Medical Liability Reform: A Physician’s Perspective

Published January 1, 2003

With the resurgence of the medical liability crisis, a review of tort reform efforts over the past several years is in order. It’s important to understand where we have been and where we are headed in our struggle for meaningful and substantive medical liability reform.

Premiums for physicians are skyrocketing. Medical liability insurers are leaving many states and abandoning their former client physicians, leaving them without coverage. Obstetricians have been particularly hard hit, but the crisis affects every one of us, from physicians to patients.

In Mississippi, 400 doctors are expected to leave the state. At one time, 14 insurance companies provided medical liability coverage in the state; now only one company remains. St. Paul Insurance Company, the second largest medical liability insurer in the country, is not only leaving such states as Mississippi and Georgia, but has decided to get out of the business altogether.

Obstetricians are not the only ones affected. Dr. José Igoa, a 47-year-old psychiatrist, closed his office door and protested in Spring 2002 along with his colleagues in Edinburg, Texas because of soaring insurance premiums, which in 2001 were between three and four times higher than they were five years before. Now, he cannot find a renewal policy at all!

HIPAA Hasn’t Helped

True insurance is a mechanism of voluntarily sharing risks, with premiums proportional to the probability of a loss or payout. For physicians, insurance is a mechanism for protecting financial assets. As it has evolved, however, medical malpractice insurance isn’t insurance at all. It isn’t voluntary, and physicians are required to carry limits that may be far in excess of assets they own.

And the medical malpractice crisis isn’t merely a matter of insurance evolving into something else. It’s a symptom of a profound cultural transformation: the entitlement mentality, the erosion of contract rights, collective guilt and scapegoats supplanting individual responsibility, the expectation of government-defined and guaranteed “equity” and “social (distributional) justice,” and the hubris that all outcomes are under human control.

In the early spring of 1995, the U.S. House of Representatives passed a bipartisan medical liability bill (tort reform) by a significant margin (247 to 171), despite strong opposition by the trial lawyers. The legislation was a sweeping tort reform bill that would have gone a long way towards reforming medical “malpractice” and alleviating the adversarial and litigious climate in which physicians have been practicing medicine for the past three decades.

The measure included a $250,000 cap on non-economic damages, limits on “joint and several” liability, and even a provision for a “loser pays” rule that would have penalized plaintiffs for filing frivolous lawsuits.

Robert E. McAfee, M.D., then president of the American Medical Association, called it “a giant leap forward”; not surprisingly, the AMA claimed victory for “its decade-long advocacy on behalf” of physicians. Unfortunately, the AMA’s boast turned out to be a premature exercise in muscle-flexing. The Clinton White House threatened to respond to the proposal with a Presidential veto, and medical liability reform never saw the light of day, although some product liability reform did pass.

The Kassebaum-Kennedy proposal, known now as the Health Insurance Portability and Accountability Act (HIPAA), unanimously passed the U.S. Senate in 1996 with the support of the AMA. It has proven to be a terrible piece of legislation, not improving but in fact worsening the American health care system.

HIPAA has enforced draconian fraud and abuse provisions harmful to patients and physicians. Its administrative “simplification” requirements threaten medical privacy and patient record confidentiality with proposed Unique Patient Identifiers, establishment of databases, and other privacy-eroding provisions.

HIPAA increased health insurance premiums because of guaranteed coverage and renewability requirements. As a result, the measure has caused an increase in the number of uninsured Americans, as higher insurance premiums have priced many individuals and their families out of the insurance market.

HMO Lawsuits

You would think despite all the shortcomings and failures of managed care and HMOs, the AMA and organized medicine would remain sensitive to the problem of medical litigation and the pain-and-suffering lawyers and lawsuits have inflicted on medical practitioners for decades.

The AMA, claiming to represent “organized medicine,” has instead said “Yes!” to more lawsuits, thus potentially opening a new venue for trial lawyer litigation.

During 2000-2001, the AMA considered HMO lawsuits more important than tort reform, despite the fact that about 90 percent of physicians support tort (“malpractice”) reform and, conversely, 75 percent of them believe trial lawyers would have the most to gain from HMO lawsuits.

It sounds like a good idea to make things easier for patients who want to sue their HMOs and employers for delayed or mismanaged care. But who in fact will benefit from opening another Pandora’s box of litigation? The trial lawyers, of course, not the patients, who most likely will die or whose health will worsen as they wait and wait stressfully and in an adversarial environment for the slow wheels of civil litigation to turn in their favor.

The AMA’s leaders have lost sight of their mission and, unless pushed by the membership in the trenches, appear to have trouble recognizing the face of the enemy.

Since as far back as 1998, the AMA has alienated the who’s who of the Republican Party, from Georgia Rep. Charlie Norwood and Oklahoma Sen. Don Nickles to affable House Speaker Dennis Hastert, who complained “these guys [AMA leaders], as far as I am concerned, are toadies of the Democrats.”

Deja vu

The headline of the “professional issues” section of the July 8-15, 2002, issue of American Medical News declared: “AMA readies for battle on tort reform.” The subtitle went on to state, “the ambitious plan passed at the Annual Meeting could cost more than $15 million to carry out, with $12 million set for a national ad campaign to educate the public.”

It would appear the AMA leadership has finally heard the message of the rank and file, private practitioners and now has seriously considered tackling the festering problem of the medical liability crisis. Indeed, the leadership of organized medicine has assigned it the “highest legislative priority.”

The voices have been heard, and the medical politicians have talked the talk. Will they follow through and walk the walk? Only time will tell. Frankly, looking at their track record, I have my doubts.

Miguel A. Faria Jr., M.D., is editor-in-chief of the Medical Sentinel, the peer-reviewed publication of the Association of American Physicians and Surgeons (AAPS), and author of Vandals at the Gates of Medicine and Medical Warrior. He can be reached by email at [email protected]. This article summarizes a larger work, published with references, in the Fall 2002 issue of Medical Sentinel.