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Tort reform directly affect malpractice laws as it caps the money patients can receive as an award from a physician or hospital they have sued for malpractice. They also limit punitive damages courts can order physicians or hospitals to pay, and although it differs from state to state, they also provide tighter limitations on suits that can be tried, dismissed or dropped.
In general, tort reform can also help dispense with frivolous suits in order for more legitimate ones to be taken up. This is emphasized by the fact that between 15,000 and 19,000 malpractice lawsuits are being received annually (the most current of which are from diagnosis, treatment and surgery) and that the American Medical Association (AMA) listed 22 states that are in a healthcare crisis in relation to medical malpractice. Moreover, according to Melissa Walton-Shirley, MD, of Medscape, over 80% of the world’s malpractice claims are filed in the US.
For many industry experts and physicians, reimbursement systems and tort reforms remain to be the most prevalent issues in terms of making healthcare more cost-effective and efficient. Many physicians, industry professionals and other advocates continue to push to add legislative provisions that will decrease the overall cost of the country’s healthcare system by restricting malpractice lawsuits, along with easing the burden on physicians.
Although tort laws vary from state to state, they commonly adopt caps on damages, joint-and-several liability, statutes of repose/limitation, attorney contingency-fee and periodic payment reforms as well as pretrial screening panels.
Since the 1970s, the US has confronted ‘malpractice difficulties,’ which, cites Frank Sloan, J. Alexander McMahon Professor of Health Policy and Management and Economics at Duke University, sprung from decreased insurance profitability, increased premiums and limited accessibility of insurance. Moreover, as early as the 80s, many states have enacted tort reforms to counter the rising insurance costs and declining insurance accessibility. Since 1986, 38 states amended their joint-and-several liability rules, while 23 states limited noneconomic damages (18 of which still implement it) and 34 states capped punitive damages.
The Case of Texas and Ohio
Increased malpractice insurance costs have been observed by industry experts as early as the mid-70s. Compared to overall healthcare costs, they have risen by 1,642% from 1975 up to 2000, which, of course, resulted in soaring insurance premiums. A study from the American College of Emergency Physicians (ACEP) reported that for the past years, emergency doctors have seen increases in malpractice premiums, while two out of three of EM physicians saw increases of up to 60%.
In the case of Texas, 31 out of every 100 doctors were sued. When physicians left their communities, its physician-to-patient ratio became 152:100,000, and were ranked as 48th for patients per physician (the US average during 2002 was 196:100,000). Health systems spent $400 million annually for their malpractice and legal costs while battling physician shortage—in fact, 158 of 254 counties did not have an obstetrician.
After the introduction of a tort reform in 2003, Texas’ malpractice insurance costs decreased by an average of 21%—by 2007, about 600 OB/GYN physicians returned to practice in Texas. Resources acquired from malpractice savings enabled growth for some facilities. Christus Hospital at Corpus Christi launched its Diabetes Excellence Program; Driscoll Children’s Hospital unveiled its satellite clinics in Brownsville and McAllen, while the Houston-based Kelsey-Seybold Clinic set up an electronic medical record system.
Ohio’s tort reform wasn’t particularly the same. Although it decreased malpractice claims by 39% in 2008 by limiting noneconomic damages to $250,000 (except for outstanding cases) and making it more difficult to put cases to trial, employer-based family health premiums increased by 19% and averaged to $11,425 in 2008, up from $9,590 four years ago. Healthcare policy pundits say it may not be possible to determine whether overall cost would have increased further had the state not passed such a tort reform, given that its neighbor state, Kentucky, has not put further limitations in malpractice rulings but had healthcare savings.
On the other hand, the Ohio State Medical Association (OSMA) is optimistic, said OSMA spokesman Jason Koma. Although healthcare costs have increased, it has tremendously helped in regulating unnecessary tests and procedures. Koma remarked, “No one can argue that tort reform in Ohio hasn’t brought down the practice of defensive medicine.”
Both Sides of the Fire
“States that set limits on suing may only be able to go so far,” remarked William Hayes, President of the Health Policy Institute of Ohio. He cited the Medicare spending as to why it is challenging to determine healthcare savings from tort reforms—in 2006, enrollees in Cleveland were to pay $8,377, $8,153 in Akron, $7,930 in Dayton and $9,612 in Elyria. The New York Times also pointed that there was an unusual, high percentage of angioplasty procedures performed by cardiologists. Moreover, Hayes also cited that despite Texas’ leverage with its tort reform, it still remains to be one of the biggest Medicare spenders.
Tom Baker, University of Pennsylvania Professor of Law and Health Sciences, remarked at an earlier New York Times article, “As the cost of health care goes up, the medical liability component of it has stayed fairly constant. That means it’s part of the medical price inflation system, but it’s not driving it. The number of claims is small relative to actual cases of medical malpractice.”
On the other hand, the Congressional Budget Office pointed out that a federal-level tort reform can reduce healthcare costs by $11 billion annually, and since the government pays majority of it, a nationwide reform could decrease the deficit by $54 billion in over a decade. Moreover, according to nonpartisan advocacy group Physicians for Reform, tort reform can further patient access to specialties like obstetrics, trauma surgery and neurosurgery while saving as much as $80 billion annually. In fact, a 2003 Health and Human Services report noted that medical liability reform can enable Medicare and Medicaid save up to $50 billion dollars annually.
In a recent survey conducted by Pinnacle Health Group about physician perception of the healthcare reform bill, 50% of its respondents considered malpractice reform as a critical factor for effectively practicing medicine. For an ER physician, “Tort reforms can help us decrease defensive medicine strategies. No tort reform means no separation of legitimate and frivolous lawsuits, which can further the cost of medicine. While congress cites malpractice insurance is only few percent of overall healthcare expenditure, it is the excessive use of healthcare resources due to defensive medicine that drives healthcare and doesn’t get included in the equation. Rational use of healthcare resources can only come with tort reform.”
Another physician commented, “Declining reimbursements without tort reform to contain physician expenses is untenable. Most single-payer models that other countries have that are so touted by politicians also include an assumption of medico-legal risks by the government rather than the individual practitioner. By not including these measures in the bill, it unfairly places the burden of medical costs on the physicians.”
In a recent study conducted by Health Affairs on defensive medicine (which is perceived as a driving factor for increasing healthcare costs) and its relationship with tort reforms, its study showed that a “10% decline in medical malpractice premiums would be less than 1% of total medical care costs in every specialty,” although it does not recommend that it ignores its impact in healthcare costs and the physicians’ emotional strain “because even this small level of extra cost should be eliminated from the system.” In a separate survey, Health Affairs also noted that malpractice concerns were high among generalists and specialists in states “where objective measures of malpractice risk were low,” and that there are relatively modest differences in physicians’ concerns across states with and without common tort reforms.”
Physician Recruitment
“Tort reforms also have an influence to physician recruitment,” said Mike Broxterman, Chief Operating Officer of Pinnacle Health Group (PHG). “They attract doctors because they are perceived to be more physician-friendly, and they also tend to pay less in annual premiums than in other states. Its most evident case in point is Texas—by 2007 about 500 or so OB/GYNs were practicing in the state, and their malpractice premiums reduced by about 20%. Its positive domino effect for both Texas and the physicians is that it became a more attractive practice environment while more and more physicians were inspired to practice there.”
PHG’s Director for Training and Recruitment Craig Fowler remarked, “There is an implied connection to tort reforms, recruitment and retention, as there is perceived advantage of tort reforms for physicians. In West Virginia, for instance, its 2003 reform resulted in adding about 360 physicians the following year. Mississippi ranked the last in terms of physician supply, as doctors–particularly the younger ones, with specialties like OB/GYN and neurosurgery–relocated to other communities, but since its introduction of tort reform, Laurel and even Delta-based facilities are at least finding it easier to recruit physicians.”
According to the Center for Delivery, Organization, and Markets Agency for Healthcare Research and Quality, counties with limited noneconomic damages had 2.2% more physicians per capita, while rural counties had 3.2% more; rural counties with a $250,000 cap had 5.4% more OB/GYNs and surgeons.
In a separate study by the Journal of American Medical Association (JAMA) in 2005, tort reforms had a diametric relation to physician supply, which increased after enacting them for three years. The reform, according to the survey, had bigger impact on non-group and group physician supply, specialties with high malpractice premiums and communities with higher managed care.
Malpractice Environment in Other States
Tort reforms in other states vary in their stipulations and/or provisions. In 2005, physicians saw the enactment of HB 393, Missouri’s medical liability reform, which capped noneconomic damages to $350,000 and revised the state’s malpractice rates among others. Premiums for ophthalmologists decreased to $16,406 in 2009 from $22,718 in 2006. However, Kansas’ premiums for ophthalmologists were only $8,937 in 2009.
In Jefferson County, Mississippi, six claimants were awarded $150 million for asbestos-related cases last year—this led physicians to leave their practices while 71 insurance companies closed down. As per the state’s special legislative session, Mississippi’s reform limits punitive damages and joint-and-several liability rules as well as restrict where cases can be tried and penalize attorneys who file frivolous cases.
In Florida, a physician-endorsed proposal to limit attorney fees was approved back in 2004. It included restricting initiatives by trial lawyers such as the “three-strikes” liability rule, which revokes a physician’s license after having three liability judgments against them. There is also a recently passed limitations on intangible damages, which are capped between $500,000 for physicians and $750,000 for hospitals and non-physicians. However, they do not apply retroactively and are still challenged in the court.
Utah’s tort reform placed a $450,000 cap on pain and suffering rewards—its newly passed law also requires patients to secure certifications from medical experts that would merit the claimant to pursue a case that could have been dismissed by a screening panel. Georgia’s medical liability reform in 2005 capped claims to $350,000 against physicians and limited total awards to at least a million, where the case involves several physicians and hospitals. Nevada also capped its noneconomic damages to $350,000. In states like Illinois, South Carolina and Virginia, medical communities, particularly physicians, are pushing for a $250,000-cap on noneconomic damages—in Illinois, there is still pending proposals on protection for physician assets and change in expert witness laws.
References:
“Averting Medical Malpractice Lawsuits: Effective Medicine—Or Inadequate Cure?” Stephen Langel, Health Affairs, 29, no. 9 (2010): 1565-1568.
“Georgia Supreme Court Upholds Emergency Room Tort Reform Law,” Insurance Journal, March 15, 2010.
“Health reform bills light on medical liability reform,” Amy Lynn Sorrel, American Medical News, Nov 2, 2009.
“Low Costs Of Defensive Medicine, Small Savings From Tort Reform,” J. William Thomas, Erika C. Ziller, and Deborah A. Thayer, Health Affairs 29, NO. 9 (2010): 1578–1584.
“National Costs Of The Medical Liability System,” Michelle M. Mello, Amitabh Chandra, Atul A. Gawande and David M. Studdert, Health Affairs, 29, no. 9 (2010): 1569-1577.
National Practitioner Data Bank 2006 Annual Report, U.S. Department of Health and Human Services, Health Resources and Services Administration, Bureau of Health Professions, Division of Practitioner Data Banks.
“The Effects of Tort Reform: Evidence from the States (June 2004),” Congressional Budget Office.
“The Role of Medical Liability Reform in Federal Health Care Reform,” Michelle M. Mello, J.D., Ph.D., M.Phil., and Troyen A. Brennan, M.D., J.D., M.P.H., New England Journal of Medicine, 361:1-3July 2, 2009.
“Tort Reform And Changes To Doctor Payment Could Cut Health Costs,” Henry J. Kaiser Family Foundation, 03 Sep 2009.
“Tort reform eases burden for Mississippi physicians,” Orthopedics Today, January 2003.
“Tort reforms enacted in Utah,” Amy Lynn Sorrel, American Medical News, April 15, 2010.
“Tort Reform Record (December 31, 2003), pp. 2-3,” American Tort Reform Association. The American Tort Reform Association (ATRA) does not list reforms enacted prior to 1986, when the association was founded. Although the ATRA lists Vermont as enacting reform of joint-and-several liability since 1986, Vermont actually enacted that reform in 1985.
“Ohio’s tort reform law hasn’t lowered health-care costs,” Stephen Koff, The Plain Dealer, March 20, 2010.
“Physicians’ Fears Of Malpractice Lawsuits Are Not Assuaged By Tort Reforms,” Emily R. Carrier, James D. Reschovsky, Michelle M. Mello, Ralph C. Mayrell, and David Katz, Health Affairs 29, NO. 9 (2010): 1585–1592.
Physicians For Reform, www.physiciansforreform.org.
“President Obama: Ignoring tort reform equals administrative malpractice,” Melissa Walton-Shirley MD, December 20, 2009, theheart.org.
“Researchers peg malpractice costs at over $55 billion,” Jennifer Lubell, Sept 7, 2010, Modern Physician.
“Show Me Tort Reform: the Missouri Experience: The changes in one state and their implications for the nation,” John C. Hagan III, MD; John F. Doane, MD; and Jim Denning, Cataract and Refractive Surgey Today.
“Small Cost Benefit for Tort Reform, More Primary Care,” Merrill Goozner, The Fiscal Times, Sep 14, 2010.