Stateline Story

Medical Liability Debate Still Roaring in Statehouses

  • June 14, 2004
  • By Erin Madigan

Nearly a dozen states have made headway in addressing costly premiums for medical malpractice insurance by passing new laws during the 2004 legislative session.

The Mississippi Legislature, called into special session to reform its civil justice system, sent Gov. Haley Barbour (R) a bill June 3 to impose a $500,000 cap on jury awards for pain and suffering in medical malpractice lawsuits and a $1 million cap in other cases. Barbour, who made tort reform a top campaign issue when he was elected last November, applauded the measure.

After more than a year and a half of debate and several large-scale doctor protests, New Jersey Gov. James McGreevey (D) signed a malpractice bill June 7 that will create a temporary fund to subsidize doctors' liability insurance premiums and give judges more authority to lessen jury awards they deem too high. "This medical malpractice law is comprehensive, providing short-term relief and long-term reform," McGreevey said in a statement. The bill did not put a ceiling on jury awards for pain and suffering, which was considered a defeat for doctors who had pushed hard for damage caps.

Capping the amount of money juries can award victims for non-economic damages, which are different from medical expenses or lost wages, is one of the most controversial ways to try to address medical malpractice problems. The issue has plagued states for the past few years and was on the agenda at 42 statehouses this session. Much of a recent upsurge in lobbying at the state level has been driven by doctors' groups and trial lawyers battling over medical malpractice legislation.

Physicians and insurance companies blame excessive jury awards for high premiums, but lawyers say caps undermine victims' ability to get fair compensation. Florida, Nevada and Ohio are among the states that already set limits on what can be paid out in pain and suffering.

Lawmakers across the country are looking for legislative Band-Aids to control premium prices for medical liability insurance and keep doctors practicing in the state. All states hold health care providers liable in the event of medical negligence, but as was the case in the mid-1970s and again in the 1980s, insurance premiums are increasing.

In recent years, state remedies have ranged from creating state-run, last-resort insurance pools to providing temporary premium relief to improving medical-error reporting and doctor discipline.

This year, Arizona, Colorado, Nebraska, Ohio, Utah, Virginia, Washington and West Virginia also made changes to their medical liability systems, according to the Health Policy Tracking Service, a Virginia-based company that follows state health legislation. In addition, bills passed the legislatures in Connecticut, Iowa and Missouri, but were promptly vetoed by their governors, Republican John Rowland, and Democrats Tom Vilsack and Bob Holden. Other states, such as West Virginia and Pennsylvania, this year tried to tweak laws they'd approved over the past few years.

Here's a sampling of other recent state activity:

  • Wyoming's Legislature will reconvene July 12 for a special session to discuss medical malpractice, responding in part to the Ohio Insurance Company's decision not to renew health care providers' insurance policies in the state after Oct. 1. 
  • Maryland legislators failed to approve Republican Gov. Robert Ehrlich's plan to limit jury awards in malpractice cases. 
  • In Missouri, medical malpractice has emerged as an issue in the gubernatorial race. Secretary of State Matt Blunt, the likely Republican nominee, promised that if elected governor in November, he'll pursue limits on malpractice lawsuits. 
  • Colorado Gov. Bill Owens (R) signed a law earlier this year that requires the state board of medical examiners to post on their Web site any medical malpractice jury verdicts against doctors. 
  • And in Oregon, voters may have the chance to vote on two ballot initiatives in November that would clamp a constitutional cap of $500,000 on non-economic damages in medical liability cases and limit trial lawyers' fees to $100,000 in any malpractice case. The deadline for collecting the necessary 65,000 signatures is July 2.

Doctors' protests over rising insurance premiums, trauma center closings and the withdrawal of several large malpractice insurance companies from the market has generated a surge of media attention over the past few years. However, policy analysts said that those activities slowed slightly in 2004 and that the worst of the premium crisis may be over.

"I think the medical malpractice crisis has leveled off, but it's still at issue in particular states," said Trudi Matthews, associate director of health policy at the Council of State Governments in Lexington, Ky.

Because debates over malpractice reform are largely fueled by lobbyists for doctors and lawyers, policy analysts expect the issue to return. "It will come up again as long as there are trial lawyers and doctors," said Randall Bovbjerg, a lawyer who studies health policy at the Urban Institute, a Washington think tank. "Doctors never stop wanting this; they just want it much more in these crisis periods. And the lawyers never stop hating it; they just spend more money fighting it when they have to."

In fact, a new report by the Center for Public Integrity on statehouse lobbying expenditures in 2003 identified medical malpractice as an issue that ate up huge portions of lobbying dollars in states such as New York, where lobbyists for both sides spent at least $1 million each arguing their positions, resulting in a legislative impasse. The same was true in Florida in 2003, when Gov. Jeb Bush (R) held three special sessions before pushing a medical malpractice bill through the Legislature, causing lobbying spending to jump 128 percent from 2002.

"These two sides are battling it out in the statehouse, and a lot of times, to no avail. They're often reaching a stalemate," said Robert Morlino, who authored the report.

Proponents of limiting jury awards include the Bush administration and the American Medical Association, which has identified 19 "crisis" states. They argue that caps would lessen the amount of money insurance companies could potentially pay out on behalf of doctors who get sued and therefore allow companies to reduce premiums.

A cap enacted nearly 30 years ago in California is often credited with stabilizing the insurance market there and still serves as a model for many current proposals.

"When you have judgments that wind up in multiple figures, it raises all of the costs for all of us," said Washington state Rep. Mary Skinner (R), who supported a bill that would have capped jury awards for pain and suffering in her state at $350,000 because her largely rural district is losing physicians. "They're retiring and they're leaving our area," she said.

The measure didn't pass out of committee in the Washington House, but Gov. Gary Locke (D) signed a bill that impacts interest rates on jury awards. Skinner calls the measure "tort reform lite" because it doesn't go as far as she would like in changing the judicial system. "I'm not advocating that folks who have been injured in such a way that they won't be able to regain their lifestyle shouldn't have the ability to go after those who have been negligent," she said.

Opponents of caps, however, blame too-high premiums on shoddy stock-market investments by the insurance industry and say that the medical community needs to better discipline bad doctors. "(Caps) penalize the most severely injured victims of medical malpractice," said Carlton Carl, spokesman for the Association of Trial Lawyers of America. "These efforts are designed to take away every citizen's legal rights and enhance the rights of insurance companies and corporate wrongdoers at the expense of the people."

Federal legislation supported by the Bush administration has passed the U.S. House of Representatives twice, but the Senate has failed to act. "I don't think any state is waiting for the federal government to regulate it," said Susan Frederick, who tracks legal issues for the National Conference of State Legislatures.