SPECIAL REPORT

A presidential boost for tort reform

A speech by President Bush has given new impetus to the move for malpractice reform. But will Congress buy the administration's pitch?

Wayne J. Guglielmo
Senior Editor

President George Bush jumped into the malpractice fray in late July, declaring before a North Carolina audience that "one of the main reasons (for rising health care costs) . . . is a broken liability system."

To fix it, Bush called for a federal law modeled after California's Medical Injury Compensation Reform Act of 1975, the gold standard in medical tort reform.

Among other things, Bush wants to see:

•a $250,000 cap on noneconomic damages

•restrictions and limits on punitive damages

•periodic payments in place of lump-sum payouts

•jury notification of other sources of compensation for a plaintiff—health insurance, for instance

•a more equitable division of liability in multiple defendant cases

•a sliding scale for attorneys' contingency fees

The administration is also calling for changes in the way medical errors are handled. Said the president to a round of applause: Doctors and hospitals should be able "to evaluate their practices so they can improve care without having the discussions discoverable for lawsuits."

A day before the Bush speech, the Department of Health and Human Services released a report that reflected much of the president's thinking.

The AMA has also released data showing that at least 12 states are currently in the throes of a medical liability crisis. Another 30 states and the District of Columbia are showing signs of trouble, according to the AMA. Last December, the nation's second largest malpractice insurer, The St. Paul Companies, announced that it was pulling out of the medical liability market; the insurer will no longer write new malpractice policies or renew the existing policies of its 42,000 physicians, 750 hospitals, and 73,000 other health care providers.

Bush targets the "liability lottery"

Supporters of reform were elated by the president's remarks. "President Bush recognizes the high price patients pay for the liability lottery we have in America right now," said AMA President-elect Donald J. Palmisano, a New Orleans general and vascular surgeon and an attorney. The organization has vowed to make liability reform its top legislative priority. The AMA and other physician groups are betting the president's speech will build support for liability reform legislation now in the House and Senate. (A bill introduced in April by Rep. James C. Greenwood, R-PA, may be congressional reformers' best chance this session. In July, a companion bill was introduced in the Senate.)

The Bush call to arms pleased others in the tort reform movement. "This is a national problem, and we applaud the president for proposing a national solution," said Karen Ignagni, president and CEO of the American Association of Health Plans and co-chair of the American Tort Reform Association's Medical Liability Committee. "From Pennsylvania to Nevada, patients across the country are falling victim to a reckless litigation binge."

Other groups calling for California-style reforms include the Physician Insurers Association of America (PIAA), the American Academy of Family Physicians, and the American College of Physicians-American Society of Internal Medicine.

But Bush critics fault him for targeting the wrong enemy.

In a speech delivered on the Senate floor the day after the president's speech, Sen. John Edwards (D-NC) charged him with pandering to the big insurance companies.

The proposed reforms will end up hurting victims of malpractice and won't lower premiums, said Edwards, a possible presidential contender in 2004. That's because high premiums have little to do with runaway jury awards, he argued, and everything to do with insurance companies propping up their bad investments. "Every single time . . . the stock market falls and insurance companies' money is not bringing back a good return . . . , they raise premiums," said Edwards. "[And] who has to pay for those higher premiums? Health care providers. They're just as much the victims of this as the kids and families who are the victims of the bad medical care."

Officials of PIAA have challenged the bad-investment theory, arguing that "insurance investments are highly regulated and controlled by each state department of insurance and monitored by the rating agencies."

Trial lawyers accuse HHS of "cooking the books"

Other groups have their own bones to pick with the administration's reform efforts. The Association of Trial Lawyers of America charges that HHS "cooks the books for insurance companies." ATLA says that, in calculating 2000-2001 average premium increases to compare states with caps on economic damages and those without caps, the HHS report "handpicked" the 10 non-cap states with the highest premium increases, and ignored 20 others that had either no increases or significantly smaller ones. Moreover, says ATLA, "premiums in California are [actually] 8 percent higher than the average of states that don't have caps on noneconomic damages."

Public Citizen—the Washington, DC-based consumer lobby—fumes in a release that "Bush and Congress should act to reduce medical errors, not reduce compensation to injured patients."

Which side will prevail in what's shaping up to be a solid election issue?

The answer may be the side that does a better job of reaching out to the American public. This summer, the AMA launched a $12 million public advertising campaign as part of a larger effort aimed at convincing patients to rally around their doctors' cause. "To bring about change, we need to get out all of the facts and get people to talk personally to their legislators," says Palmisano.

Trial lawyers are countering with outreach efforts of their own. "We have a number of initiatives underway to convince the public, state legislators, and the Congress of the real facts," says Carlton Carl, spokesman for ATLA. "Of course, the present situation hurts doctors. But what's needed is insurance reform, not limiting the rights of patients and some of the most vulnerable in our society."

One thing that's clear, though: With the president in the debate, it won't be ignored.

 

Wayne Guglielmo. Special Report: A presidential boost for tort reform. Medical Economics 2002;17:65.