suit process, it devastates you."

Repeal and replace

The HEALTH Act is the first of a series of measures House Republicans plan to offer as alternatives to the national health reform law. Every GOP member and three Democrats in the lower chamber voted to repeal the reform statute.

The day after the repeal vote, the House voted to instruct four House committees with jurisdiction over health care to draft legislation to replace the health reform law. The instructions contain a series of principles, including the need for a permanent fix of the Medicare physician pay formula and greater flexibility to states to administer Medicaid.

"The American people deserve a thorough and forward-looking discussion of the health care law's impact on our economy and how best to replace it with reforms that reflect their priorities," said House Speaker John Boehner (R, Ohio).

Obama said during his State of the Union address that he is open to amending the health reform law with provisions to reduce costs. "What I'm not willing to do is go back to the days when insurance companies could deny someone coverage because of a preexisting condition." Obama also discouraged Republicans from continuing an open-ended campaign against the law. "Let's fix what needs fixing and move forward."

Democrats also cited Congressional Budget Office estimates that repealing the bill would increase federal deficits by $230 billion. Republicans disputed the CBO estimate, saying it relies on faulty Democratic parameters and does not represent the true cost of the bill.

Senate Republicans have vowed to force consideration of the House repeal bill -- perhaps through amendments to unrelated legislation -- but such a vote is widely expected to fail. Senate Democrats in turn plan to pressure their GOP colleagues by forcing them to go on the record on individual health reform law provisions that have proved popular.

The AMA does not favor repealing the entire health reform law, but it would support amending it with medical liability reform legislation, a measure to fix the Medicare physician pay formula, and a bill to repeal a provision in the law requiring additional expense reporting by businesses that would apply to some physician practices, said AMA President Cecil B. Wilson, MD. Obama and many Democrats in Congress have said they would support repealing the business expense reporting provision.

House Republicans also must address funding the federal government after March 4, when a stopgap fiscal 2011 funding measure expires. GOP members led by House Budget Committee Chair Paul Ryan (R, Wis.) have proposed reducing nonsecurity spending to fiscal year 2008 levels for the last half of fiscal 2011, a move that would impact discretionary health spending. Obama called instead for a five-year freeze on domestic spending.