A Triad for Medical Liability Market Reform

Texas Malpractice Liability Reforms: 4 Years Later

2007-10-05T21:03:00.000-07:00

NY Times: October 5, 2007

More Doctors in Texas After Malpractice Caps

HOUSTON, Oct. 4 — In Texas, it can be a long wait for a doctor: up to six months.

That is not for an appointment. That is the time it can take the Texas Medical Board to process applications to practice.

Four years after Texas voters approved a constitutional amendment limiting awards in medical malpractice lawsuits, doctors are responding as supporters predicted, arriving from all parts of the country to swell the ranks of specialists at Texas hospitals and bring professional health care to some long-underserved rural areas.

The influx, raising the state’s abysmally low ranking in physicians per capita, has flooded the medical board’s offices in Austin with applications for licenses, close to 2,500 at last count.

“It was hard to believe at first; we thought it was a spike,” said Dr. Donald W. Patrick, executive director of the medical board and a neurosurgeon and lawyer. But Dr. Patrick said the trend — licenses up 18 percent since 2003, when the damage caps were enacted — has held, with an even sharper jump of 30 percent in the last fiscal year, compared with the year before.

“Doctors are coming to Texas because they sense a friendlier malpractice climate,” he said.

Some experts say the picture may be more complicated and less positive. They question how big a role the cap on malpractice awards has played, arguing that awards in malpractice lawsuits showed little increase in the 12 years before the law changed.

And some critics, including liability lawyers, question whether the changes have left patients more vulnerable. With doctors facing reduced malpractice exposure, they say, many have cut back on their insurance, making it harder for plaintiffs to collect damages. Moreover, the critics say that some rural areas have fewer doctors than before.

The measure changing Texas’ malpractice landscape, Proposition 12, was narrowly approved in a constitutional referendum on Sept. 12, 2003. It barred the courts from interfering in limits set by the Legislature on medical malpractice recoveries.

For pain and suffering, so-called noneconomic damage, patients can sue a doctor and, in unusual cases, up to two health care institutions for no more than $250,000 each, under limits adopted by the Legislature. Plaintiffs can still recover economic losses, like the cost of continuing medical care or lost income, but the amount they can win was capped at $1.6 million in death cases.

All but 15 states have adopted some limits on medical damage awards, according to the National Conference of State Legislatures. But the restrictions in Texas go further than in many states, where the limits are often twice as high as they are here.

“Other states have passed tort reform, but Texas implemented big changes all at once,” said Lisa Robin, a vice president for government relations at the Federation of State Medical Boards, a national umbrella group based in Dallas.

Some experts say that the lack of a state income tax, combined with what William M. Sage, a law professor at the University of Texas in Austin, called a “relatively rapid transition in its tort reputation as a plaintiff-friendly state,” has contributed to the state’s appeal to doctors.

Dr. Timothy George, 47, a pediatric neurosurgeon, credits the measure in part with attracting him and his sought-after specialty last year to Austin from North Carolina. “Texas made it easier to practice and easier to take care of complex patients,” he said.

The increase in doctors — double the rate of the population increase — has raised the state’s ranking in physicians per capita to 42nd in 2005 from 48th in 2001, according to the American Medical Association. It is most likely considerably higher now, according to the medical association, which takes two years to compile the standings. Still, the latest figures show Texas with 194 patient-care physicians per 100,000 population, far below the District of Columbia, which led the nation with 659.

The Texas Medical Board reports licensing 10,878 new physicians since 2003, up from 8,391 in the prior four years. It issued a record 980 medical licenses at its last meeting in August, raising the number of doctors in Texas to 44,752, with a backlog of nearly 2,500 applications.

Of those awaiting processing, the largest number, after Texas, come from New York (145), followed by California (118) and Florida (100).

In some medical specialties, the gains have been especially striking, said Jon Opelt, executive director of the Texas Alliance for Patient Access, a medical advocacy group: 186 obstetricians, 156 orthopedic surgeons and 26 neurosurgeons.

Adding to the state’s allure for doctors, Mr. Opelt said, was an average 21.3 percent drop in malpractice insurance premiums, not counting rebates for renewal.

To help state officials monitor the influx of doctors, the medical board recently got money to hire six more employees, said Dr. Patrick, the director since 2001. It now has 17 lawyers, compared with no more than four when he arrived, he said.

Since 2003, investigations of doctors have gone up 40 percent, patient complaints have gone up 25 percent, and disciplinary actions about 8 percent, said Jill Wiggins, a board spokeswoman. But the figures may reflect greater regulatory diligence rather than more misconduct, Ms. Wiggins said.

Of the 10,878 physicians licensed since 2003, she said, 14 have been the subject of disciplinary actions, on charges as diverse as addiction problems and record-keeping infractions, with none accused of harming patients.

But there are those who are skeptical about the caps on malpractice.

“We’ve lost our system of legal accountability, said N. Alex Winslow, executive director of Texas Watch, a consumer advocacy group. “Just having more doctors doesn’t make patients safer. It remains to be seen who is coming to our state.”

Demian McElhinny, 33, a former hospice pharmacy technician in El Paso, recently settled claims against a neurological surgeon for spinal surgery that left him disabled and his family impoverished; he said he emerged with “pennies on the dollar.” His wife, Kelly, found work as a school bus driver, he said, while “I’m at home being a housewife to my two boys.”

Mr. McElhinny’s surgeon, Dr. Paul Henry Cho, later admitted to the medical board that he was addicted to a narcotic cough syrup and had written fraudulent prescriptions. Dr. Cho’s license to prescribe drugs was suspended, although it was soon restored, and he moved from El Paso to a hospital in Fort Worth. He did not return a call to his office, and his lawyer declined to comment.

Paula Sweeney, a leading Dallas liability lawyer and a past president of the Texas Trial Lawyers Association, said, “A lot of legislators are aware they went too far in ’03.”

Texas Watch, in a report last February, questioned the decline in malpractice insurance rates, saying they must be seen in light of increases of as much as 147 percent before the 2003 referendum. And Bernard S. Black, a law professor at the University of Texas, has published studies showing little increase in Texas insurance awards from 1990 to 2002, casting doubt, he said, on the “malpractice insurance crisis.”

Professor Black also said that data was too scant to attribute the rise in the number of doctors to the damage caps. “I don’t doubt there’s an effect,” he said, “but I think it’s a small one.”

Texas Watch also contends that many poor rural areas of Texas remain underserved, and rural West Texas has actually lost several physicians since 2003. But Dr. James Baumgartner, a pediatric neurosurgeon at Memorial Hermann Hospital in Houston, is among many doctors who believe the new malpractice caps have helped.

Dr. Baumgartner said it was now far easier to recruit doctors to a state where close to 30 percent of children lack health insurance and Medicaid reimbursements are low.

Dr. Keith Hill, a recently discharged Army doctor with a specialty in foot and ankle reconstruction, said the change in state law was the reason he moved from Georgia to open a practice in Beaumont, a poor city in East Texas long seen as plaintiff-friendly.

Had it not happened, said Dr. Hill, 40, “I can say I would not have considered Texas.”

Continuing Benefits of Comprehensive Medical Liability Reform In Texas

2007-10-05T20:48:00.000-07:00

Influx of doctors overwhelms Texas board

Monday Jul 9, 2007: 5:18 PM ET

An influx of doctors lured to Texas by new limits on malpractice lawsuits has overwhelmed the state board that screens candidates for medical licenses, creating a backlog that forces many applicants to wait months before they can start seeing patients.

Officials said many of the relocating physicians are filling shortages in areas such as Beaumont, where trauma patients previously had to be flown other cities because there weren't enough surgeons to treat them. But Austin psychiatrist Dr. James E. Kreisle Jr. said he fears the Texas Medical Board's backlog could prompt some physicians to rethink their decision to move.

Kreisle and his colleagues have been waiting since the fall for two psychiatrists from South Carolina and Georgia to get licensed in Texas so they can join their practice. In the meantime, patients are being forced to wait three weeks for appointments.

The board received 4,000 applications for medical licenses in 2006, up from 2,992 the previous year. Spokeswoman Jill Wiggins said the board expects to approve 2,750 new licenses this year, 235 more than last year. There is a backlog of more than 2,398 applications.

Lawmakers approved $1.2 million to hire six more employees to process applications more quickly. The board has also hired temporary workers and is paying staffers overtime, but they still can't keep up, Wiggins said. "The pipeline is just clogged," she said.

Approving an application for a medical license involves verifying the doctor's medical education, doing a criminal background check and other steps. In 2003, it took 45 days to approve the most complex applications and 20 days to approve the simplest, Wiggins said.

Data provided by the board shows it is now taking the agency more than six months to process the most complicated applications, including those that come from out-of-state doctors or veteran doctors who have long histories to be checked. The simplest applications are taking about 41 days to approve. Wiggins estimated it will take "a little over a year" before the agency's new staffers can bring the applications backlog under control. "You're turning a battleship around," she said.

Several doctors who moved to Texas from other states said they were drawn by lower malpractice insurance rates.

The average malpractice insurance premiums in Texas have fallen by 21.3 percent since 2003, when lawmakers and voters implemented a $250,000 cap on non-economic damages such as pain and suffering in malpractice cases, according to Jon Opelt, who leads a group of doctors, hospitals and other health care providers that fought for the changes.

The changes are "a big factor why Texas has become a popular state to practice in," said Dr. Punit Chadha, an oncologist who moved from Chicago to Austin last year. He said his malpractice insurance premium is one-fourth of what it would have been in Chicago.

Dr. Kevin H. Brown, an obstetrician who opened a Round Rock practice with his wife in May, said they paid $130,000 a year for their malpractice insurance in Georgia. Now, they pay a combined annual premium of $82,000 a year.

"It was a $24,000 raise for each of us before we even got started," Brown said.

___

Information from: Austin American-Statesman, http://www.statesman.com

David Hendricks: Insurance companies, doctors flock to Texas

Web Posted: 06/01/2007 09:01 PM CDT

San Antonio Express-News

When Texas voters in 2003 approved a state proposition capping lawsuit awards for medical malpractice cases, only four insurance companies even offered malpractice policies to Texas doctors.

Now, 30 insurance companies crowd the market, and premiums have fallen like so many San Antonio Spurs playoff opponents. The lower cost of being a doctor in Texas has helped trigger a stampede of applications for physician licenses, with the waiting line now up to 12 months.

Rates have fallen an average of 21.3 percent, and up to 41 percent at one insurance company, says former state Rep. Joe Nixon, a Houston trial lawyer who helped sponsor passage of Proposition 12.

An internal medicine doctor in Houston paid $18,507 for malpractice insurance in 2003 but only $13,272 in 2007, or $10,403 with a 20 percent renewal dividend, according to figures given to Nixon by the state's largest insurer, Texas Medical Liability Trust. An obstetrician paid $56,564 in 2003 but only $41,575 in 2007, or $32,585 at the renewal rate. A neurosurgeon paid $103,558 in 2003 but only $76,117 in 2007, or the renewal rate of $59,659.

Before Proposition 12, the state did not impose a cap on the amount of noneconomic damages in a malpractice lawsuit against doctors. Proposition 12 established a cap of $250,000. Malpractice lawsuits have fallen 50 percent, Nixon said, causing some malpractice lawyers to shift to other fields, such as commercial litigation.

Insurance companies are flocking to Texas because now they can put a numeric value on the risk of doing business in Texas, something that was not possible when the sky was the limit for juries. Assessing risks helps assure profits for insurance companies. As more insurance companies entered Texas, rates have dropped even further because of competition.

Probably no other profession could benefit so much from legislated lawsuit protection. As Nixon explained it, doctors have little control over their incomes. Their fees are determined by government programs such as Medicare and Medicaid and by insurance companies. On the expense side of doctors' balance sheets, however, are rising incomes for staff, higher rents for offices and, before 2003, outlandish malpractice insurance premiums. An unknown number of Texas doctors closed their practices or retired earlier than they would have liked.

Tennessee is considering a lawsuit cap similar to the one in Texas. In the meantime, 350 Tennessee doctors have applied to move their practices to Texas, 50 of those with license applications still pending, Nixon said.

Meanwhile, about 2,250 license applications await processing at the Texas Medical Board in Austin. The wait could be as long as a year for some of the more experienced doctors because it takes longer to review their records.

The fear is that some doctors will give up on Texas and go elsewhere instead of waiting. A $1.22 million emergency funding request was approved during the last days of Texas legislative session for the Texas Medical Board, which licenses physicians. That is on top of the $18.3 million regular biennial appropriation, said Jane McFarland, the board's chief of staff.

The board plans to add nine new employees to its 139-member staff, seven of which will help chop away at the backlog of license applications.

Six months to a year is a long time to make a doctor wait to start a practice in a new location. Texas needs as many doctors as possible because it ranks in the bottom half of states in doctors per capita. Even the new wave of applicants won't change that.

Alluding to popular restaurants with lines of patrons out the front door, Nixon said: "Some of these doctors will find a new place to eat."

dhendricks@express-news.net

Posted on Fri, Jun. 15, 2007

Perry signs Medicaid reform bill

By BILL HANNA
Star-Telegram staff writer

FORT WORTH -- Gov. Rick Perry signed the state's Medicaid reform bill Thursday, which is designed to bring increased healthcare coverage to as many as 200,000 of the state's working poor.

That is a small fraction of Texans without health insurance (4%), but Perry, who was speaking at John Peter Smith Hospital, touted the plan as an important first step.

"It will help encourage personal responsibility," Perry said. "It will promote consumer choice and will provide hundreds of millions of dollars to insure working Texans who are just one terrible illness away from an absolute catastrophe in their personal lives."

State Sen. Jane Nelson, R-Lewisville, the sponsor of Senate Bill 10, warned that Medicaid costs are spiraling out of control in Texas. Ten years ago, 14 percent of the state budget was spent on Medicaid. It is now close to 26 percent and was expected to reach 40 percent by 2017.

Medicaid is the federal program administered by states that pays for indigent healthcare. The costs are shared by state and federal governments. Texas is seeking a federal waiver that could bring in $1 billion to create a trust fund that would help the working poor obtain health insurance. Nearly 25 percent of Texans do not have health insurance.

Mike Leavitt, U.S. Health and Human Services secretary, traveled with Perry to endorse the legislation, leaving officials confident that the waiver will be approved.

"My hat is off to Texas today and Governor Perry. I do get it, and I get that it was an important day for Texas and an important day for America," Leavitt said.

Medicaid By the Numbers:

$17.9 billion: Amount Medicaid costs Texas annually.

5 million: Number of uninsured Texans.

200,000: Uninsured Texans who could get insurance under this plan.

Highlights of legislation

Creates a fund to cover some healthcare costs and provides money for premiums.

Provides assistance for private insurance enrollment and employer-sponsored plans.

Creates benefit packages for children with special healthcare needs.

Promotes consumer choice through health savings accounts.

Rewards healthy lifestyles with healthcare incentives.

SOURCE: Gov. Rick Perry's office and state Sen. Jane Nelson' office

Tort reform still splits doctors, lawyers

2006-10-06T06:49:00.000-07:00

Houston Business Journal - September 29, 2006: by Mary Ann Azevedo

Houston orthopedic surgeon Dr. Terry Clyburn says passage of Proposition 12 gave him incentive to continue performing high-risk procedures. "Several years ago, I was very seriously considering stopping the higher-risk part of my practice and simply doing straightforward surgical procedures because I was very disheartened," says Clyburn, who specializes in joint replacement and adult reconstructive surgery at The University of Texas Health Science Center.

Houston attorney John Eddie Williams, who actively campaigned against the passage of Proposition 12, says consumers are getting the short end of the tort reform stick.
"We passed Proposition 12 in order to help Texas families," says Williams. "We were promised there would be savings all around, and when I look at the health care costs that I pay for my employees, they've gone up. Doctors were promised savings. I don't think they've seen much savings. Consumers haven't seen any savings."

Three years after passage of medical tort reform by the Texas Legislature, proponents and opponents continue to make many of the same arguments for and against the landmark bill.

Houston physicians generally give a thumbs up to the impact of tort reform. Some statistics support their case.

Placing a cap on jury awards for judgments in malpractice suits has attracted new outside carriers as well as doctors from other states.

The Texas Medical Board is anticipating a record 4,500 applications for new physician licenses this year. The number is 40 percent greater than in 2005, the board's busiest year on record.

Dr. Donald Patrick, executive director of the state board, calls medical tort reform the "only one viable hypothesis" to explain the jump in applications.
Plaintiff attorneys take a more negative view. They note Texas continues to carry the country's highest number of uninsured people. They also claim Proposition 12 has made it more difficult for malpractice victims with legitimate cases to find attorneys.

Jim M. Perdue Jr. says the vast majority of his practice was medical malpractice cases before tort reform. "Now they're still the majority, but don't represent nearly as much of our business." says Perdue who practices with his father, Jim Perdue Sr., at The Perdue Law Firm. He says those most affected by Proposition 12 are the elderly, children and stay-at-home moms who can't recover lost wages. Says Perdue: "They have had their rights truly cut because of the way these caps operate. Unfortunately, this law has affected those who are the most seriously injured and their ability to recover."

Changing litigation climate:
The centerpiece of Proposition 12 was a $250,000 cap on judgments for non-economic damages such as pain and suffering in health care liability cases, (combined with malpractice insurance market reforms and increasing the disciplinary authority of the Texas Board of Medical Review and Licensure.)

Dr. Steven Gartzman, an emergency room physician at Christus St. Catherine Hospital in Katy, believes tort reform literally kept specialty medical practices alive. "It's saved medicine in Texas," says Gartzman. "We'd be in deep, deep trouble without tort reform. People would literally die without it. There would not be enough specialists to treat the life-threatening emergencies we have every day."

Orthopedic surgeon Clyburn says Proposition 12 made a big difference in the way he approaches his work. Clyburn says he spent a lot of time counseling high-risk patients who slammed him with lawsuits in several cases. He has not been named in any litigation since Proposition 12 passed, and he feels more confident in prescribing treatments. "I'm also comfortable that the patients who really need this level of care are able to get it," Clyburn says.

Tort reform has allowed Dr. James Key to rein in the expense of liability insurance. "It's been nothing but a boon," says the chief of ophthalmology at St. Luke's Episcopal Hospital. "Proposition 12 enabled a small group practice at St. Luke's to get costs under control and seriously think about adding another new partner to the practice."
Before tort reform a new doctor in his practice paid around $20,000 in the first year for liability insurance, a figure Key acknowledges is "little" compared to more high-risk specialties. First-year coverage for a starting physician now costs about $8,000 a year. Key, who has testified as an expert witness in a number of lawsuits, doesn't think that Proposition 12 has eroded a patient's ability to recover from the cost of illness and the economic damages of any malpractice. "It's cut down on huge awards for pain and suffering," says Key. "But nobody is out any true disability because of Proposition 12."

Questioning caps:
Attorney Williams doesn't agree. He contends malpractice patients have a more difficult time finding lawyers to take their cases. The cap at times leaves little compensation for attorneys, he says, and insurance companies have less incentive to settle. Williams also questions who has reaped the rewards. "I don't think in any way has it done anything for families in Texas. All it's done is actually help insurance companies," he says. Adds Williams: "It sounds to me like we were sold a bill of goods and got bamboozled a little bit."

Plaintiff attorney Perdue contests claims that Proposition 12 has cut down on frivolous lawsuits. Judgment caps do nothing to fight frivolous cases, Perdue charges, but only make some economically unfeasible. He says he turns down a case "that would have been a viable and legitimate death case under the old law" every other week. "If a case is going to require two or three experts to prosecute and it's going to cost over $100,000 to prosecute, it will be tough for victims or their families to find a lawyer," Perdue explains.

But he is not giving up. "I'd like to say they haven't run me out of the business yet. And I'm not going to let them," Perdue says.

Increasing "Fair But Firm" Disciplinary Decisions Improves Patient Safety

2006-07-12T12:08:00.000-07:00

Doctors face Texas Medical Board's watchful eye:

http://www.bizjournals.com/houston/stories/2006/07/10/focus1.html

More doctors are being called before the Texas Medical Board, and there has been a dramatic jump in disciplinary decisions. The number of investigations increased from 1,775 in 2003 to 2,131 in 2005. The number of disciplinary decisions rose from 187 in 2002 to 304 in 2005, according to online statistics provided by the board.
Houston Business Journal - July 12, 2006

North Carolina medical board may toughen up:

http://www.newsobserver.com/722/story/459749.html

The N.C. Medical Board, criticized for failing to aggressively police the state's 21,000 physicians, will have more firepower under a bill adopted this week by the General Assembly. Raleigh News & Observer - July 12, 2006

Tennessee Joins 20 States in Medical Liability Crisis

2006-02-16T16:55:00.000-08:00

Guam Showing Problem Signs

For immediate release: February 14, 2006

CHICAGO — The American Medical Association (AMA) today announced that Tennessee is the 21st state designated by the AMA as "in crisis" due to a deteriorating medical liability climate that is jeopardizing patients' access to care.

"Our broken medical liability system is choking out access to care and threatening every American who lives in a crisis state or travels through one," said AMA President J. Edward Hill, MD. "Tennessee lawmakers need to act now to stem this tide before more patients are put at risk. Proven reforms have worked in other states and can make a difference in Tennessee."

"Tennessee is facing a 'perfect storm' - a collision of destructive influences that is greater than the sum of its parts," said Phyllis Miller, MD, president of the Tennessee Medical Association (TMA). "The high cost of our broken legal system is driving up the cost of patient care, medical liability insurance, and the cost of doing business in Tennessee. The constant threat of a lawsuit is forcing physicians to rethink their career choices. Without relief, Tennessee physicians often have no choice but to curtail their practices, move out-of-state or discontinue practicing medicine altogether. Patients will be left without access to the medical care they need."

From 1995 to 2005, Tennessee physicians have seen liability premium increases as high as 127 to 212 percent. While premiums costs have increased, reimbursements from TennCare - the state's health care program - have dwindled, and now average only 25 percent of billed charges.

"No business can continue to operate if expenses consistently outpace revenue. Physician practices are no different. Doctors have to pay their bills and pay their employees, just like everyone else, or they cannot keep their doors open," Dr. Hill said.

The current crisis makes it difficult to attract physicians to Tennessee, and patient access to physicians in high-risk specialties is suffering. A TMA survey found that 70 percent of Tennessee's physicians believe the state has a shortage of high-risk specialists. AMA data from 2004 shows that of Tennessee's 95 counties:

81 counties have no residing neurosurgeon in patient care.
49 counties have no residing orthopedic surgeon in patient care.
47 counties have no residing emergency physician in patient care.
42 counties have no residing obstetrician-gynecologist in patient care.

Tennessee today joins Arkansas, Connecticut, Florida, Georgia, Illinois, Kentucky, Massachusetts, Mississippi, Missouri, New Jersey, Nevada, New York, North Carolina, Ohio, Oregon, Pennsylvania, Rhode Island, Washington, West Virginia and Wyoming as states in crisis.

"We need to fix a jackpot justice system that is bad for our patients, bad for health care, and bad for local economies," Dr. Hill said. "It's time for Tennessee's state and federal representatives to stand up and do what is necessary to ensure that when patients need care, physicians are there to provide it."

Medical liability reforms that include a reasonable limit on non-economic damages have been proven to protect patients and preserve access to medical care. A medical liability crisis in Texas was halted after the state enacted sweeping reforms in 2003, and voters passed a constitutional amendment to head off potential court challenges. Since then, access to care has been increasing, claims are down, physician recruitment and retention are up, and new insurers are entering the increasingly competitive Texas medical liability market, creating more choices for physicians. As a consequence, last year the AMA removed Texas from the list of crisis states.

"Lawmakers and voters acted to bring Texas back from a meltdown of their health system," said Dr. Hill. "We urge Tennessee's state and federal lawmakers to consider the example of other states and look to proven remedies when considering medical liability reform."

The AMA also announced today that it is adding Guam to the medical liability crisis map as a territory "showing problem signs." Access to care is already a problem in Guam with a limited number of physicians practicing some specialties, no physicians available in others, and the closest alternative approximately eight hours away in Hawaii. Guam has only one civilian hospital serving a largely rural population of 160,000. A number of physicians have left the territory, and local doctors cite the medical liability environment as the key challenge in attracting and retaining physicians to meet existing needs.

Further details on the situations in Tennessee and Texas can found on the AMA Web site. Please visit the Web site and click on "Tennessee" and "Texas."

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For more information, please contact:
Robert J. Mills AMA Media RelationsOffice:
(312) 464-5970Mobile: (312) 543-7268

A Smoking Gun?: A Dramatic Mismatch Between Malpractice Insurance Premiums Collected and Net Claims Paid

2005-09-22T11:03:00.000-07:00

According to the Center for Justice and Democracy, a consumer advocacy group, between 2000 and 2004:

while net malpractice claims paid did not increase, the increase in malpractice insurer premiums collected by 15 large insurers nationwide was 21 times the the increase in paid claims, and, over the same period,
the incurred-loss ratio--the ratio of claims to premiums collected--for the 15 insurers decreased almost 25% to 51.4%.

http://www.californiahealthonline.org/index.cfm?Action=dspItem&ItemID=112563&classCD=CL351

Medical Malpractice Paid Claims in 2003: United States vs Rhode Island

2005-06-17T13:46:00.000-07:00

According to the Kaiser Family Foundation (http://www.statehealthfacts.org), in 2003:

In the United States, the total number of paid medical malpractice claims was 15,287 and the number of paid claims per 1,000 physicians was 18.8 (15,287/814,909).
In Rhode Island, the total number of paid medical malpractice claims was 71 and the number of paid claims per 1,000 physicians was 18.3 (71/3,879).

Rhode Island Replaces Texas on Crisis List

2005-05-31T11:18:00.000-07:00

AMA eVoice: May 26, 2005:

FROM THE PRESIDENT

Two states are seeing changes in their medical liability climates.

First, the good news. We've created a new category for states where effective reforms are halting the crisis. Texas is the first state to enter this category.

In September 2003, voters passed a constitutional amendment that allowed the state legislature to pass good reforms that can't be challenged in the courts.

Since then, Texas has seen all five of its largest insurers cut physicians' medical liability insurance rates. Physicians - especially high-risk specialists like neurosurgeons and obstetricians - are back in practice. And that means access to care for our patients is headed in the right direction.

Unfortunately, the opposite is true in Rhode Island - which joins 19 other crisis states. Soaring jury verdicts are driving medical liability insurance premiums beyond the reach of Rhode Island physicians.

Fully 49 percent of Rhode Island physicians say these costs have caused them to stop or consider stopping certain services. And 48 percent say they're thinking about leaving the state or giving up their practice.

Rhode Island and the other crisis states need to follow Texas' lead - and enact proven reforms. And once we've got good reforms in place - whether it's state by state or through federal legislation - it's not game over. It's game begun. From there, we need to look at stronger expert witness standards, stronger arbitration requirements and even medical court systems. Nothing should be off the table.

The AMA remains committed to medical liability reform. Together we can work with each state to make it a reality for patients across America. Because together we are stronger.

John Nelson, MD

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Another negative trend for all physicians trying to cope with uncontrolled escalations in medical liability premiums is significant income reductions produced by the continuing reductions in payment for their services from private and public third party payers, especially the federal Medicare program.

How will Medicare cuts affect your state?

Projected reductions in Medicare physician payment rates of 26 percent over a six-year period starting next year will affect all 50 states.

Visit http://enews.ama-assn.org/UM/T.asp?A40.442.2339.34.271796 and select your state in the drop-down menu to see how your state will be affected.

Visit http://enews.ama-assn.org/UM/T.asp?A40.442.2339.35.271796 to contact your members of Congress to support legislation to stop the cuts.

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A PERSONAL INJURY COMPENSATION SYSTEM BROKEN BEYOND REPAIR?:

Over the last 50 years, tort costs in the U.S. have grown more than 100-fold from less than $2 billion in 1950 to $246 billion in 2003. This translates to a cost of $845 per person in 2003, compared to $12 in 1950. At this growth rate, tort costs could approach $1,000 per person by 2006. Gross Domestic Product, by contrast, has grown by a factor of 37; population by a factor of less than two.

The cost of the entire U.S. tort system increased 5.4 percent to $246 billion in 2003. About 9 percent of this total (over $21 billion) represented total medical liability costs.

Paradoxically, the majority of dollars moving through the U.S. tort system never reach the plaintiffs who suffered damages. Overall, just 22 cents of the tort dollar compensates victims for economic loss; 24 percent pays non-economic losses. More than half of every tort dollar—at least 54 percent—never reaches the victims.

A recent essay in the op-ed section of the May 30, 2005 Providence Journal reviewed the national statistics that help explain the intransigence of the problem.

According to Edward A. Kent, MD, President of the Rhode Island Society of Anestheseologists, entitled "Trial Lawyers Waste Taxes, Eject Doctors", 80 percent of cases alleging malpractice are dropped after they have burdened the tort system. Of the remaining 20 percent, 80 percent are settled with costs to the plaintiff's insurance company and 20 percent proceed to trial by jury. The physician is found not guilty by the jury 80 percent of the time.

It would be useful if all of the stakeholders in the medical tort system, especially members of the tax-paying public, were aware of the implications of these national statistics.

For example, based on these figures, for every 100,000 alleged malpractice claims filed by trial attorneys, 80,000 are dropped after they have burdened the tort system with significant expenses and adjudication delays, without any payments to the plaintiff or their lawyer.

Of the 20,000 not dropped, 16,000 are ultimately settled by the insurance company and defendant's lawyer with costs in the form of out-of-court settlements paid to the plaintiff and his or her lawyer (generally, the trial lawyer receives 20 percent of the total payment minus his or her itemized expenses).

The remaining 4,000 proceed to trial by jury. Of these cases (4 percent of every 100,000 claims), 3,200 receive an innocent verdict and 800 (0.8 percent) are found guilty resulting in awards to both the plaintiff and his or her lawyer (generally, the trial lawyer receives 30 percent of the jury award minus his or her itemized expenses).

Based on these statistics, the end result is that only about 17 percent (16,800) out of every 100,000 claims are being settled with cash awards paid to both the plaintiff and their lawyer.

The key number, however, is that a super majority of 83% of all alleged medical malpractice claims in the United States are settled without remuneration or financial costs to the party alleging a physician negligence-related personal injury.

Any unbiased, non-partisan view of these facts would suggest that, in its current configuration, the U.S. healthcare's personal injury adjudication system is analogous to a rapidly expanding $21 billion national lottery with two main features:

a 17 percent chance of winning, and
no need for either of the two parties seeking remuneration to buy a ticket.

May 31, 2005:

Reducing the Complicated to the Simple

2005-05-19T15:14:00.000-07:00

AMA eVoice: May 19, 2005

Medical liability crisis declared in Rhode Island:

Meanwhile, in Texas, a unique turnaround is under way, thanks to sweeping reforms that took effect in 2003.

To learn more visit:
http://enews.ama-assn.org/UM/T.asp?A40.442.2323.34.271796 .

THE TIPPING POINT IN U.S. MEDICAL LIABILITY REFORM

2005-02-28T13:23:00.000-08:00

"We need to fix a broken medical liability system. Doctors should be focused on fighting illnesses, not fighting lawsuits." (President George W. Bush, January, 2005)

"Medical liability policy should seek three goals:

restraining overall costs,
compensating the victims of medical mistakes, and
providing incentives for doctors and hospitals to reduce avoidable medical errors." (William M. Sage, MD, a law professor at Columbia University)

February 27, 2005 NY Times ("Bush’s Next Target: Malpractice Lawyers"

By Steve Lohr
http://www.nytimes.com/2005/02/27/business/yourmoney/27mal.html )

AMA to L.A. Times: MICRA works

2005-02-28T13:06:00.000-08:00

January 15, 2005
Los Angeles Times Letter to the Editor
Los Angeles, CA

Contrary to the Jan. 10 editorial (in the L.A. Times), experience and research demonstrate that California's medical liability law, known as MICRA, is fair — to patients and physicians. Under the law, patients, not lawyers, receive a greater share of a jury award than they would in states without reforms.

Patients in California have full access to the courtroom and can recover millions in economic damages, plus an additional quarter-million dollars for pain and suffering.If patients are harmed by negligence, they should be fully and fairly compensated. In California, they are.

California's law also ensures that physicians' insurance premiums rise at moderate levels. A Los Angeles OB-GYN pays about $63,000 per year, but in such non-MICRA states as Pennsylvania and Illinois, an OB-GYN pays $147,000 to $161,000. In crisis states, high-risk specialists are restricting services, retiring early or relocating to other states.

The AMA strongly supports California's law as a model for federal reform for one simple reason: It works. It protects patients' access to care and injects some common sense into our nation's legal system. All Americans should be so lucky as to live under California-style reforms.

John C. Nelson MD, MPH President, American Medical Association

Visit http://enews.ama-assn.org/UM/T.asp?A40.442.2008.29.271796 to read the letter.

"No Doctors, No Malpractice"

2005-02-28T10:02:00.000-08:00

AMERICAN ASSOCIATION OF PHYSICIANS & SURGEONS
1601 N. Tucson Blvd. Suite 9Tucson, AZ 85716-3450Phone: (800) 635-1196Hotline: (800) 419-4777
http://www.aapsonline.org

NO DOCTORS, NO MALPRACTICE
(AAPS NEWSLETTER: Volume 61, No. 2 February 2005)

The trial lawyers and their political servants say they have the answer to spiraling premiums for professional liability premiums: get rid of malpractice, by "disciplining" the doctors who "commit" it so that they can't practice.

Even President Bush, while campaigning for federal caps on awards, commissioned a study by the University of Iowa and the left-leaning Urban Institute to "help state boards of medical examiners in disciplining doctors" (NY Times 1/5/05).

"If you had more aggressive policing of incompetent physicians and more aggressive disciplining of doctors who engage in substandard practice, that could decrease the type of negligence that leads to malpractice suits," stated Josephine Gittler, a law professor at Iowa.

"If you take the worst performers out of practice, that will have an impact.... Most doctors have few or no claims filed against them," said Randall Bovbjerg of the Urban Institute. The same article notes that, according to the Federation of State Medical Boards, the 5,230 disciplinary actions against doctors in 2003 was up 7% from 2002 and 41% from 1993.

Meanwhile, New York hospitals have experienced an average increase of 27% per year in their liability premiums over each of the past 5 years, for a 150% increase since 1999. Since 2000, the number of insurers has decreased from six to four (NY Times 1/6/05). In 2004, some Pennsylvania surgeons were hit with a 300% increase, so that premiums equalled their take-home pay for an entire year (AP). In Maryland, about 70% of the obstetricians have been sued at least once, with the average settlement exceeding $1 million (Wash Times 12/12/04).

So, more disciplinary actions have been accompanied by higher liability costs not supportive of the plaintiff's bar theory. Has disciplinary activity been misdirected?

In New York, the percentage of actions for "poor quality care" dropped from 40% in 1999 to 28% in 2002 (AP) despite doubling physicians' licensing fees to fund more investigations.

In Texas, failure to furnish the board with requested information within 24 hours has led to harsher penalties than removing the wrong part of the lung (Star-Telegram 11/16/04). "It is extraordinarily difficult to discipline a doctor based on incompetence. Everybody knows that some doctors are in- competent, but identifying them is a very difficult task," said Timothy Jost, law professor at Washington and Lee Univ. and former member of the Ohio medical board (NY Times 1/5/05).

Massachusetts plans to have the tort system serve as a screen. Three or more payouts, either in settlements or judgments, will trigger a clinical review by the board (ibid.).

Maryland trial lawyers, while pretending to enact tort reform, forced through a bill that would foist part of tort costs onto taxpayers, while limiting further the due process rights of physicians facing board action. H.B. 2, passed in special session, changes the standard of proof for disciplinary action from "clear and convincing" to "a preponderance of the evidence." Governor Ehrlich vetoed the bill, as promised, but the legislature acted quickly to override the veto.

Tackling the "difficult task" of identifying "substandard" care are government agencies and insurers undeterred by inability to define terms such as "quality." While moving ahead with implementing a 2004 Minnesota law (M.S. 62J.43) requiring the state health department to begin standardizing the practice of medicine, Cabinet members were reluctant to give Twila Brase, President of Citizens' Council on Health Care, the definition she sought. Quality is "a little bit in the eye of the beholder," said Health Commissioner Diane Mandernach (CCHC Insider Report, winter 2004).

In the name of quality, UnitedHealth Group will monitor how well physicians follow guidelines for ordering imaging studies, claiming that "30 to 40% are ordered inappropriately" (Business J of the Greater Triad Area 12/27/04).

Horizon Blue Cross Blue Shield of New Jersey will be using claims data to compare doctors on clinical quality. It will send the first performance reports to 600 gastroenterologists and OB/Gyn specialists (Wall St J 12/15/04).

While such efforts may be styled as "pay for performance," with bonuses for compliance, "outliers" may find themselves targeted for licensure actions or alleged fraud or violations of antikickback laws, as insurance companies often have relationships with prosecutors (MSSNY 11/04) or boards. Malpractice suits frequently are filed against physicians who experience an audit, indictment, or board action.

Physicians are dropping out, one by one. In Illinois, 23 of 102 counties have no hospital, and an additional 26 have no hospital obstetric services (Wall St J 1/4/05). It's not just the money. After enduring the "intellectual rape" of a malpractice action, neurologist Michael S. Smith, M.D., decided to take an enormous pay cut and become a statistician (Sombrero 12/04).

Medical students had such an emotional reaction to the prospect of a doctor being sued that David Rothman stopped teaching Columbia students about it (NY Times 12/14/04). But bright prospective physicians have already figured out the high risk of investing in a medical education. "Kids are getting in today who would have been laughed out of the admissions office a few years ago," writes Herb Rubin, M.D., of UCLA. If medicine by protocol is really better than care by a skilled professional, who needs physicians? A technician following a "guideline" isn't really a physician.

Are trial lawyers really so short-sighted as to endanger their livelihood by destroying medicine as a relatively affluent profession? Or are they helping to guarantee far worse outcomes, with ever rising damages to be paid by insurers backed up by governmental taxing authority?

High Double Digit Malpractice Premium Increases in Rhode Island for 2005:

2004-09-20T13:31:00.000-07:00

The first three paragraphs in the story in the September 20, 2004 issue of the Providence Business News by Staff Writer Marion Davis entitled "Malpractice insurers eye steep hikes" accurately highlight the worsening malpractice insurance cost crisis in the state.

http://www.pbn.com

"In the wake of a 42.8-percent rate hike this year, the state’s largest medical malpractice insurer wants to raise premiums by another 19 percent, adding an average of $7,000 to the cost of each of its 1,500-plus policies.

If approved by the state Department of Business Regulation, the proposed hike would make NORCAL Mutual Insurance Co.’s premiums 2.4 times higher than what they were, overall, in 2000. The actual cost of each policy varies by medical specialty and other factors, and some doctors have seen bigger hikes in that time period.

NORCAL’s rates have a particularly big impact on Rhode Island because since its entry into the market in 1994, it has seized a sizable market share: 64 percent of direct premiums written in 2003. But the California-based insurer is not alone in its skyrocketing premiums."

http://www.pbn.com/stories/printdetails.php?id=108669

The responses of the approximately 3,835 Rhode Island physicians* to this further uncontrollable increase in medical practice overhead are consistent with physician responses in more than half of the other states in the nation also in crisis:

"A recent survey by the Rhode Island Medical Society found that 12.3 percent were closing their practices, 26.5 percent were retiring early; 16.9 percent planned on leaving the state; 24.4 percent planned to reduce their patient load, and 32 percent were reducing the services they offered."

*detailed statistics on the medical markets in all 50 states are available at the Kaiser Family Foundation site at: http://www.statehealthfacts.org .

In this type of deteriorating business environment, many, if not most physicians are inclined to agree with the perspective of Rich Lowry, author of Legacy: Paying the Price for the Clinton Years, as expressed in his recent essay entitled "Suing the OB-GYNs: Our legal system doesn’t exactly welcome life into the world":

"Many of the lawsuits are over children with neurological damage such as cerebral palsy. The theory often is that a doctor's negligence during childbirth kept the baby from getting enough oxygen. Edwards successfully sold this theory to juries. It is problematic at best.

A recent ACOG study concluded that less than 10 percent of cases of neurological impairment were caused by events during labor, and even in most of those cases the problems were not preventable. Deliveries by Caesarian section have increased from 6 percent in 1970 to 26 percent today — to make it harder for a trial lawyer to argue that a C-section would have prevented a baby's disability. But a study last year found that cases of cerebral palsy had remained steady despite the increase in C-sections.

Of course, there are instances of real medical malpractice, which should be compensated. But it cannot be the case, as the pattern of lawsuits now suggests, that nearly every obstetrician in America is incompetent and negligent. Krauss points out that medical insurance rates for OB-GYNs don't differ according to experience or prior suits the way, say, auto insurance rates do. That's because there is no predicting who will be hit by the pervasive and random suits.

The lawyers who game this system are simply scoundrels. Not just in how they coax millions out of the American health-care system, but in how they play on the understandable emotions of heartbroken and scared parents, telling them an alluring lie: that no tragedy in this life is unpreventable, that nothing goes wrong without it being someone's fault, a fault that can be precisely calibrated and paid out in a settlement or jury award.

America should make itself safe again for doctors who deliver babies."

THE RECENT EXPERIENCE WITH MEANINGFUL REFORMS IN TEXAS:

Recent developments in Texas with its 47,201 physicians, 411 hospitals and population of over 21 million (versus 3,835 physicians, 11 hospitals and 1 million citizens in Rhode Island in 2002) do offer some hope that the right kind of state-based reforms can help both all non-negligent physicians and all truly injured patients.

As described in detail in the previous eleven postings on this site, the multiple structural defects in the medical liability insurance market in Rhode Island and other states demand a multifaceted and coordinated legislative reform effort.

Just such a "three-pronged" reform effort was conceived, organized and implemented in the Texas State legislature in September, 2003.

Its dramatic one-year impact is summarized in the following fact sheet from the Home page of the current Republican Governor of Texas, Rick Perry who says that "medical liability reforms are healing healthcare in Texas":

http://www.governor.state.tx.us/divisions/press/tortreform/factsheet.htm

Medical Liability Reform Fact Sheet:

"In the one year since we passed major medical liability reforms, patients are experiencing better access to healthcare, communities are recruiting new physicians, insurance costs are down significantly for many hospitals and some doctors, and lawsuits filed against healthcare providers have declined dramatically." - Governor Rick Perry

Medical Liability Reforms are improving patient access to the healthcare delivery system all across Texas. Statewide and local data show a stunning reverse in recent trends with hospitals and communities experiencing much greater success in recruiting physicians, lower insurance costs for hospitals leading to an expansion of indigent and charity care in some instances, a tremendous decrease in lawsuits against healthcare providers, and lower rates for some doctors compared to skyrocketing increases in previous years.

Here are the facts:

Lower Insurance Costs:
Texas Hospitals are reporting a 17 percent decrease in professional liability premiums for 2004-2005 (Texas Hospital Association Survey with responses from 172 acute-care hospitals, 8/23/04.) In 2003 premiums rose more than 50 percent.

Ten new carriers are seeking entry into the Texas market (Texas Department of Insurance report 8/5/04), and the largest carrier, the Texas Medical Liability Trust, has reduced physician rates 12 percent. In the years prior to medical liability reform, 13 carriers left the state and 6,000 physicians had to scramble for coverage.

The largest hospital writer in Texas, Healthcare Indemnity, Inc. has reduced rates by 20 percent (TDI report 8/5/04.)

Lawsuits Down Dramatically:
Medical liability lawsuits in several counties considered high-risk for physicians have decreased dramatically since the new law took effect on 9/01/03:

Harris County: 105 lawsuits were filed from 9/01/03 to 7/31/04, compared to 746 lawsuits filed in the three months prior.
Bexar County: 81 lawsuits were filed from 9/01/03 to 4/30/04, compared to 304 lawsuits filed in the three months prior.
Nueces County: 32 lawsuits were filed from 9/01/03 to 4/30/03, compared to 108 lawsuits filed in the three months prior.
Cameron County: 17 lawsuits were filed from 9/01/03 to 4/30/04, compared to 28 lawsuits filed the three months prior.
Hidalgo County: 17 lawsuits were filed from 9/01/03 to 4/30/04, compared to 96 lawsuits filed the three months prior.

Lawsuits filed against hospitals declined 70 percent in the first ten months since House Bill 4 took effect (9/1/03-6/30/04.) In the month prior to the new law some hospitals reported a 300 percent increase in lawsuits filed.

Patient Access to Care is Improving:
Since medical liability reforms took effect, the number of physicians maintaining or enhancing services has increased dramatically, with nine percent providing new services in addition to maintaining existing ones, and 73 percent making no changes to services they offer (Texas Medical Association Survey, 8/23/04.) Since 9/1/03, 13 percent of doctors have reduced their services, compared to 51 percent who reduced services in the previous two years.

The number of physicians who have found it easier to recruit new physicians to their practice, hospital or community is now higher than the number of physicians who have indicated it is more difficult (TMA survey, 8/23/04.) Of those who indicated it is easier, 97 percent indicated the professional liability climate was either very important or somewhat important in their ability to recruit.

Reports from several communities show patients have access to additional physicians and specialists:

Corpus Christi: Driscoll Children's Hospital has experienced a one-year savings of $204,000 on its liability premiums, plus an additional $250,000 that would have otherwise been allocated to its self-insurance trust fund. The hospital has hired close to a dozen pediatric specialists since September2003 (including two cardiologists, three neonatologists, a hematologist, a plastic surgeon, an anesthesiologist, and a general surgeon.
Corpus Christi: Christus Hospitals, which are saving nearly $21 million statewide in liability costs, are saving millions of dollars at Christus Spohn in Corpus Christi. The hospital has experienced a net gain of 22 physicians. After losing four neurosurgeons in the three years prior, Corpus Christi recently recruited a new neurosurgeon.
Rio Grande Valley: Driscoll Children's Hospital has built new pediatric specialty clinics in McAllen and Brownsville in partnership with Valley Baptist Medical Center. Rio Grande Regional estimates $750,000 in liability savings and has recruited two neonatologists.
San Antonio: Christus Santa Rosa has saved $935,000 in liability costs and expanded specialized care services.
Beaumont: Christus St. Elizabeth has yielded $1.372 million in savings. Beaumont has also recruited four new anesthesiologists. It was just two years ago that Christus St. Mary's in
Port Arthur canceled a dozen surgeries over an eight hour period because their anesthesiologists lost their insurance.
Austin: Austin has gained 16 new obstetricians in a year after losing the same amount over the preceding 2 ½ years.
Dallas: Baylor Hospital reports that seven reinsurance companies are bidding for their insurance renewal, compared to just one company a year ago. They estimate liability savings in "the seven figures," and doctors insured by the Baylor Health Care System "Health Texas" group can expect a premium decrease of more than ten percent (Dallas Morning News, "Hospitals find healthy savings," 8/23/04).
Fredericksburg: Two obstetricians placed an ad in the paper thanking voters for passing Proposition 12 and announced they would resume their obstetrics practice."

September 20, 2004:

Relative Importance of California's MICRA vs Proposition 103

2004-07-31T12:42:00.000-07:00

I think MICRA-type tort system reform is much more important than Proposition 103-type reform because of Stigler's Law. George Stigler won the Nobel Prize in Economics in part by proving that instead of protecting the public, some regulations protect firms, organizations and professional and occupational groups from competition. This is because state regulated insurance companies are often able to "capture" and control the state regulatory agencies and insurance commissioner to serve their own commercial interests.

As usual, with billions of dollars* in annual medical malpractice tort system settlements and awards at stake, those who benefit from financially successful medical negligence claims (consumer plaintiffs , trial attorneys and consumer advocacy groups) will invariably:

view the same statistics very differently than healthcare providers and their allies,
often create "mis or disinformation", and
do anything else necessary to block any change in the status quo that might adversely impact their growing earning power.

*A total of $24.5 billion in 2002 according to Tillinghast-Towers Perrin. This amount representing 10.5 % of the $233 billion, or $809 for every person in the country, that the entire U.S. tort system cost consumers in that year. Since 1975, national costs for medical malpractice liability lawsuits have steadily grown at a faster pace than for all other torts. We are all living in an increasingly litigious society.

This is why determining the true comparative impact in California of MICRA (passed in 1975) and Proposition 103 (passed in 1988) is a critical part of creating any legislative solution in Rhode Island or in any other state.

MALPRACTICE REFORM OPPONENTS:
The perspective of the trial attorneys and consumer advocacy groups is accurately reflected in recent published quotes from David S. Casey, Jr., President of the Association of Trial Lawyers of America in his June 27, 2004 letter to the Providence Journal Editor entitled "Insurance Caps Hurt Victims of Malpractice":

"Caps on jury awards have not solved the problem in states that have adopted them and caps perversely hurt those most seriously injured by medical errors. California is not a triumph for cap-driven "reform." In fact, it was insurance reform that actually netted lower premiums for doctors in my home state, not "one-size-fits-all" limits on jury verdicts. Check out the facts please, and don’t believe the insurance industry’s propaganda."

Similarly, a February 16, 2004 Media Release from Public Citizen and Georgia Watch ("Protecting Georgia Families") claimed:

"California’s lower malpractice insurance premiums are due to insurance reforms, not damage caps. In the first 12 years of MICRA (1976-1988), that capped non-economic damages at $250,000, total medical-malpractice insurance premiums paid by health providers increased 190 percent (almost 16 percent annually). But under Proposition 103, a major insurance reform passed by voters, malpractice premiums paid declined 2 percent from 1988-2001."

The full report, Increasing Doctor Accountability & Patient Safety: Solving Georgia’s Medical Malpractice "Crisis", is available at:

http://www.citizen.org/congress/civjus/medmal/articles.cfm?ID=11077.

A summary of Proposition 103 is available at:

http://www.pifc.org/Media/pdffiles/refprop103.pdf

MALPRACTICE REFORM ADVOCATES:
A number of medical liability reform advocates claim that California’s stable medical liability market is due to passage of MICRA in 1975, not Proposition 103 in 1988.

These include the AMA, state Medical Societies, the Physician Insurers Association of America (PIAA), commercial malpractice insurers, and advocacy groups that support pro-physician sponsored legislative medical malpractice reform like the Health Coalition on Liability and Access (HCLA: http://www.hcla.org) and Californians Allied for Patient Protection (CAPP: http://calphys.org/html/bb220.asp).

The CAPP link above provides convincing data that refutes 4 "myths" about Proposition 103 and claims that:

"The argument that Proposition 103, the insurance reforms passed by voters in 1988 targeted primarily at auto insurers, is directly or indirectly responsible for keeping malpractice liability premiums in California lower than in other states is based on convenience and coincidence rather than evidence.

There is plenty of evidence, however, that California’s Medical Injury Compensation Reform Act of 1975 has been the driving force that has kept premiums one-half to one-third below those in states without caps on non-economic damages and similar reforms. Here are some commonly held misconceptions about Prop. 103 and the facts to refute them from Californians Allied for Patient Protection. http://www.micra.org.

The HCLA claims that " Proposition 103 has had no impact on California medical liability premiums." and includes the following data on MICRA:

"How successful has MICRA been? At the height of California’s medical liability crisis, insurance premiums for anesthesiologists reached $22,702 per year. Current rates are $10,337 per year---50% below the rates charged in 1975. (Norcal Mutual Insurance Company, January 31, 2003).

Since MICRA was enacted 27 years ago, medical liability premiums in California have risen just 167 percent compared to 505 percent for the rest of the nation (a 33 percent advantage). (Physician Insurers Association of America).

The stridency of the malpractice reform opponents about caps may be partly due to a recent analysis published in the journal Health Affairs (January 21, 2004) indicating that tort system reform involving award caps has worked nationally in the 24 (48 %) of U.S. states that have implemented them:

"Jury award caps exist in 24 states and are the only malpractice reform that has reduced physicians’ premiums, reducing them 17 percent."

http://www.healthaffairs.org/press/janfeb0403.htm .

The AMA Health Policy Group produces a "Health Care Financial Trends Report." The most recent edition (June 2004) reveals our nation's massive investments in health care -- nearly $1.6 trillion in 2002, increasing to an estimated $2 trillion in 2004-- and is filled with a number of educational charts and statistics.

AMA members can visit the following link for a free copy:

http://enews.ama-assn.org/UM/T.asp?A40.442.1654.20.271796

The current AMA President, John C. Nelson, MD, MPH noted in the July 22, 2004 edition of the AMA eVoice a section of this report entitled: "Professional Liability Insurance Update: Growth in Medical Liability Premiums in California vs. the Rest of the U.S."

"As you know, California's $250,000 cap on non-economic damages, mandated by the passage of the Medical Injury Compensation Reform Act (MICRA) in 1975, has served as a model for what we at the AMA hope to accomplish nationwide because medical liability premiums are stable and competitive in California and exactly the opposite in many other states.

In the report, we learn that premiums have grown exponentially faster outside of California since MICRA was enacted. In fact, while California premiums have risen 245 percent, the rest of the country has experienced a 750 percent increase! (also a 33 percent advantage). That's further proof that MICRA-style reforms work -- and work well.

Speaking of which, congratulations to Wyoming's House and Senate for passing a constitutional amendment to allow the legislature to enact caps on non-economic damages in medical liability cases. This crisis state's constitution currently prohibits limiting damages in any case involving injury or death. Wyoming patients will vote on approving the amendment this November."

According to the AMA, MICRA protects patients and health care providers by:

Providing full compensation for all economic damages, including medical bills, lost wages, future earnings, custodial care and rehabilitation.
Placing a fair and reasonable limit of $250,000 on non-economic damages.
Establishing a statute of limitations on claims.
Ensuring that the bulk of any award goes to the plaintiffs, not attorneys.

BARRIERS TO MEANINGFUL REFORM:
If the numbers provided by the reform/award cap advocates are correct, I must conclude that Public Citizen and other opponents of award cap-based tort reform are either distorting the statistics or lying. In any case, what still must be overcome is the substantial money and political power behind the liberal mass media, the trial lawyers (including John Edwards, 2004 Democrat candidate for Vice President ) and certain Democratic members of Congress and the Rhode Island General assembly.

The liberal mass media attitude on tort reform is well characterized by NY Times Op-Ed columnist Bob Herbert in his June 25, 2004 NY Times essay entitled: "Cooking Up a Crisis."

http://www.nytimes.com/2004/06/25/opinion/25HERB.html

"The disinformation campaign of the tort reform zealots and their sustained attacks on the rights of patients who have been harmed by doctors, have been disgraceful. The proper prescription for this apparently chronic disorder is a strong dose of the truth."

According to AMA Immediate Past President Dr. Donald J. Palmisano, while Bob Herbert, writer of the columns, focuses on tidbits that Dr. Palmisano thinks dilute the overwhelming body of evidence that a medical liability crisis exists, the rest of the nation is actively seeking a solution.

Mr. Herbert cited an August 2003 General Accounting Office (GAO) report that found mixed evidence on access to care caused by the medical liability crisis. However, as Dr. Palmisano points out, he didn't mention a key finding of the report that states, "growth in malpractice premiums and claims payments has been slower in states that enacted tort reform laws that include certain caps on non-economic damage." Also not mentioned in the column was the June 2003 GAO report that verifies what the AMA has said about the crisis: medical liability premiums have "increased dramatically" in some states and specialties - and that increasing awards "appear to be the primary driver."

"One key statistic can't be denied: Americans want medical liability reform," Dr. Palmisano wrote. "An overwhelming 78 percent say they are concerned about the impact that rising liability costs have on access to care, and 72 percent support a law that caps non-economic damages."

http://www.ama-assn.org/ama/pub/article/print/9255-8684.html .

Rhode Island trial lawyer Max Wistow, Esq. accurately summarized the perspective of all his colleagues, Public Citizen, Ocean State Action and other consumer advocacy groups in this recent Providence Journal quote:

"Doctors have chosen to protect each other in ways that are scandalous. In Rhode Island, 4.8% of doctors were responsible for 52.7 % of all the dollars paid in settlements and jury awards. No one ever goes after those doctors."

This perspective, based on over 14 years of National Practitioner Databank (NPDB) statistics, is exactly why any genuine and meaningful reform effort must address all three interrelated areas: the state-based medical discipline system, the civil justice (tort) system for medical liability and the medical liability insurance system. The importance of a combined approach is very well illustrated by the impact all three types of reform have had since they were legislated in Texas just one year ago.

THE 2003 TEXAS LEGISLATIVE SOLUTIONS:
Texas doctors and Rep. Joe Nixon (R-Houston) have already emulated California's MICRA in September, 2003, combining passage of H.B 4 and "Proposition 12" to amend the state constitution and immediately validate the legislature's work in passing H.B. 4 and Governor Perry signing it into law with passage of SB104 and SB14 (see below).

The $250,000 cap on jury awards for pain and suffering was the first part of a three-step process that included reforming the state's medical discipline system, tort system reform and insurance reform which forces the three medical liability insurance carriers to file and justify their rate changes with the Department of Insurance.

http://www.consumerwatchdog.org/healthcare/nw/nw003647.php3 .

A THREE-LEGGED APPROACH TO MED-MAL REFORM IN TEXAS:
(Texas Legislature 78th Regular session--2003)
I. Medical Discipline System Reform: SB104
II. Tort System Reform: HB4 and Proposition 12
III. Insurance System Reform: SB14

The content of the combination of medical liability market reform bills that were passed by wide margins in the 78th Texas Legislature (2003/2004) are available online at the following URL:

http://www.capitol.state.tx.us/tlo/legislation/bill_status.htm .

You can search on all three bills (SB104, HB4 and SB14) by highlighting "78th Regular Session-2003", and then inserting the number of each bill in the "Bill Number" field and submitting a search for the "History" or "Text" of each bill.

A summary of the successful 2003 Texas "Proposition 12" voter constitutional amendment is at:

http://www.scotthochberg.com/amends/amend12.html .

It is still too early to predict the full impact of these Texas reforms passed only last fall. However, since January 2004, the Texas Medical Liability Trust, a physician-owned insurer, has decreased its premium rates by 12% (e-Internal Medicine News 8/1/04 issue: "Physicians Push for Caps in Liability Reform Efforts, by Mary Ellen Schneider).

TEXAS Medical Liability Reform Fact Sheet: (from Governor Perry's Web site)
"In the one year since we passed major medical liability reforms, patients are experiencing better access to healthcare, communities are recruiting new physicians, insurance costs are down significantly for many hospitals and some doctors, and lawsuits filed against healthcare providers have declined dramatically." - Governor Rick Perry

http://www.governor.state.tx.us/divisions/press/tortreform/factsheet.htm

Medical Liability Reforms are improving patient access to the healthcare delivery system all across Texas. Statewide and local data show a stunning reverse in recent trends with hospitals and communities experiencing much greater success in recruiting physicians, lower insurance costs for hospitals leading to an expansion of indigent and charity care in some instances, a tremendous decrease in lawsuits against healthcare providers, and lower rates for some doctors compared to skyrocketing increases in previous years.

HERE ARE THE FACTS FROM TEXAS:

Lower Insurance Costs: Texas Hospitals are reporting a 17 percent decrease in professional liability premiums for 2004-2005 (Texas Hospital Association Survey with responses from 172 acute-care hospitals, 8/23/04.) In 2003 premiums rose more than 50 percent.
Ten new carriers are seeking entry into the Texas market (Texas Department of Insurance report 8/5/04), and the largest carrier, the Texas Medical Liability Trust, has reduced physician rates 12 percent. In the years prior to medical liability reform, 13 carriers left the state and 6,000 physicians had to scramble for coverage.
The largest hospital writer in Texas, Healthcare Indemnity, Inc. has reduced rates by 20 percent (TDI report 8/5/04.)
Lawsuits Down Dramatically: Medical liability lawsuits in several counties considered high-risk for physicians have decreased dramatically since the new law took effect on 9/01/03:
Harris County: 105 lawsuits were filed from 9/01/03 to 7/31/04, compared to 746 lawsuits filed in the three months prior.
Bexar County: 81 lawsuits were filed from 9/01/03 to 4/30/04, compared to 304 lawsuits filed in the three months prior.
Nueces County: 32 lawsuits were filed from 9/01/03 to 4/30/03, compared to 108 lawsuits filed in the three months prior.
Cameron County: 17 lawsuits were filed from 9/01/03 to 4/30/04, compared to 28 lawsuits filed the three months prior.
Hidalgo County: 17 lawsuits were filed from 9/01/03 to 4/30/04, compared to 96 lawsuits filed the three months prior.
Lawsuits filed against hospitals declined 70 percent in the first ten months since House Bill 4 took effect (9/1/03-6/30/04.) In the month prior to the new law some hospitals reported a 300 percent increase in lawsuits filed.

Patient Access to Care is Improving:
Since medical liability reforms took effect, the number of physicians maintaining or enhancing services has increased dramatically, with nine percent providing new services in addition to maintaining existing ones, and 73 percent making no changes to services they offer (Texas Medical Association Survey, 8/23/04.) Since 9/1/03, 13 percent of doctors have reduced their services, compared to 51 percent who reduced services in the previous two years.
The number of physicians who have found it easier to recruit new physicians to their practice, hospital or community is now higher than the number of physicians who have indicated it is more difficult (TMA survey, 8/23/04.) Of those who indicated it is easier, 97 percent indicated the professional liability climate was either very important or somewhat important in their ability to recruit.
Reports from several communities show patients have access to additional physicians and specialists:
Corpus Christi: Driscoll Children's Hospital has experienced a one-year savings of $204,000 on its liability premiums, plus an additional $250,000 that would have otherwise been allocated to its self-insurance trust fund. The hospital has hired close to a dozen pediatric specialists since September2003 (including two cardiologists, three neonatologists, a hematologist, a plastic surgeon, an anesthesiologist, and a general surgeon.
Corpus Christi: Christus Hospitals, which are saving nearly $21 million statewide in liability costs, are saving millions of dollars at Christus Spohn in Corpus Christi. The hospital has experienced a net gain of 22 physicians. After losing four neurosurgeons in the three years prior, Corpus Christi recently recruited a new neurosurgeon.
Rio Grande Valley: Driscoll Children's Hospital has built new pediatric specialty clinics in McAllen and Brownsville in partnership with Valley Baptist Medical Center. Rio Grande Regional estimates $750,000 in liability savings and has recruited two neonatologists.
San Antonio: Christus Santa Rosa has saved $935,000 in liability costs and expanded specialized care services.
Beaumont: Christus St. Elizabeth has yielded $1.372 million in savings. Beaumont has also recruited four new anesthesiologists. It was just two years ago that Christus St. Mary's in Port Arthur canceled a dozen surgeries over an eight hour period because their anesthesiologists lost their insurance.
Austin: Austin has gained 16 new obstetricians in a year after losing the same amount over the preceding 2 ½ years.
Dallas: Baylor Hospital reports that seven reinsurance companies are bidding for their insurance renewal, compared to just one company a year ago. They estimate liability savings in "the seven figures," and doctors insured by the Baylor Health Care System "Health Texas" group can expect a premium decrease of more than ten percent (Dallas Morning News, "Hospitals find healthy savings," 8/23/04).
Fredericksburg: Two obstetricians placed an ad in the paper thanking voters for passing Proposition 12 and announced they would resume their obstetrics practice.

VOTE NO ON FRIVOLOUS LAWSUITS:

According to a recent survey of 800 registered voters in 17 "swing" states, America's patients are more likely to vote for a candidate who supports medical malpractice reform—regardless of their political affiliation.

More than two-thirds of the voters polled said the current medical liability rules should be changed to reduce frivolous lawsuits. Democrats, however, are more likely than Republicans to say they have heard enough about the issue of reforming the medical liability system. On other health care issues, a majority of the respondents were more likely to vote for a candidate who supported competition between different private health plans to give seniors the best benefits at the most affordable cost. The survey was commissioned by America's Health Insurance Plans and conducted by Public Opinion Strategies.

MY PERSONAL CONCLUSIONS TO DATE:
In face of the attitude of at least some registered voters on frivolous medical liability lawsuits, the inflexible stance of the local and national opponents of malpractice reform can be converted from a significant barrier into a big opportunity for disruptive beneficial change in the status quo. By simultaneously focusing the public debate on increasing patient safety, along with Texas-style tort and insurance reforms, I believe that it could prove feasible to build a public consensus for legislating all three measures in Rhode Island in 2005.

SUMMARY RHODE ISLAND ACTION PLAN: (from the Med-mal liability reform Weblog:

http://www.med-malliabilityreform.blogspot.com

First, reform the medical discipline market: Increase patient safety immediately and for the long term by creating and implementing fair but firm economic sanctions for the small group of most egregious repeat offenders whose performance records combine excess number of payouts* with serious disciplinary actions.

Second, reform the lottery-like aspects of the tort** (civil-justice) system: Reform the medical liability market by enacting measures equivalent to California's Medical Injury Compensation Reform Act (MICRA) of 1975 (only six of the 24 states with a non-economic damage cap currently have set it at a $250,000).

Third, reform the insurance industry: Reform medical malpractice and all other major insurance lines by enacting measures equivalent to California's Proposition 103 of 1988 (i.e. convert Rhode Island from an "open competition system" to a "prior approval" state).

If the Public Citizen/Georgia Watch statistics on the impact of MICRA vs Proposition 103 in California prove incorrect, it would suggest to me that if # I and #II can be accomplished in Rhode Island, #III may prove to be either optional or even unnecessary.

*The Percentage of Physicians with Number of Malpractice Reports in the National Practitioners Data Bank (NPDB) between September, 1990 and December, 2002: One Report = 63.4% Two Reports = 20.2% 3-5 Reports = 13.4% 6-10 Reports = 2.5% >10 Reports = 0.5%

** a tort (from Old French, injury) is a "a wrongful act done willfully and negligently that injures another for which a civil suit can be brought."

AN ACTION PLAN FOR THE DETERIORATING MEDICAL LIABILITY INSURANCE MARKET IN RHODE ISLAND:

2004-06-22T15:54:00.000-07:00

In June, 2002 the Rhode Island Medical Society published a Report and Update on medical professional liability in the state describing how it mirrored the rest of the nation and listing the seven carriers lost to Rhode Island in the previous 12 months (St. Paul; AIG; CAN; HUM; Legion; Phico; Zurich).

At that time, there were only six surviving medical malpractice carriers in Rhode Island insuring a total of 3,300 physicians. These included:
(1)one physician-owned mutual (Norcal with 1,700),
(2)two for-profit stock companies (ProSelect with 300 and General Electric MedPro with 200),
(3)one quasi-public state agency (Rhode Island MM-JUA with 200), and
(4)two hospital-owned, off-shore self-insurance companies (RISE with 700 and Women & Infants Indemnity with 200).

These numbers were rough estimates. Also, because many physicians practice in multiple settings and therefore have multiple insurance policies, the total of 3,300 exceeds the number of physicians who are actually present and practicing in Rhode Island.

The structure of the Rhode Island JUA (Medical Malpractice Joint Underwriting Association of Rhode Island)is such that the JUA could virtually never become insolvent. (This positive assessment of the JUA's strength is supported by the Judge Torres decision of February, 1991).

Hospital-owned off-shore "captives" are not domestically regulated carriers. Information on their capitalization, reserves and loss experience is not publicly available.

See: http://www.rimed.org/news02jun.html

In June 2004, General Electric MedPro announced it will be leaving the Rhode Island market and its remaining 130 covered physicians.

This year in the Rhode Island General Assembly, the Rhode Island Medical Society submitted the 2004 Medical Liability Reform Act to the Judiciary Committees in the House (H7850. Representative Robert E. Flaherty, Chairman) and Senate (S2473. Senator Michael J. McCaffrey, Chairman).

This Medical Society bill was intended to accomplish the following:
(1) Reduce the time injured Rhode Islanders would have to wait for a settlement or award (currently 6.4 years, the longest delay in the nation).
(2) Reduce the 12 percent prejudgement interest rate on successful lawsuit payouts.
(3) Require an expert to certify that a case has merit before it can be filed.
(4) Require a statute of limitations (a suit involving a child must be filed within three years of age 8, not by age 18 as now required).

A bill submitted on behalf of Governor Carcieri this year contained similar provisions, plus a cap on malpractice awards for pain and suffering.

Some of the key reasons professional liability rates are rising so fast in Rhode Island are described in a PDF file on the online May/June 2004 issue of the Newsletter of the RI Medical Society at:

http://www.rimed.org/omeganews5_10.pdf.

In my personal opinion, the H7850 and S2473 bills represent important and long overdue incremental reforms which would benefit both truly injured patients with valid medical negligence claims and the majority of Rhode Island's non-negligent physicians.

However, real medical liability market reform demands not only these common sense measures but also a combination of broader initiatives. Both a clear vision for future reform and substantive, not just incremental, changes are necessary. Policy makers must recognize that patchwork policies will not achieve the fundamental restructuring that is so badly needed. These major "beneficially disruptive" innovations in the system must not be based on the status quo. They must be initiated and catalyzed by an unprecedented, physician-led and insurer-supported effort to shift the focus of reform to increasing patient safety. This will require simultaneously overcoming the tyranny of the minority of physicians with the worst performance records and fundamentally changing the state's existing destructive medical malpractice system.

Even more so than with the two prior medical malpractice insurance crises since 1964, time is rapidly running out for both Rhode Island doctors and their patients.

Before it becomes too late to help, creative structural reforms that truly serve the private and public interests of all of the medical liability stakeholders must be proposed, communicated, enacted and implemented.

Although enactment of the needed legislation and regulations cannot occur until the Rhode Island General Assembly reconvenes in January 2005, it may not prove to be too late if Rhode Island seizes the opportunity to lead the nation in meaningful and durable patient-centered reform by carefully considering, discussing and implementing all three of the following measures.

SUMMARY ACTION PLAN FOR RHODE ISLAND:

I. Medical Discipline:
Increase patient safety immediately and for the long term by creating and implementing fair but firm economic sanctions for the small group of most egregious repeat offenders whose performance records combine excess payouts* with serious disciplinary actions.(mirroring the Texas legislature's SB104 in 2003.)

II. Tort System:
Enact measures equivalent to California's Medical Injury Compensation Reform Act (MICRA) of 1975 and the Texas legislature's HB4 and Proposition 12 in 2003.

III.Insurance System:
Enact measures equivalent to California's Proposition 103 of 1988 and the Texas legislature's SB14 in 2003.

*The Percentage of Physicians with Number of Malpractice Reports in the National Practitioners Data Bank (NPDB)between September, 1990 and December, 2002:
One Report = 63.4%
Two Reports = 20.2%
3-5 Reports = 13.4%
6-10 Reports = 2.5%
>10 Reports = 0.5%

The NPDB Public Use Data File does not include any information that identifies individual practitioners or reporting entities. The file is designed to provide data for statistical analysis only. (http://www.npdb-hipdb.com)

A Toxic Battle Over Medical Malpractice Lawsuits

2004-06-22T15:49:00.000-07:00

According to the June 14, 2004 issue of USA Today in a Cover story by Laura Parker entitled "Medical Malpractice Battle Gets Personal", the battle over medical malpractice lawsuits has become toxic. Some doctors are refusing medical treatment to lawyers, their families and their employees except in emergencies. And, some professional medical societies are trying to silence their peers by discouraging doctors from testifying as expert witnesses on behalf of plaintiffs.

" Doctors and lawyers long have been at odds over malpractice litigation. But soaring malpractice-insurance premiums, which hit doctors in high-risk specialties such as neurosurgery and obstetrics particularly hard, have fueled the debate. For doctors who blame the increases in their premiums on unwarranted lawsuits and large jury awards, the solution is clear: Overhaul the nation's civil-litigation system, starting with what juries can award in damages.

Malpractice lawyers, led by the Association of Trial Lawyers of America, counter that rising premiums have more to do with the insurance injury than jury awards. They say tighter regulation of the industry is needed. The lawyers say that stifling malpractice litigation could deny Americans some of their rights to seek redress in court when doctors make mistakes.

The AMA is backing federal legislation that would cap pain-and-suffering awards against obstetricians and emergency-room doctors at $250,000. The bill, resubmitted by President Bush this year, is again stalled in the U.S. Senate where it died in 2003. Meanwhile, the battles continue in state legislatures. All but nine states have restricted medical-malpractice lawsuits in recent years. But the AMA contends that only six states have passed "effective" legislation, meaning laws that cap money awards."

The following link to a map published in the May 15, 2004 issue of Internal Medicine News shows which states had limits on noneconomic damages for medical malpractice in 2003. In New England, only Massachusetts and Maine currently cap noneconomic damages, but only Texas and Colorado have capped both noneconomic (pain and suffering) and total (punitive) damages.

On the AMA home page (http://www.ama-assn.org)in the "Spotlight on Issues" section, clicking on the "Medical Liability Reform is AMAs No. 1 Legislative Priority" link leads to another page containing the link below entitled; "Medical Liability Reform--Now!".

http://www.ama-assn.org/ama/pub/category/7861.html

Published on June 14, 2004, this provides "a compendium of facts supporting medical liability reform and debunking arguments against reform". (It is a 63 page, 610KB PDF file which requires Adobe Acrobat Reader to be downloaded).

Systemic Misunderstanding: Public Citizen versus The Doctor's Company*

2004-06-22T15:05:00.000-07:00

In a September 23, 2002 publication, Public Citizen, a "national, non-profit public interest organization", proposed that the real problem is not medical malpractice lawsuits. Instead, Public Citizen believes that improving oversight of physicians and stopping repeat offender doctors are the keys to cutting medical malpractice costs. (http://www.citizen.org/congress/civjus/medmal/articles.cfm?ID=8308).

In its July, 2003 press release, it used 2002 federal National Practitioner Data Bank (NPDB) records to dispute the presence of a malpractice lawsuit "crisis" in Rhode Island (http://www.citizen.org/documents/RI_NPDB.pdf).

On April 14, 2004, Public Citizen released its annual ranking of serious disciplinary actions in 2003 by state medical boards (http://www.citizen.org/publications/release.cfm?ID=7308).

Based on data from the Federation of State Medical Boards (FSMB) on the number of disciplinary actions taken in 2003 against doctors, Public Citizen’s Health Research Group has calculated the rate of serious disciplinary actions, including license revocations, surrenders, suspensions and probation/restrictions per 1,000 doctors, in each state and compiled a national report ranking state boards by the rate of serious disciplinary actions per 1,000 doctors for the year. Physicians are typically disciplined for negligence, incompetence, sexual misconduct, and breaking criminal laws.

There were 2,992 serious disciplinary actions taken by state medical boards in 2003 (3.55 actions per 1,000 physicians), up 4.5% from the 2,864 serious actions taken in 2002 (3.56 actions per 1,000 physicians). State rates ranged from a low of 1.46 serious actions per 1,000 physicians in Rhode Island, which was ranked 51st of all states and the District of Columbia, to 11.58 actions per 1,000 physicians in Kentucky, a 7.9-fold difference between the best and worst states.

* A systemic misunderstanding arises when your framework and the other person’s framework are so fundamentally different that it cannot be corrected by providing more information.” (Thomas Friedman NY Times 1/28/00 Page A28)

DEFENDING THE PRACTICE OF MEDICINE:

According to Richard E. Anderson, MD, Chairman of The Doctor's Company, a leading medical malpractice insurer based in Napa, California: "There is little doubt about the following facts: Physicians across the United States have been confronted with alarming increases in the cost of malpractice insurance, and access to critical medical services imperiled in many states." Mutual or reciprocal insurance companies, like The Doctor's Company, are owned by the physician policyholders themselves, not outside shareholders and dominate the national market, currently insuring more than 60% of America's practicing physicians.

His commentary in an article entitled: "Defending the Practice of Medicine:" reviews the extent of the malpractice insurance dilemma as it exists today, compares it with historical antecedents, analyzes the root causes and suggests practical solutions that are available now. (Archives of Internal Medicine Vol. 164, June 14, 2004 1173-1178: http://www.archinternmed.com). AMA Members and subscribers to the Journal have online access to the article. Others can purchase and print it online for $12.

Main sections in the article include:
(1) The Crisis Today: Loss of Capacity
(2) Earlier Crises
(3) Unique Aspects of Today's Malpractice Arena (Frequency, Severity, The HMPS and IOM Reports)
(4) Allegations of the Plaintiff's Bar (Flat claims losses, Making up for stock market losses)
(5) Solutions
(6) Costs
(7) Conclusions

Dr. Anderson notes the 4 principal provisions of the Medical Injury Compensation Reform Act (MICRA) which was passed by a special session of the California legislature in 1975. These are:
(1) A $250,000 limit on noneconomic damages that limits only payments for pain and suffering, not actual damages.
(2) Periodic payment of awards in excess of $50,000 (damages are paid over the period they are intended to cover rather than as a lump sum).
(3) Collateral source rule (prevents duplicate collection of damages already paid by a third party).
(4) A sliding scale limitation which controls the size of on attorney contingency fees (For example, for a $1 million jury award, an attorney is limited to $221,000 plus expenses)

He concludes that "There are 27 years of evidence that the MICRA statutes can contribute significantly to a solution for the current crisis by facilitating sustainable insurance markets while still providing full indemnification for injured patients."

According to Gerald B. Hickson, MD, director of the Center for Patient and Professional Advocacy at Vanderbilt University in Nashville, Tennessee (http://www.mc.vanderbilt.edu/cppa), the current tort-based system is slow to act, expensive to operate, unpredictable in outcome—and it fails the vast majority of patients injured by poor medical care. (Internal Medicine News March 15, 2004).

“Empirical studies reveal that although adverse events due to medical negligence are common, errors appear to play only a limited role in decisions to sue. Perhaps 1% to 6% of hospitalized patients are injured due to care. Yet only 2% of families with valid claims ever sue. On the other hand, up to seven times as many families with adverse outcomes that are not due to negligence file suit as well. Stated another way, 80% of claims may not be valid.

Studies have also shown that neither patient characteristics nor complexity of care explains suit variation. Not even technical competence discriminates physicians who have never been sued from those in the highest risk group. But the existing court system is neither sensitive nor specific in awarding compensation of which only about 28% is received by the injured individual.

Examination of physician claims experiences reveal that most physicians are never sued or experience only a “random hit.” On the other hand, in any target period, a minority of 2% to 8% of physicians, by discipline, generate a disproportionate share of suits accounting for 70% to 80% of all dollars paid in settlements and awards. Researchers have also found that physicians who are in the ’high risk” group today remain there for years. Physicians who attract a disproportionate share of claims do not seem to relate well to their patients. Poor rapport between physician and patient appears to drive many decisions to sue. Families report that they perceive the doctors they sue as being unresponsive and uncaring. An adverse outcome, the declarations of subsequently treating professionals, and poor relationships—not negligence---appear to drive most decisions to file suit.”

Tyranny of the Minority: Rhode Island 2002 National Practitioner Data Bank Data

2004-06-20T12:36:00.000-07:00

There is important Rhode Island-specific information contained in the National Practitioners Data Bank (NPDB) and the Healthcare Integrity and Protection Data bank (HIPDB) that is valuable in trying to create fair-minded and effective legislation and regulations that will actually improve the deteriorating statewide market for medical liability insurance.

This online data has been collected by the federal government since September 1, 1990 and is continuously updated as a public service at: http://www.npdb-hipdb.com. It is accessible to the public without cost, but does not currently allow the public access to the names of any physicians in the database.

The following link: http://www.publiccitizen.org/documents/RI_NPDB.pdf is a press release based on aggregate NPDB data that was published by the consumer advocacy group, Public Citizen on July 8, 2003. It provides a summary of key 2002 NPDB data for Rhode Island. To view it requires using the free Adobe Acrobat® Reader that can be downloaded from: http://www.adobe.com/products/acrobat.

As is typical in other states reported in the NPDB, between 1990 and 2002, a small minority of Rhode Island doctors (4.9%) was responsible for half (49.9%) of all malpractice payouts. This is also the case in Kentucky (4.7% for 50%), N.J. (6.1% for 54.8%), FL (6.2% for 52%), S.C. (3.9% for 61%) W.V. (10.2% for 60%) and Montana (8.7% for 53.3%).

Over that twelve-year interval, an even smaller physician minority in Rhode Island (1.5%) had made three or more malpractice payouts, amounting to 23.5% of all malpractice payouts in the state. Of the 52 doctors who made three or more malpractice payouts, only 12 (23.1%), have been disciplined by any disciplinary entity in the state.

The group of 84 doctors with 3, 4, 5, 10 or more payouts represents only about 2.4% of the 1997 RI doctor population of 3,481, and in this group, only 22 (26.5%) have had one or more reportable licensure actions.

As you can see from the tables in this July, 2003 news release, the numbers most directly related to our currently escalating premium increases and carriers leaving Rhode Island are the average amounts that have been paid out per case and per doctor. In Rhode Island, between 1990 and 2002, the average payout per case was $263,352 ($193,563,650/735) and the average payout per doctor was $367,992 ($193,563,650/526).

Public Citizen and trial attorneys may not acknowledge a real-time malpractice insurance cost and availability crisis in Rhode Island, but it's very real to me since I've seen my own General Electric Medical Protective premiums soar from $4,000 in 2000 to $20,000 in 2003 ($16,000 with my 20% discount based on zero claims since GE Medical Protective's coverage began in 1989). Even worse news for me, and about 129 of my Rhode Island colleagues using the same insurer, is the recent announcement that because GE Medical Protective is leaving the state as of July 1, 2004, my current policy will terminate on April 5, 2005.

Most of America’s more than 800,000 practicing physicians generally view the current professional liability cost and availability crisis from the perspective of the conservative/libertarian Association of American Physicians and Surgeons (AAPS.This viewpoint is expressed in its most recent newsletter entitled:"Doctors Fight Back on “Med Mal” (AAPS News Volume 60, No. 6 June 2004 at:http://www.aapsonline.org. Under “Departments” in the left frame click on: “AAPS News”.):

“What lawyers call “med mal” really refers to anything bad that happens to a patient for which a court might award money. It is a medical maloccurrence that might or might not involve malpractice—culpable neglect and negligence*---but certainly imposes liability on doctors, at least for insurance and defense costs.

The explosion in liability costs, like that in medical costs, is to a large extent sustained by an enormous pool of third-party “free money.” Everyone with the right ticket has access to the pool, which manifests the tragedy of the commons. When the pool is in danger of running dry, the third parties just extract higher premiums. But there is a limit, which is being reached with both professional liability and medical insurance. More and more states are nearing or reaching the tipping point**.”

On the other hand, the reality is that malpractice plaintiffs' trial lawyers and consumer and labor advocacy groups, like Public Citizen and Ocean State Action, will always believe that:

"The right approach to reducing lawsuits and insurance premiums is to reduce medical errors, improve oversight of physicians, stopping repeat offenders and encouraging other patient safety efforts".

In fact, Max Wistow, a prominent Rhode Island plaintiff's lawyer quoted in a Providence Journal article on May 21, 2004 parroted the Public Citizen and trial attorney mantra stating:

"The other part of the problem (in addition to malpractice insurance company fiscal irresponsibility) is that doctors have chosen to protect each other in ways that are scandalous. In Rhode Island, 4.8% of doctors were responsible for 52.7% of payouts. No one goes after those doctors".

Malpractice plaintiffs' trial lawyers and consumer and labor advocacy groups continue to scoff at the medical community’s argument that medical liability litigation constitutes a giant "lottery," in which lawsuits are purely random events bearing no relationship to the care given by a physician.

From their perspective, because a small percentage of doctors are responsible for the bulk of malpractice in the United States, better oversight by state medical boards could drastically reduce the damage they cause.
· Public Citizen’s analysis of the National Practitioner Data Bank, which covers malpractice judgments and settlements since September 1990, found that about five percent of the doctors in the United States are responsible for half the malpractice. Specifically, through September 2002, 4.8 percent of doctors (40,118) had paid two or more malpractice awards to patients. At that time, these doctors were responsible for 51 percent of all the reports made to the Data Bank, and had paid out nearly $21 billion in damages, more than 53 percent of the total damages paid.
· At the same time, 14,293 doctors, representing 1.7 percent of the doctors in the U.S., had made three or more payments, totaling $11 billion. These doctors were responsible for 27.5 percent of all malpractice awards reported up to that date.

To malpractice plaintiffs' trial lawyers, Public Citizen and other consumer and labor advocacy groups, rather than suggesting a random, lottery-like pattern, this distribution very much resembles the pattern of drunk driving recidivism. They point out that motor vehicle licensing bureaus have procedures in place to prevent or deter predisposed individuals from driving under the influence, such as mandatory counseling and license suspensions or revocations. Unfortunately, they believe, medical licensing boards do not use their statutory authority with nearly as much vigor.

This is why I personally believe that incremental malpractice liability market reforms(like those currently proposed to the Rhode Island General assembly), even if enacted into law, in the long term will not solve the underlying structural problems and thus will fail to improve the "old conditions".

What we need is a truly new order of things. If the silent majority of doctors, our hospitals and defense lawyers could ever initiate a coordinated, large scale attempt, using reasonable measures, to economically quarantine the most dangerous members of the Rhode Island doctor minority, I believe the escalating cost and availability crises could be improved significantly in both the short and long term.

Some of these types of measures are described in the September 23, 2002 Public Citizen News Release entitled: "Stopping Repeat Offenders: The Key to Cutting Medical Malpractice Costs."

(See: http://www.publiccitizen.org/congress/civjus/medmal/articles.cfm?ID=8308 ).

With adequate publicity and media coverage, I believe that, such an unprecedented good faith effort would provide the necessary leverage to at least start public and private discussions about combining:

(1) the patient safety effort with the other two components of the triad,

(2) California-style non-economic damages caps (i.e. the 4 principal provisions of MICRA (the California Medical Injury Compensation Reform Act of 1975). Similar damage caps are already in place in 24 states where they have been the only malpractice reform effort that has affected physicians' premiums, reducing them 17.1 %, and

(3) comprehensive liability market reform (between 1988 and 2001,the addition of California's 1988 " Proposition 103" to the MICRA provisions helped limit that state's cumulative medical malpractice premium increases to only 2%).

One thing is certain, Rhode Island’s one million citizens have no knowledge of these key statistics or the real scope of the crisis and its disastrous impact. And even worse, based on periodic news stories of medical negligence awards and settlements in PowerBall lottery amounts, many assume that medical negligence involves the majority of doctors both locally and nationally.

If Rhode Island's proposed new health insurance commissioner, consumers, the local media, the Governor, and our legislators and judges can appreciate the value of this integrated triad approach with its non-incremental, patient safety-centered features, meaningful reform legislation could be enacted and withstand any legal challenges.

Niccolo Machiavelli would have appreciated both the extreme barriers to innovative reform and the importance of introducing a coordinated approach that attacks all three root causes of the "med mal" problem. All we need now is the right medical, political and media leadership that can clearly explain this "new order of things" to all Rhode Island stakeholders and convince them that beneficial market reform will improve the status quo while serving the legitimate long term interests of all affected parties.

*In law: “failure to exercise the degree of care considered reasonable under the circumstances, resulting in unintended injury to another party.”

**an epidemiologic concept that small changes will have little or no effect on a system until a critical mass is reached. Then a further small change “tips” the system and a large effect is observed.

Scope of the Problem in Rhode Island

2004-06-15T15:04:00.000-07:00

NPDB and HIPDB Data for RHODE ISLAND PHYSICIANS (September, 1990-April, 2004):

National Practitioner Data Bank(NPDB)Summary Report:

The following is a summary of reports of adverse malpractice,licensure and clinical privileges and professional society membership actions against Rhode Island physicians submitted and accepted into the NPDB. This data covers the period from September 1, 1990 through April 24, 2004.

Since September 1, 1990, there were 783 malpractice reports for Physicians (MD) and 46 for Osteopathic Physicians (DO), for a total of 832(about 5 per month).

Over the same period, there were 210 licensure, clinical privileges and professional society membership reports for Physicians and 11 for Osteopathic Physicians, for a total of 221 (about 1.4 per month).

In addition, there were 32 Medicare or Medicaid exclusion reports for Physicians and 3 for Osteopathic Physicians, for a total of 35 (about 0.2 per month).

Healthcare Integrity and Protection Data Bank (HIPDB)Reports Submitted by State Agencies and Health Plans:

This report summarizes the number of Adverse Action Reports (including licensure actions, any other negative actions or findings, and other adjudicated actions) and Civil Judgment or Criminal Conviction Reports submitted for Rhode Island physicians. This data also covers the period from September 1, 1990 through April 24, 2004.

Since September 1, 1990, there were 78 adverse action reports for Physicians (MD) and 2 for Osteopathic Physicians (DO), for a total of 80 (about 0.5 per month).

Over the same period, there were no civil judgement or conviction reports for Physicians (MD) or for Osteopathic Physicians (DO), for a total of zero per month.

HIPDB Reports Submitted by Federal Agencies:

This report summarizes the number of Adverse Action Reports (including licensure actions, any other negative actions or findings, and other adjudicated actions) and Civil Judgment or Criminal Conviction Reports submitted by Federal Agencies for Rhode Island physicians. This data also covers the period from September 1, 1990 through April 24, 2004.

Since September 1, 1990, the HHS Ofice of Inspector General made 7 adverse action reports for Physicians (MD) and 2 for Osteopathic Physicians (DO), for a total of 9 (about 0.06 per month).

Over the same period, the same agency made no civil judgement or conviction reports for Physicians (MD)or for Osteopathic Physicians (DO), for a total of zero per month.

Source: http://www.npdb-hipdb.com (Statistical Information: “Data by Profession and State”).

June 15, 2004:

SHIFTING THE FOCUS TO PATIENT SAFETY

2004-06-15T10:54:00.000-07:00

SHIFTING THE FOCUS TO PATIENT SAFETY IS THE KEY TO MEDICAL LIABILITY MARKET REFORM:

According to Stephen C. Schoenbaum, MD, of the Commonwealth Fund, in New York, and Randall R. Bovbjerg, JD, of the Urban Institute, in Washington, DC, “physicians hold the key to malpractice reform in the United States.” (1)

They note that large numbers of Americans are the victims of preventable medical injury, which in some specialties and locations have doubled within the past 1or 2 years.

Nationwide, in 2002, malpractice premiums increased on average by 23.2%. “Caps” on jury awards and settlements do exist in 24 states and are the only malpractice reform effort that has affected physicians’ premiums, reducing them 17.1 % in these states. (2) According to the Schoenbaum and Bovbjerg, however, such caps ignore the fundamental problem by neglecting to address patient safety as an issue that needs reform.

The authors believe that reducing medical errors and improving patient safety must be an important part of any medical liability reform and that more active work to reduce harm and improve care is clearly in the best interest of the public. Ultimately, they believe, it is also in the best interest of American physicians.

They added, “Simply capping awards applies a Band-Aid to the increases in premiums bleeding many physicians, while leaving patient wounds unattended.”

A COLLECTIVE PHYSICIAN EFFORT IN RHODE ISLAND TO REDUCE PATIENT HARM:

What has never been tried in any state with or without caps on awards is to combine Rhode Island malpractice market reform with a physician-led, consumer, malpractice insurer and regulator-supported effort to “quarantine” or eliminate from practice the small minority of physicians with the worst records of repeated incidents of unequivocal patient harm.

This is entirely feasible because only a small minority of American physicians are responsible for the majority of the patient injuries and malpractice payment dollars paid.

Since the National Practitioner Data Bank inception in 1990, the one percent of physicians with the largest total payments in the NPDB were responsible for about 12 percent of all the money paid for physicians in reported malpractice judgments or settlements. The five percent of physicians with the largest total payments in the NPDB were responsible for just under a third of the total dollars paid for physicians over the 13-year period. Eleven percent of U.S. physicians were responsible for half of all malpractice dollars awarded by jury verdicts or settlements from September 1, 1990 through March 31, 2003.
(See: http://www.npdb-hipdb.com ).

Legislation producing meaningful long-term reform of the medical liability market in Rhode Island is impossible this year since the 2004 legislative activities of the Rhode Island General Assembly will most likely be completed before the July 4th holiday.

However, this is clearly an important and costly bi-partisan issue that must be confronted and solved as soon as possible. This will be possible only by creating a consensus among all its stakeholders on specific easy-to-understand reform measures and by adequately educating members of the medical and legal professions, legislators, the public and the media.

The proposed solution is straightforward and should be easily understood by all:

In exchange for an unprecedented effort by the majority of Rhode Island physicians to help enhance health care consumer safety and cut overall medical malpractice costs by stopping repeat offenders, the Democratic Rhode Island General Assembly and Republican Governor Carcieri would work together in the 2005 legislature to create a legislative pro-consumer, pro-business solution to the serious medical malpractice insurance cost and availability crisis in this state.

Subsequent postings on this topic using publicly-accessible information contained in the National Practitioner and Healthcare Integrity and Protection Databanks will provide a complete description of the scope of the medical malpractice and physician discipline problems in Rhode Island since September, 1990.

Viewing and understanding this historical data is crucial to implementing the critical first component of the triad that is necessary for meaningful long-term reform (as outlined in my first posting on June 13th).

(1)Annals of Internal Medicine (2004; 140: 51-53).
(2) Physicians Financial News March 15, 2004 (page 26) See: http://www.healthaffairs.org/press/janfe0403.htm .

June 15, 2004:

Many Physician Businesses are Falling Behind

2004-06-14T09:57:00.000-07:00

Despite the common public perception of doctors as an economic class of the “super-rich”, for the average physician the reality is quite different.

Despite an overall national trend of rising income and general economic prosperity in the late 1990s, and first three years of the new century, physician net income from the practice of medicine declined markedly and their private office overhead as a percentage of revenue surged to an estimated 54%, a substantial rise from 36% in 1997, and more than twice the 1980 median of 25%. (1)

Between 1995 and 1999, with CPI inflation averaging 2.5%, the average United States’ Professional Technical worker income rose 3.5%. In comparison, the percent change in average income decreased by 5.0% for all physicians, 6.4% for Primary Care physicians and 4.0% for Specialists physicians.

In addition, there is an increasing and demoralizing disparity between provider workload and compensation. The American College of Physicians (ACP noted that between 1999 and 2000, physician income declined by 13.9%, while total hours worked underwent a 6.7% increase. (http://www.acponline.org/hpp/e-consult.pdf).

In 2002, U.S. healthcare spending reached $1.6 trillion ($5,440 per person) with hospital and drug spending driving most of the increase. Hospital spending and prescription drug costs fueled the 9.3% increase over 2001. Total spending is expected to exceed $2 trillion by 2004.

In 2003, as a share of US gross domestic product, healthcare costs jumped to 15% up from only 5% in 1980. They are now projected to rise to almost one quarter of GDP by 2030. Last year, drug spending alone in the United States and Canada rose 9.1% to $230 billion, accounting for 46% of the estimated worldwide sales of $500 million. Many experts now believe that health costs are rising at a rate that, in the long term, employers and the federal and state governments will not continue to bear.

Health care spending (i.e medical costs) which climbed faster than the rest of the U.S. economy in 2002 at a 9.6% rate, slowed to a 7.4% rise in 2003. Hospital spending, which makes up the lion's share of health care costs, accounted for 53% of the total increase in spending in 2003, a year in which inpatient and outpatient hospital care costs rose by 8%, the biggest one-year increase since the government began tracking these figures. Spending on prescription drugs, meanwhile, grew by 9.1% in 2003 compared to 13.2% in 2002 and the peak of 18.4% drug cost growth set in 1999.

Compared to hospital and drug spending, aggregate physician spending is not growing as fast as in recent years. (2) Spending on physician care rose by only 5.1% in 2003 compared to a 6.5% increase in 2002. This is a significant decrease from the 8.6% growth in 2001, with physician spending reaching $339.5 billion representing 21% of total healthcare spending last year. Since 1960, as a percentage of U.S. personal health expenditures, physician spending has stayed about the same, while the hospital share grew and then declined and the spending on home health and nursing homes has grown substantially.( Distribution of Personal Health Care Expenditures by Type of service, 1960-2000: Table 1.5 See: http://www.cms.hhs.gov/charts/healthcaresystem/chapter1.pdf).
According to a recent study by the Center for Studying Health System Change, a public policy research organization in Washington, DC, between 1994 and 2003, the average annual growth in healthcare spending, by type of service showed the following percentages:
Physician = 4.29%
Hospital Outpatient = 9.98%
Hospital Inpatient = 1.39%
All hospital services = 5.67%
Prescription drugs = 12.14%

Prescription drugs alone now account for 11 percent of all U.S. healthcare spending, twice the level of just ten years ago.

In the face of aggregate declining inflation adjusted revenues and because of inexorable increases in key fixed costs to a national median of about 55%, many physicians in Rhode Island and other insurer-dominated, highly regulated markets continue to struggle to make ends meet. According to the 2003 American Medical Group Association’s (AMGA’s) Medical Group Financial Operations Survey, many doctor’s groups are experiencing losses in the midst of an increasingly regulatory and competitive environment. (3) An important part of declining profitability is the more than doubling of median practice overhead for U.S. physicians over the last 30 years, from 25% in 1976 to 36% in 1996 and 54% in 2002.

Based on financial performance on a per physician basis (by region), the average group lost $3,977 per physician. The biggest average losses were in the Northern ($11,943) and Southern ($12,954) regions. In 2002, the average annual compensation for a group practice internist decreased by 1.8% compared to increases of 2.2% for a family physician and 0.9% for an OB/GYN physician.

Doctors continued to fall behind othe economic sectors last year as well. According to the US Commerce department ans Sullivan, Cotter & associates, in 2003,the average compensation increase of 1.3% for U.S. primary care physicians again lagged behind the 1.9% increase in the annual inflation rate. A recent survey by Akel & Associates found that 67% of physicians expect their practice revenue to "decline or remain the same" in the next three years.

In Rhode Island, however, the situation is substantially worse because more than 75% of office-based physicians are practicing, not in medium or large group practices, but as individuals or in small groups with 5 or less members.

Even more ominous from the consumer perspective, with private and public reimbursement in the lowest 10th percentile compared to all other states and fixed by the payers for over three decades, most of the independent solo practitioners in Rhode Island are in even deeper financial trouble than in other states. Issues contributing to their escalating financial challenges include rising liability premiums, cutbacks in retroactively dated Medicare reimbursement and unfunded legislative and regulatory mandates including HIPAA.

Looking forward 3-5 years, physician accessibility and quality is further threatened by an average educational debt of a U.S. medical school graduate of $109,457 (4) and surveys indicating that 52% of America’s active physicians’ if given a second chance, say they wouldn’t go into medicine again. (5) And in fact, the most recent Meritt, Hawkins & Associates national survey predicts an impending physician shortage in the United States. In their 2004 nationwide survey of 436 physicians, in the next 1 to 3 years, more than 50% of physicians between the ages of 50 and 60 are currently planning to retire, seek nonclinical jobs, or significantly reduce the number of patients they see.

Doctors just entering practice and those still in training also have financial problems.

According to the 2004 report from the Association of American Medical Colleges (AAMC), there has been a 238% increase of tuition and fees in the 126 medical schools in the United States since 1984, an annual average increase of almost 12 %.

In 2003, the median education debt of a US medical school graduate increased to $117,000. Graduates of private medical schools incurred a median debt of $135,000, while the median debt for public medical school graduates was $100,000. By contrast, in 1984, median debt for private and public medical school graduates was $27,000 and $22,000 respectively. Overall, medical education debt was 4.5 times as high in 2003 as it was in 1984, while average tuition and fees was 2.7 times as high in private medical schools and 3.8 times as high in public medical schools.

For first-year students in 2003-2004, average tuition and fees in private medical schools was $32,488 for state residents and $34,067 for nonresidents. The average for public medical schools for residents was $16,172 and $33,653 for nonresidents. (6) According to US News & World Report, for example, in 2004 one year's tuition at the private Harvard Medical School cost $34,766. An additional $19,234 in fees, supplies and living expenses increased the total annual cost to $53,900.

The danger is that medical education may soon not be within reach for many qualified students. And at the same time, student debt may become unmanageable if practice expenses, including malpractice premiums, continue to rise and physicians' income remains flat or continues to decrease.

The AAMC survey also found the average annual income for a US physician was $187,500 in 2003. In the face of soaring educational debt, practice operating expenses exceeding 60%, declining profitability and crises in medical liability insurance cost and availability, it remains to be seen whether this potential income level will continue to attract the "best and brightest" into the medical marketplace for physician services.

This increasingly hostile market for physicians is also increasingly threatening for patients, employers and government who must pay for health care products and services and especially for the more than 41 million Americans without private or public health insurance coverage.

According to Paul B. Ginsburg and Bradley C. Strunk of the Center for Studying Health System Change(http://www.hschange.org), "Costs--and therefore private health insurance premiums--will likely continue to outstrip growth in the overall US economy by a significant margin for the foreseeable future. Although some argue that ever-higher spending for medical care is a good thing, the continuing rapid growth in health spending will make insurance unaffordable to more and more people. Ultimately, policy makers are likely to confront a stark trade-off between health care costs and access, perhaps leading to a willingness to discuss taboo subjects, such as rationing of health care."

(1) Medical Economics Annual Surveys, for 1997 (October 26, 1998) and for 2002 (November 7, 2003).
(2) Health Affairs, 23 (1): 147-159, 2004.
(3) See: http://www.amga.com or call: 703-838-0033.
(4) Association of Medical Colleges, 2004.
(5) Merritt, Hawkins & Associates, 2003.
(6) Physicians Financial News, June 15, 2004 (page 3)The complete report, entitled "Medical School Tuition and Young Physician Indebtedness", can be found on AAMC's Website at (http://www.aamc.org/publications) .

June 14, 2004:

Physicians and Patients are Running out of Time

2004-06-14T06:53:00.000-07:00

TRENDS IN UNITED STATES MEDICAL MALPRACTICE PREMIUMS:

Between 1998 and 2002, changes in malpractice premiums were -2.9% versus 20% for Internal Medicine, 1.0% versus 21.9% for General Surgeons and 0.3% versus 14.2% for OB/GYN.

2003 FACTS(1):
· The average medical malpractice jury verdict award increased to $1,000,000.
· The average out-of-court settlement for a medical malpractice claim = $299,000.
· Percentage of all medical malpractice jury verdicts decided in the doctor's favor = 61%.

Nationwide, premium changes for internists, general surgeons and OB/GYN physicians ranged from a 144% increase to a 16% decrease. The vast majority, almost 66%, saw premium increases of 10% or more, about 6% being hit with rates that were higher by 50% or more. Although 20.3% saw no changes in their premiums in 2003, only 2.3% saw lower rates.

Their is a wide range of professional liability insurance annual premium costs across the United States. The highest current premium costs for Internal Medicine ($65,697), General Surgeons ($226,542)and OB/GYNS ($249,196) are in Dade County, FL. The lowest premiums are in Nebraska for Internal Medicine ($2,786),in Minnesota for General Surgeons ($8,717) and in South Dakota for OB/GYN ($14,662).

Four factors have been identified as the principal drivers of escalating United States malpractice premiums and accelerating disruption of the insurance market:
(1) increased frequency of lawsuits
(2) growing jury awards and settlements
(3) declines in insurers investment income
(4) the bankruptcy of some malpractice carriers and the decisions of others to stop writing new policies in some states or withdraw from the business altogether.

For example, between 1995 and 2002, operating expenses, settlements and jury awards for every dollar of premium received have increased from $0.95 to $1.29. Investment earnings as a percentage of premium income has decreased from 49 percent to 18 percent. Overall, in 2002, the U.S. malpractice insurance industry suffered an aggregate industry-wide loss of 11 percent.

(1) Jury Research Verdict and Physician Association of America, 2003; Medical Liability Monitor 2003 rate survey; Health Affairs, Medical Liability Monitor (as of 10/8/02)(http://www.medicalliabilitymonitor.com).

June 14, 2004:

Some Ominous Statistics

2004-06-13T15:11:00.000-07:00

UNITED STATES MALPRACTICE CLAIMS COSTS: Average payouts for malpractice claims are rising, as are the expenses of defending against them.

Between 1988 and 2002, average legal expenses paid by physician-owned liability insurance companies for cases that doctors settled or lost increased from $2K to $48K and average payments to plaintiffs made by physician-owned liability insurers for settled or lost claims almost tripled from $110K to $300K.

Source: Physicians Insurers Association of America (PIAA)

According to Jury Verdict Research, (http://www.juryverdictresearch.com 800-341-7874):

$4.9 billion = medical malpractice claims paid by insurance companies in 2003.

$1,010,858 = median compensatory jury award for medical malpractice cases. This steadily climbed by more than 100% between 1996 and 2000, but leveled off between 1999 and 2002. ($0.713 million in 1999, $1 million in both 2000 and 2001 and $1,010,858 in 2002)

52% = percentage of $1 million or more medical malpractice verdicts between 1999 and 2002.

42% = the overall medical malpractice plaintiff recovery rate (i.e. the ratio of plaintiff verdicts to total verdicts) in 2002.

Between 1998 and 2002, the following increases in plaintiffs recovery rates occurred:

Medical Malpractice Overall: 33% to 42%
Diagnosis Negligence: 33% to 43%
Surgical Negligence: 30% to 41%
Childbirth Negligence: 43% to 60%

COMMON CLAIMS:
According to Jury Verdict Research, from 1996 to 2002, the following median awards were made for the five most common injury claims in medical malpractice cases.

Brain damage = $5.3 million
Cancer = $1.3 million
Death = $1 million
Leg injuries = $670,000
Genital injuries = $300,000

According to the Physician Insurers Association of America, (PIAA; http://www.thepiaa.org), a trade association of more than 60 malpractice insurers:

65% = percentage of malpractice suits filed in 2002 that were dropped or dismissed.

$16,000 = the average expense to a malpractice insurer for dropped or dismissed suits

24% = percentage of malpractice suits filed in 2002 that were settled out of court.*

1% = percentage of malpractice suits filed in 2002 that were tried and decided in favor of the plaintiffs.

60% = percentage of any settlement or jury award consumed by lawyer and witness fees and court costs.

WHERE TORT COSTS GO:
Awards for noneconomic loss = 24%
Awards for economic loss = 22%
Administration = 21%
Claimant's attorney fees = 19%
Defense costs = 14%

A "tort", which from Law French, literally means "a wrong" is a civil wrong for which the law provides a remedy. In 2002, total costs for all tort case types in the United States were $233 billion. This represented 2.23% of the Gross Domestic Product or $809 per capita and increased from $205 billion or $721 per capita in 2001. Medical malpractice tort costs have steadily been growing at a faster pace than all other tort costs since 1975. In 2002, according to Tillinghast-Towers Perrin (TTP), a New York-based insurance industry consulting firm, they were $24.5 billion, or 10.5 percent of total tort costs.

Aggregate medical malpractice premiums have more than doubled in less than 10 years. Direct written premiums reached $4.2 billion in 2003, up from $1.9 billion in 1995, with the biggest spike occurring in 2002 when premiums jumped to $4 billion, up from $3.1 billion the previous year.

During the same period, insurers' net income plummeted from 23 percent in 1995 to -2 percent in 2003. Profits hit a low in 2002 at -11 percent.

A key indicator from A.M. Best, which rates insurers, reflects easing financial pressure on the industry. The so-called "combined ratio," a measurement of the amount insurers spend on claims for every premium dollar they take in, dropped to an estimated 1.35 in 2003, from 1.53 in 2002, the Rockville, Md.-based PIAA reports. That means carriers' losses declined last year to 35 cents for every premium dollar collected, from 53 cents the previous year.

The rating agency predicts a further drop in the 2004 ratio, to 1.28, says Lawrence Smarr, president of PIAA. The break-even point is 1.14, he adds, so while the business climate is improving, insurers are "not out of the woods yet."

Source: Data compiled for the Physician Insurers Association of America (PIAA)from Tillinghast-Towers Perrin (Physicians Financial News: July 15 and Aug 15, 2004).

*Many doctors believe they are pressured to settle a malpractice claim even when they are in the right, thus saving the insurance company the legal costs of contesting the suit. Because of this, plaintiff’s lawyers often file “shotgun” suits aimed at any doctor whose name shows up on a patient’s chart, even if the doctor had absolutely no effect on the medical outcome.

June 13, 2004:

A PATIENT-FOCUSED TRIAD FOR MEDICAL MALPRACTICE LIABILITY REFORM IN RHODE ISLAND:

2004-06-13T14:34:00.000-07:00

TRIAD FOR MEANINGFUL REFORM OF THE MEDICAL LIABILITY MARKET IN RHODE ISLAND:

American consumers and voters want specifics and solutions on healthcare system reform, not just empty rhetoric. Here are three tangible and achievable specific measures to solve the growing crises in malpractice insurance cost and availability in Rhode Island. No known U.S. state has tried to implement all three concurrently or sequentially.

(I). Utilize public information in the National Practitioners Databank (NPD), the Health Integrity and Protection Databank (HIPDB) and the Rhode Island Board of Medical Licensure and Discipline (RI BMLD) to promote necessary legislation and regulation that “quarantines” the most dangerous licensed physicians in Rhode Island based on repetitive malpractice reports, criminal convictions and civil judgements. (1)

(II). Reform the medical liability market by enacting measures equivalent to California's Medical injury Compensation Reform Act(MICRA)of 1975(2)

(III). Reform medical malpractice and all other major insurance lines by enacting measures equivalent to California's “Proposition 103” of 1988(3)

(1)See: http://www.npdb-hipdb.com and http://www.docboard.org/ri/discipact.htm

(2) According to a recent analysis published in the journal Health Affairs (January 21, 2004), award caps exist in 24 states and are the only malpractice reform that has reduced physicians’ premiums, reducing them 17 percent. (http://www.healthaffairs.org/press/janfeb0403.htm).

(3) In California, damage caps instituted by themselves in 1975 (MICRA) did not prevent total medical malpractice premiums paid by California providers from increasing 190 percent between 1976 and 1988 (almost 16% per year). When Proposition 103, a major insurance market reform which included all major insurance lines was passed by voters in 1988, malpractice premiums subsequently declined by 2 percent between 1988 and 2001. (http://www.pifc.org/Media/pdfiles/refprop103.pdf).

Bob Coli, MD

June 13, 2004: