Travels With Susan

Some people understand that George Orwell's  Animal Farm and 1984 are fictional novels meant to stand as a warning against lying politicians who use propaganda to mislead, deceive and corrupt the voters.  Others take Orwell's novels as a guide.  Nancy Pelosi seems to be one of the latter.  Section 2531 of her proposed health care reform offers a bribe to states to dump the medical malpractice reforms they have already adopted.  The federal government will pay states to adopt "medical liability alternatives" that require insurance companies to make early offers in medical malpractice cases And may include a requirement that attorneys obtain a certificate from someone who is actually a doctor that there was malpractice before filing the case.  This is supposed to cut costs.  But, in addition, the malpractice reforms MUST NOT include caps on awards or caps on attorney fees.  

Here's the rub.  Texas and California have already adopted reforms that DO include caps on emotional harm awards and caps on attorney fees.  

While Texas may be known as a conservative state, it has not been conservative when it comes to litigation.  The largest ever known jury award was made in the great state of Texas.  In Pennzoil v. Texaco a Texas jury awarded over 10 Billion dollars to Pennzoil.  This was a business dispute, but Texas juries were no slouches when it came to medical malpractice awards either.   Despite claims made by plaintiff's malpractice lawyers, who disguise themselves as consumer watchdogs, caps on awards, among other reforms have resulted in lower malpractice premiums to doctors, which means lower fees to the public.

The cost of the actual jury awards is,  however, really just a tiny part of the cost of the current malpractice system in many states.  Most studies show that the majority of jury awards in malpractice cases are for the defendant (meaning the doctor or hospital).  So what's the complaint?  Answer-- the cost of defense is so high, that nobody really wins.  Speaking as a lawyer I can tell you that the cost in attorney fees and costs on the average malpractice case will run at least $100,000, and the insurance companies pay those costs.  Why does it cost so much? First, you have to look at a lot of medical records and you have to take a lot of depositions.  So one malpractice case engages not only a lot of attorney time but a lot of physician expert (other than the defendant ) time on both sides of the case.  In California, the insurance companies end up paying for a lot of that physician time.  If you take the decision of a physician expert, you have to pay the expert for his time, often at a rate of $1,000 per hour.  So a physician expert deposition can easily cost $5,000-- part for the attorney fees, part for court reporter fees and part for physician witness fees.  

All of the cost of defense in cases in which the doctors and hospitals WIN is paid by the insurance company.  This explains why doctors pay malpractice premiums of 20,000 to 100,00 per year.  

But the malpractice insurance cost is just a larger slice of the part of the iceberg that appears above water.  The other part is the procedures, limitations, extra tests, extra personnel devoted to documentation that go on because of malpractice claims.  

Of course those cases also cost plaintiff's personal injury lawyers.  Because the costs for these cases are so high, personal injury lawyers will only take cases where they expect a very big payoff.  Caps on fees and attorney fee awards discourage attorneys from taking cases with small injuries or which are lacking in merit. That's a good thing.

Here is the text of the statute

SEC. 2531. MEDICAL LIABILITY ALTERNATIVES.

2 (a) INCENTIVE PAYMENTS FOR MEDICAL LIABILITY

3 REFORM.—

4 (1) IN GENERAL.—To the extent and in the

5 amounts made available in advance in appropriations

6 Acts, the Secretary shall make an incentive payment,

7 in an amount determined by the Secretary, to each

8 State that has an alternative medical liability law in

9 compliance with this section.

10 (2) DETERMINATION BY SECRETARY.—The

11 Secretary shall determine that a State has an alter12

native medical liability law in compliance with this

13 section if the Secretary is satisfied that—

14 (A) the State enacted the law after the

15 date of the enactment of this Act and is imple16

menting the law;

17 (B) the law is effective; and

18 (C) the contents of the law are in accord19

ance with paragraph (4).

20 (3) CONSIDERATIONS FOR DETERMINING EF21

FECTIVENESS.—In determining whether an alter22

native medical liability law is effective under para23

graph (2)(B), the Secretary shall consider whether

24 the law—

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1 (A) makes the medical liability system

2 more reliable through prevention of, or prompt

3 and fair resolution of, disputes;

4 (B) encourages the disclosure of health

5 care errors; and

6 (C) maintains access to affordable liability

7 insurance.

8 (4) CONTENTS OF ALTERNATIVE MEDICAL LI9

ABILITY LAW.—The contents of an alternative liabil10

ity law are in accordance with this paragraph if—

11 (A) the litigation alternatives contained in

12 the law consist of certificate of merit, early

13 offer, or both; and

14 (B) the law does not limit attorneys’ fees

15 or impose caps on damages.

16 (b) USE OF INCENTIVE PAYMENTS.—Amounts re17

ceived by a State as an incentive payment under this sec18

tion shall be used to improve health care in that State.

19 (c) TECHNICAL ASSISTANCE.—The Secretary may

20 provide technical assistance to the States applying for or

21 receiving an incentive payment under this section.

22 (d) REPORTS.—Beginning not later than one year

23 after the date of the enactment of this Act, the Secretary

24 shall submit to the Congress an annual report on the

25 progress States have made in enacting and implementing

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1 alternative medical liability laws in compliance with this

2 section. Such reports shall contain sufficient documenta3

tion regarding the effectiveness of such laws to enable an

4 objective comparative analysis of such laws.

5 (e) DEFINITION.—In this section—

6 (1) the term ‘‘Secretary’’ means the Secretary

7 of Health and Human Services; and

8 (2) the term ‘‘State’’ includes the several

9 States, District of Columbia, the Commonwealth of

10 Puerto Rico, and each other territory or possession

11 of the United States.

12 (f) AUTHORIZATION OF APPROPRIATIONS.—There

13 are authorized to be appropriated to carry out this section

14 such sums as may be necessary, to remain available until

15 expended.