Sky high and rising: Limits sought for malpractice in Pennsylvania
Reform could spread to other states
In response to a malpractice insurance crisis in the state, the Pennsylvania House recently passed legislation that limits the strategies available to patients suing for medical malpractice and lowers insurance expenses. Health care providers say the action may save a system floundering under the weight of insurance and liability costs.
But the trial attorneys have a different opinion.
Pennsylvania is not the only state where physicians are struggling to pay for insurance, so observers are eagerly watching the developments there with hopes that similar reform might spread to other states. The initial reform efforts seem to satisfy most health care providers who think insurance and malpractice costs are too high, but the coming months may determine how effective the effort really is. The bill still must pass the Pennsylvania Senate and then, if the bill’s provisions are implemented, their success or failure may hold a lesson for other states.
The Pennsylvania House of Representatives voted 164-32 in passing House Bill 1802, a bill designed to "maintain the rights of an injured person to sue without jeopardizing the future of medicine as a result of lawsuit abuse," according to Howard A. Richter, MD, president of the Pennsylvania Medical Society, which spearheaded the reform effort. Richter says the bill included patient-safety measures in addition to steps aimed at helping providers. For instance, the bill includes changes in the state’s licensing requirements to boost patient safety and the creation of the Patient Safety Authority so that medical errors are reported and reviewed for appropriate action.
No one denies that the main purpose of the bill was to save the state’s physicians from the crushing cost of malpractice insurance and lawsuits. The bill addressed several areas to reduce costs associated with liability insurance. Future damages awarded may be made through periodic payments. In addition, contracts between patients and doctors would be permissible and would allow a limit for a cap on noneconomic damage above and beyond economic awards. To prohibit double dipping of award payments, a collateral-source rule would allow juries to learn if the injured person already had been compensated from another source.
Several other actions were passed to end lawsuit abuse. Venue shopping would not be permitted. To rid the courts of junk science, more stringent qualifications for expert witnesses also would be put into place.
"Despite the misguided and false advertisements in recent weeks from personal injury lawyers, Pennsylvanians should be proud to know that their House of Representatives saw through the smoke and acted in the best interest of their constituents," Richter says. "Their vote was encouraging and a good first step in solving the liability insurance crisis that is interfering with health care and the patient-doctor relationship."
Physicians welcomed the changes, but the state’s trial lawyers immediately called the legislation a threat to patients. Clifford A. Rieders, JD, president of the Pennsylvania Trial Lawyers Association, says the group is "extremely concerned about the language in this bill, especially during this time of persistent medical errors. Its provisions will make it far more difficult for legitimately injured victims and their families to have access to our courts; and if they are able, it is less certain that they could receive fair and full compensation for the harm done to their health."
Among the legal reforms approved by the House is a $250,000 cap on noneconomic damages. Rieders says that provision will be especially hard on children, retirees, and homemakers — victims who are even considered by current law to have little if any economic value and therefore ineligible for damages for lost wages.
Consumer advocates also are concerned about a provision called periodic payments. This allows medical malpractice insurers to pay awards over time rather than in one lump sum, which Rieders says hurts injured victims when insurance companies become insolvent or file for bankruptcy. Since 1996, six insurers have gone bankrupt and abandoned their claims.
Also controversial is the reduction in the coverage limits that doctors must purchase. Since 1976, doctors in Pennsylvania have been required to obtain policies of $1.2 million per injury. Pennsylvania has some of the country’s highest rates for liability insurance. On the heels of a 21% to 60% increase in 2001, insurance carriers significantly raised their rates for 2002 as high as 70%. Pennsylvania ranks second among states in terms of total payouts for medical litigation. For fiscal year 2000, Pennsylvania’s total was $352 million — nearly 10% of the national total.
At a recent public forum in which physicians pleaded for relief from the skyrocketing costs of malpractice claims and insurance, one of the speakers was William J. West Jr., MD, an obstetrician/gynecologist from Berks County.
During his speech, West described how a personal injury lawyer dragged him into a meritless lawsuit when he was chief resident at Lankenau Hospital near Philadelphia. Although he had not treated the patient or had any responsibility in the care provided, West spent seven years proving his innocence before a judge dismissed him from the case. In addition, the hospital spent $40,000 for his defense.
"The judge asked, Why are you here?’ to which I responded, I don’t know,’" West said during his speech. "The judge then dismissed me from the case, but only after seven years of depositions, interrogatories, and time away from my practice."
At the same forum, Nancy S. Roberts, MD, system chairman of the Main Line Health Department of Obstetrics and Gynecology near Philadelphia, described how one of her hospitals has lost 30% of its OB/GYNs in the last 18 months.
"I’ve seen multiple physicians dragged into court along with the hospital systems so personal injury lawyers can collect on multimillion-dollar awards," Roberts said. "One of our hospitals had 60 OB/GYNs on staff. In the last 18 months, 18 of them, or 30%, have left the state or stopped doing obstetrics."
Roberts also described how she gave up delivering babies.
"Six months ago, I was forced to give up obstetrical care, stripping away one of the greatest loves of my professional life," Roberts said. "Because of the astronomical costs of medical liability insurance, it became virtually impossible to continue delivering babies."
Providers in Pennsylvania say the legislative changes should be a big help, but other efforts from the governor’s office may be just as significant. In his recent budget address to the House and Senate, Gov. Mark Schweiker stressed that the state’s health care system is in danger from insurance and liability costs. To further address the problem, Schweiker called for a series of six health care summits in which providers and other concerned parties could work out a solution.
Carolyn F. Scanlan, president and CEO of the Hospital & Healthsystem Association of Pennsy-lvania, says, "Nothing poses a more immediate threat to Pennsylvanians’ access to health care than skyrocketing liability insurance costs and shrinking availability of coverage. Gov. Schweiker recognizes the magnitude of the crisis, and he’s doing something about it."
Richter says the efforts under way in the state are only a start. He advocates a much more direct approach to reducing liability and insurance costs in part by letting medical malpractice juries in on some facts that might affect their verdicts and the size of their awards. For instance, one move advocated by the society is a change in the law that would require that juries be informed that medical malpractice awards are not taxable.
"Personal injury awards are inflated because the fact-finder is unable to take into account the tax-free status of the award," he says. "Personal injury awards are not subject to state or federal income tax. This applies even to that portion of the damages that are provided for lost earnings."
Under current Pennsylvania law, the jury is not informed that the damage award will be tax-free, and the plaintiff is entitled to collect damages for his or her full lost wages without any deduction to account for the tax liability that the plaintiff avoids.
"The net result is twofold," Richter says. "Juries potentially increase their damage awards for medical and other expenses based upon the misconception that the award will be taxed, and personal injury plaintiffs receive a tax windfall when they are awarded damages for lost earnings."
You have reached your article limit for the month. Subscribe now to access this article plus other member-only content.
- Award-winning Medical Content
- Latest Advances & Development in Medicine
- Unbiased Content