It's tort reform time in Tennessee

If it’s springtime, state legislators are in session and tort reform is again a hot topic in states where it hasn’t already been passed.

Here in Tennessee, a proposed comprehensive “health care liability” bill (HB1993/SB2001) would, among other things:

* Limit non-economic damages to $250,000

* Limit contingency fees for attorneys

* Restrict expert testimony to active practitioners in a specialty relevant to the lawsuit

* Require the plaintiff to declare the amount of damages they are seeking

* Require submission of an affidavit specifying the negligence that occurred and provides damages to the defendant including legal fees if the affidavit is rejected by the court before the case gets to trial

The legislation is similar to legislation passed in other states and promoted by the American Tort Reform Association (ATRA) lobbying organization. There is another bill that would implement “loser pays” for civil litigation (HB0789/SB0682).

Reaction has been harsh in some quarters, such as this Tennessean op-ed column:

It’s easy to shrug off the complexities of a doctor-lawyer, Democrat-Republican shouting match. But something fundamental is at stake: citizen access to the courts, one of the oldest of democratic principles.


…insurance companies are collecting tens of millions more in premiums than they pay out in the “jackpot justice” system, enabling them to fatten reserves by more than $100 million a year, even after hefty salaries for executives and defense lawyers. Those numbers are hard to come by, along with the dividends the physician-owned insurance company returns to its members.

Clearly, there is a lot of money in the system, but it isn’t being doled out from the jury box. Doctors may well be paying high premiums, but they need to look at their insurance company for explanations.

And this recent Tennessean editorial:

Tennessee lawmakers should take a dim view of repeated efforts by medical providers to avoid accountability for their actions in malpractice cases.

Legislation that would cap non-economic damages, such as awards for pain and suffering and punitive damages, is again under consideration in the General Assembly. Legislators should reject the effort, because the state needs a system where a fitting response to malpractice is possible. If fairness and accountability are taken out of the justice system, there will be no justice in the system.

A former trial lawyer has some facts you may not have been aware of:

The Tennessee Trial Lawyers Association (TTLA) responds with many of the same arguments that apply across the nation when the insurance industry brings the proposed reforms for a vote:

(1)Very few cases are actually decided by juries, moreover–only 5 cases went to verdict in 2005–so it is difficult to sustain the contention that jury verdicts are out of control. On the other hand, 444 cases were settled in 2005, the medical malpractice insurance carrier presumably settling because it saw probable proof of liability. Of the payouts in 2005, $120 million was in settlements, $6 million from jury awards–a ratio of 95 to 5 percent.

(2) In a 2006 report by the Department of Commerce and Insurance of Tennessee, the number of physicians practicing in Tennessee actually increased from 218 per 100,000 population to 260 per 100,000 between 1991 and 2001. While doctors experience some financial pressures, their difficulties stem in large part from radically lowered reimbursement rates under managed care, Medicaid and Medicare.

(3) Good doctors are paying for the sins of bad doctors–insurance companies do not “experience rate” their premiums, meaning that the premium is not calculated on the quality of care the doctor provides. Instead, all doctors wind up paying for the negligence of the few doctors who actually commit malpractice. Just as across the nation, more than half of malpractice claims come from only five percent of the doctors.

(4) The claim of “defensive medicine,” is not realistic. The Congressional Office for Technology Assessment found that less than eight percent of the total cost of healthcare in the U.S. is affected by the practice of defensive medicine. Actual malpractice payouts, for both meritorious and “frivolous” lawsuits, amounts to about one-half of one percent of the total cost of health care, according to the Consumer Federation of America and the Congressional Budget office.

(5) Large verdicts are always widely covered by the media, but when a trial judge or appellate court reduces the award, (e.g. the multimillion dollar verdict in the McDonald’s “hot coffee” case, which was ultimately settled for about $300,000), no one ever learns about it.

He concludes:

We should not be wasting resources debating things like caps on damages, when there are 190,000 people killed each year by hospital mistakes, and 90,000 people killed each year by hospital-acquired infections. We should be using those resources to fix the problems in healthcare delivery, not blaming the cost of healthcare on the injured patients.

Similar laws have already been passed in most Southern states. Mississippi, once featured on ATRA’s “judicial hellhole” list, passed what some are calling “model legislation” in 2004. A champion of the legislation said in 2005 that tort reform works and that it is helping attract business and keep malpractice insurance costs under control.

However, Temple University legal scholar Matthew C. Sullivan notes:

None of the reforms enacted by Mississippi appear to constitute a major departure from the tort reforms enacted elsewhere in the United States. The most significant changes enacted revised the state’s venue rules, but these changes simply brought Mississippi into line with the rules of other states. The reforms to the venue rules only eliminate the ability of plaintiffs to file in the aforementioned “magic jurisdictions� but do not reduce the ability to file suit. While Mississippi addressed the second prong by changing the potential for large damage awards, it is unreasonable to expect venue changes to precipitate a large drop in the volume of litigation. Similarly, the revisions to the rules of joint and several liability also simply brought Mississippi into line with other states, many of which are still experiencing crises. It is, thus, similarly unreasonable to expect Mississippi to cure its current problems with these changes to joint and several liability. Finally, Mississippi’s enactment of caps on non-economic damages and punitive damages is also targeted at the same quantum of award prong and fails to address the incidence of lawsuit filings and cost of litigation.

He also notes that the most vulnerable victims are more likely to end up being the real losers:

…instituting caps on damages can have a detrimental impact on equal access to restitution. In fact, some have posited that caps are creating “two tiers of malpractice victims,� those with high income or medical bills and those without them. The former cases involve recoverable economic damages and are pursued, while attorneys are turning away the latter cases in the face of caps because they often involve retired, unemployed, or young persons. An unemployed, retired, or young plaintiff will not have the lost income that constitutes economic damage and may be left to recover for medical bills that may already be covered by insurance, while any non-economic damages would be subject to the statutory caps. As such, these second-class plaintiffs may not have the potential to recover enough to cover their attorney’s fees and their cases are correspondingly not pursued. Moreover, static caps fail to account for a young victim who will bear a lifetime of impact and suffering as compared to an older victim with a comparatively short timeframe of living with the injury.

Another interesting development is that other states where such laws have recently passed are already rethinking whether some of the provisions were such good ideas.

According to the St. Petersburg Times, Florida doctors are still paying the highest malpractice insurance premiums in the nation, four years after “tort reforms” capped damages. Gov. Crist says:

“If in fact the rates are shown not to go down, even though we have a (lawsuit damages) cap, it has to make you wonder what’s going on,” Crist said recently. “That was the whole point and purpose, as I understood it.

Georgia is also having second thoughts. One concern is blanket immunity given to ER doctors:

A bipartisan group of state lawmakers last week introduced legislation to repeal a controversial part of the law that enacted sweeping changes to state rules governing medical-malpractice suits. The bill would eliminate language that opponents say gives ER doctors almost total immunity from suit.

“Folks are beginning to realize we may have gone too far on that,� said Sen. Seth Harp, R-Midland, the bill’s lead sponsor.

And, similar to Florida, lawmakers in Georgia are also wondering why malpractice insurance rates keep going up:

House Republicans introduced a measure that requires Georgia’s top insurance official to sign off on each medical malpractice rate hike, saying they’re unconvinced that new state laws aimed at suppressing medical malpractice are working.


“We need to do everything we can to make sure people are able to get affordable health care,” said state Rep. Robert Mumford, R-Conyers. “In my view, tort reform has not produced the results it advertised.”

An Associated Press analysis of state insurance records last year revealed six of the state’s top insurers of doctors and dentists have increased their liability rates – in some cases by more than a third – since new restrictions on malpractice cases became law in February 2005.

So, other than creating bad law that makes it harder for victims of malpractice to get justice (especially the young, the poor, and the elderly), what exactly is being accomplished?

Not much, according to Public Citizen, a consumer research and lobbying organization. Their recent report, The Great Medical Malpractice Hoax found the following:

• Medical Malpractice Payments Are Actually Declining. The number and the total value of malpractice payments to patients have been flat since 1991. Both show a significant decline since 2001, when the last so-called “crisis� began.

• Payments Correspond to Severity of Injury. The medical liability system is not irrational – patients do not win big jury awards for frivolous claims. Instead, evidence shows the current system works reasonably well. Patients with minor injuries receive little compensation, while the bulk of malpractice awards occur in cases involving severely debilitating injuries or death.

• Patient Safety Is the Real Crisis. The latest NPDB data underscore the fact that the real medical malpractice crisis continues to be inadequate patient safety, rather than the legal system. Instead of being distracted by business lobby myths about the court system, heath care providers should improve patient safety and better protect the health of patients.

• Improving Patient Safety Will Save Lives. One-third of malpractice cases resulting in a malpractice payment in 2005 (4,504) involved the death of a patient. Yet, as a 1999 landmark study by the Institute of Medicine showed, an estimated 44,000 to 98,000 patient deaths occur each year as a result of preventable medical errors in hospitals. Stemming preventable errors alone would, conservatively, prevent ten times as many deaths as are now accounted for by malpractice cases.

They conclude that the current system is producing rational outcomes:

The court-based compensation system is, on the whole, a rational one that provides money for valid claims and dismisses invalid ones. These findings are confirmed by other research, including a recent study conducted by researchers from the Harvard School of Public Health in which the authors found that “portraits of a malpractice system that is stricken with frivolous litigation are overblown,� going on to note that “the malpractice system performs reasonably well in its function of separating claims without merit from those with merit and compensating the latter.�

Another recently concluded study by Health Affairs, the “Policy Journal of the Health Sphere,” looked at the impact of state tort reforms on malpractice payments. They studied up to thirteen different tort reform provisions in every state, and concluded that “tort reforms’ overall impact appears to be extremely limited.”

They found that expert-witness provisions seemed to reduce the number of “frivolous” lawsuits, but that other measures had little overall impact and that laws are “determined by political context, not by empirical evidence of effectiveness.” They also found that none of these laws had any effect on improving patient safety.

The bottom line is that tort reform legislation seems only to erect more barriers that prevent victims of malpractice from obtaining justice in the courts, and does nothing to correct the underlying problems. Unfortunately, more and more states are adopting such measures, and they are also being considered once again in Congress. Perhaps what is needed, in addition to an overhaul of America’s health care system, is tort reform reform.
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