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Mayor proposes cap on malpractice awards
(Published July 12, 2004)
By STEPHANIE BRINSON
Dr. William Cooper, an obstetrician in the District of Columbia for 20 years, says there is no doubt that he and his colleagues love what they do. Yet, he predicts that five physicians with whom he works will be giving up their profession within the next few months.
High medical liability insurance rates have been making it increasingly difficult for physicians to practice medicine in the District. As a result, they are either moving their practices out of the city, choosing to retire earlier than planned or changing careers.
The city is reflecting a nationwide trend, where medical malpractice insurance premiums appear to increase as jury awards for malpractice lawsuits grow.
The Health Care Liability Reform Act, recently introduced by D.C. City Council Chairman Linda W. Cropp at the request of Mayor Anthony A. Williams, seeks to address this issue that doctors and others say has been limiting residents' access to affordable, reliable health care.
"I think D.C. is in danger of losing very critical medical care – or at least is making it much more inconvenient for people to get medical care," said Joseph P. Laukaitis, a rheumatologist at George Washington University Hospital.
Critics of the legislation -- which was drafted by members of the mayor's Office of Policy and Legislative Affairs, the D.C. Department of Health and the Department of Insurance, Security and Banking -- assert that the bill infringes upon individual rights, discriminates against lower-income individuals and limits legitimate medical liability.
The council's Committee on the Judiciary is expected to hold a public hearing on the bill in the fall.
In malpractice suits, physicians can pay millions of dollars in non-economic damages – often nebulous amounts awarded to individuals for emotional pain and suffering they may have experienced as a result of their injury. These amounts drive up insurance premiums, which "are out of control and rising constantly," Laukaitis said.
High premiums lead to increased costs for small business owners who provide health care. Higher risk specialties, such as surgery and obstetrics, are hit harder than others. For example, the average insurance company reimburses obstetricians $2,000 per delivery, a mere knick in the over $100,000 obstetricians pay each year for malpractice insurance, said John Lawson, board chairman of the D.C. Medical Society.
The trend is particularly prevalent in the District, which Lawson said has the second or third highest per capita number of malpractice suits in the country and ranks first in the country for the amount paid per verdict in malpractice suits.
It's not that doctors in the District are so incompetent that they have to pay higher amounts in malpractice insurance. Even with a record free of malpractice charges, Cooper said his insurance rates have increased on average $27,000 annually for the past several years.
Instead, the higher insurance rates are a result of zero regulation of malpractice suits, Lawson said. This, coupled with what Lawson called the city's litigious nature, results in numerous and pricey malpractice suits, in which lawyers receive 50 to 60 percent of the money awarded, he said.
One way some states have tried to stabilize medical malpractice premiums and curb the pending crisis has been to place caps on jury verdicts, limiting the amount of money individuals can receive in non-economic awards.
In 1970, California enacted the Medical Injury Compensation Reform Act or MICRA law, which placed a $250,000 limit on non-economic damages that can be awarded in a malpractice suit. Similarly, the Health Care Liability Reform Act looks to cap non-economic damages at $250,000.
Maryland and Virginia already have such legislation. Maryland currently has a $650,000 cap on non-economic damages, while Virginia has a $1.7 million cap on total damages, including a $350,000 cap on punitive damages.
As a result, physicians in the District looking to escape the city's high insurance rates flee to set up practices in Maryland and Virginia, where rates are lower due to caps, the bill's backers have said.
Data provided for this year by NCRIC Inc., a physician-governed medical professional liability insurer in the District, confirm D.C. physicians in high-risk specialties pay more for insurance. D.C. orthopedic surgeons pay $82,584 in insurance, as compared to $61,095 in Virginia and $52,288 in Maryland. D.C. obstetrician/gynecologists pay $122,323, while those in Virginia and Maryland average $72,425 and $115, 837, respectively.
However, a 2002 report by the U.S. General Accounting Office showed that tort reform laws – like those in California, Maryland and Virginia – may not lower malpractice insurance rates. Rates in California actually increased after MICRA took effect in 1976, leaping from 16 to 337 percent in southern California between 1980 and 1986, before they started to decline.
Opponents of the bill argue it tries to help the malpractice liability problem at the expense of individuals' rights.
Jack Olender, president of the Washington malpractice law firm Jack H. Olender & Associates, said the bill "does very little but help doctors."
"It's terrible," Olender said. "It tries to cure a problem that some doctors have on the back of the most horribly injured patients. It tries to cut off the rights of the most horribly injured patients to recover compensation for their injuries."
Another D.C. lawyer, who asked not to be named, gave the example of a woman suffering malpractice by a doctor and no longer being able to bear children as a result. With a $250,000 cap, she could receive around $100,000 after lawyer fees for her emotional pain.
"Is that a fair amount?" he asked.
In malpractice cases, the proposed D.C. bill also seeks to limit punitive damages to twice the amount of economic damages awarded or $500,000, whichever is greater. In doing this, opponents also say it discriminates against lower-income individuals, who will have smaller compensatory claims for such things as lost wages.
Wayne Cohen, president of the Trial Lawyers Association of Metropolitan Washington D.C., said the bill "does not encourage doctors to practice good medicine because it limits liability when a mistake is made." Instead of the government, Cohen said, juries should decide how much an individual is compensated for being injured.
The proposed legislation also provides immunity from liability to health care providers who offer free care in the District, unless the action in question is proven to be an intentional wrong or a disregard for the patient's safety.
John Fernandez, director of the mayor's Office of Policy, Research and Development and a drafter of the bill, said the goal of that provision is to "provide an incentive of protection for those who want to volunteer services for those who can't afford health care."
The legislation also places tighter regulations on insurance companies when increasing medical liability rates for health care providers. Any rate change proposed by a company must first be filed with the commissioner of the Department of Insurance, Securities and Banking, who would have 60 days to determine if the rate is "adequate, not excessive and not unfairly discriminatory."
Dr. Nancy L. Sanders, an obstetrician in Washington for 17 years, said the legislation is necessary, whether or not it solves the entire problem.
"Tort reform – I don't even know if that is the whole answer, but it's a step in the right direction," she said.
Copyright 2004, The Common Denominator