Senate Passes Patient Protection & Affordable Care Act without significant tort reform, elimination of anti-trust exemption

On Dec. 24, 2009, the United States Senate passed the Patient Protection & Affordable Care Act (H.R. 3590) by a party-line vote of 60 to 39. Endorsed by the American Medical Association, the landmark legislation seeks to strengthen the American healthcare system by expanding coverage and enhancing access to healthcare services.

Of particular interest to the medical liability insurance industry were two legislative items ultimately left out of the final Senate bill—substantive tort reform and any language that would repeal medical liability insurers’ longstanding exemption from federal antitrust laws.

The token medical liability reform amendment that was included in the final bill is a five-year, $50 million grant program to encourage states to develop alternatives to the current medical liability court system. The program is to be administered by the U.S. Department of Health & Human Services Secretary Kathlene Sebelius, in consultation with a review panel. It is significant that any grantee-state is required to “provide patients the ability to opt out of, or voluntarily withdraw from the alternative, at any time and to pursue other options, including [traditional] litigation.”

According to the Physician Insurers Association of America (PIAA), the alternative resolution legislation’s opt-out clause renders the reform meaningless because, if a state enacted a health court system, for example, the claimant would be able to take that process to its conclusion, find out how much they would receive in compensation under that system, and then opt out in order to pursue the matter via traditional litigation.

With Republican lawmakers a minority in the Senate, the lack of any meaningful tort reform in the final bill was of little surprise, but whether or not the Senate would effectively repeal the McCarran-Ferguson Act of 1945—which exempts the healthcare and medical liability insurance industries from federal antitrust laws that apply to most other industries—was a real concern during the December debate.

Introduced as an amendment by Sen. Patrick Leahy of Vermont, the Health Insurance Industry Antitrust Enforcement Act had 18 cosponsors and successfully moved through the Senate Judiciary Committee. Had the provision been included in the final bill, health and medical liability insurers would be subject to state regulation laws without the benefit of any federal government interference.

The PIAA lobbied against the Act, pointing out that allegations of “price gouging” ignore “the fact that the majority of doctors in the U.S. are insured by companies they own and/or operate—thus, if they were ‘price gouging,’ they would be gouging themselves.”
“The Congressional Budget Office (CBO)… noted, accurately, that MPL insurers are not engaged in any noncompetitive behaviors, and if they were, they could already be prosecuted for such conduct, because, ‘states already bar the activities that would be prohibited under federal law if this bill was enacted,’” said Lawrence E. Smarr, PIAA president. “The CBO report went on to say that, in fact, ‘enacting the legislation would have no significant effect on the premiums that private insurers charge.”

The Patient Protection & Affordable Care Act had moved to conference to be reconciled with the House bill.