States Tackle Liability Reform

Published July 1, 2003

Legislative proposals offered recently in three states illustrate the types of solutions policymakers are reaching for in an effort to control runaway medical malpractice insurance premiums.

Like many other states with reform measures pending, Florida, New Jersey, and Texas have been unwilling to wait for action from Congress, where liability reform has stalled as federal policymakers focus on Medicare reform and prescription drug benefits. (See “Malpractice Reform Takes a Hit,” Health Care News, May 2003.)

Florida: Bush Unveils Reform

Governor Jeb Bush (R) called on state lawmakers to return to the legislature on June 16 for a four-day special session to address the increased cost of malpractice insurance in the state. He promised to “call them back, again and again” until they resolve the issue.

Bush also unveiled a 52-page liability reform bill, which includes a $250,000 cap on non-economic damages in malpractice lawsuits and would require malpractice insurers to reduce premiums by 20 percent by October.

The Bush proposal is similar to legislation approved by the state house but defeated by the state senate last month. Opponents maintain the measure has loopholes and might not lead to reduced malpractice insurance premium rates.

Rate Cuts Required

The bill would require malpractice insurers operating in the state to reduce premium rates by 20 percent on average–by more for physicians in low-risk specialties, with smaller rate reductions for those in high-risk specialties.

The loophole pointed to by critics is a provision that would allow insurers to bypass the rate reductions requirement in cases where it would “prevent them from making a profit.”

The bill also requires hospitals and physicians to inform patients about medical errors; orders state regulators to determine what information consumers should have to help them select physicians and hospitals; and increases the authority of the Florida Board of Medicine to discipline physicians. Opponents say the provisions are “vague and virtually unenforceable.”

Attorney Fee Caps Proposed

State Representative Connie Mack (R) has proposed a ballot measure that would amend the state constitution to cap the fees plaintiffs’ attorneys could receive in malpractice lawsuits.

The measure would allow attorneys to receive up to 30 percent of the first $250,000 a plaintiff receives in a malpractice lawsuit. The remainder of the first $250,000 would go to the plaintiff–as would 100 percent of any awards more than $250,000. Mack has formed the Victim’s Compensation Coalition, a group that hopes to place the measure on the ballot in November 2004.

New Jersey: McGreevey Proposes Dr. Subsidies

Governor Jim McGreevey (D) rejected legislation approved by the state senate in March that would cap non-economic damages in malpractice lawsuits, proposing instead the state establish a direct cash subsidy for physicians “hit hardest by insurance increases.”

His proposal is similar to a bill introduced in the state assembly by Majority Leader Joseph Roberts (D). It would establish a state fund of $150 million over the next five years that could cover as much as half of malpractice insurance premium increases for physicians in high-risk specialties.

State Senate Co-President John Bennett (R) said the body would not approve McGreevey’s proposal. The senate had voted 32-5 to cap at $300,000 non-economic damage awards in malpractice lawsuits and to allow plaintiffs to collect as much as $700,000 more from a state fund.

More Data Sought

The senate also voted, unanimously, to approve revisions recommended by McGreevey to a bill giving the state Division of Consumer Affairs more authority over an online directory of physicians. The directory will include information on the medical schools physicians attended, the number of years they have practiced, and disciplinary actions or malpractice verdicts against them in the past five years.

The state assembly’s health and insurance committees announced they will seek subpoenas to force insurers in the state to submit data related to increased malpractice insurance premiums.

Texas: Model Reform Package

Policymakers in the Lone Star State have passed a package of legal liability measures that includes significant medical malpractice reform, offering hope that a working model for other states and Congress could soon be in place.

House Bill 4 caps at $250,000 non-economic damage awards against individual providers; $250,000 on damage awards against individual hospitals; and $500,000 on damage awards against two or more hospitals. Governor Rick Perry (R) has indicated he will sign the bill.

An editorial in the Wall Street Journal reported “frivolous lawsuits” are taking a “heavy toll” on Texas, noting the state can “thank the trial lawyers” for the fact there are 300 lawsuits for every 100 doctors in some parts of the state. More than 150 of the state’s 254 counties have no obstetrician.

“Republicans in Washington and especially in the filibustering Senate, need to display the same will as Texas,” the editorial advised, adding “President Bush says he’s serious about federal tort reform. His party could help by giving him some bills to sign.”

Conrad F. Meier is managing editor of Health Care News. His email address is [email protected].