Malpractice Madness

Unhappiness with the Supreme Court is about the only thing that trial lawyers and doctors share these days.

| Wed Jun. 23, 2004 2:00 AM EDT

Good news this week for the health insurance industry, with the Supreme Court unanimously ruling that patients do not have the right to sue HMOs in state courts for complications resulting from services and medicines wrongfully denied to them.

The HMOs triumphed over two Texas patients who sued under a law passed under then Governor Bush’s watch. Bush took credit for the law, which he did not sign, during his 2000 presidential campaign, promising, "If I'm president, people will be able to take their HMO insurance company to court. That's what I've done in Texas, and that's the kind of leadership style I'll bring to Washington." These words, however, seemed echoes of a distant past, as the White House dutifully sided with the HMOs.

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Doctors are upset with the ruling, arguing that it is harmful to patients and is unfair to doctors. As John C. Nelson, president of the American Medical Association (AMA), said in a released statement:

"By reserving the right to decide what is -- and what is not -- medically necessary, managed care plans can now practice medicine without a license, and without the same accountability that physicians face every day…Today's Supreme Court action significantly erodes patients' ability to obtain medically necessary care by placing patients at the mercy of managed care plans that play doctor."

Unhappiness with the recent Supreme Court decision to let the HMOs off the hook is about the only thing that trial lawyers and doctors can agree on these days. According to the American Medical Association, patients in twenty states have experienced a deterioration in medical services as a result of skyrocketing malpractice insurance costs which are forcing doctors to restrict and in some cases, cease their services. As Alan C. Woodward, Medical Society President in Massachusetts, which the AMA lists as one of the unlucky twenty states, puts it:

"Our patients have world-class physicians and health care institutions, but this crisis has been steadily eroding the quality of our health care system for many years….This crisis drives up costs, restricts patients' access to care, and prevents physicians from providing the most optimal and efficient care. For many physicians, it has become the final straw driving them out of medicine."

Doctors say that the roots of their troubles are frivolous lawsuits brought against them by overzealous attorneys after a hefty chunk of multi-million jury awards, which have translated into double-digit hikes in malpractice insurance rates. Trial lawyers counter that doctors must pay for their mistakes and that insurance companies are using occasional multi-million settlement as an excuse to artificially increase rates.

The degree of acrimony between the doctors and lawyers is indeed unprecedented. Some doctors have taken out their angst directly on the enemy by refusing to treat lawyers and their families. As Chris Hawk, a surgeon in Charleston, South Carolina told USA Today: "This idea may be repulsive. It's hardball. But it's ethical." Computer savvy docs in Texas were ordered to shutdown a site listing the names of lawyers who have brought malpractice lawsuits after some of those listed had trouble (guess what) finding a doctor.

States like Florida and Mississippi have already placed caps on damages that can be awarded for pain and suffering. Last year, Florida signed a law that limits the doctor’s liability outside the medical costs to $500,000. While doctors saw the measure as a positive first step, they say that it will be a some time before the new law is tested, and longer still before insurance rates -- which they say have risen by as much as 20 percent -- fall. Some credit the law with an increase in the number of companies that sell malpractice insurance policies and expect the rates to drop eventually.

Meanwhile, 3,000 of Florida's 89,000 physicians have decided to "go bare," meaning to practice without insurance coverage (save emergency), by transferring their assets to relatives -- a way to limit their losses if they are sued. As Alan Routman, an orthopedic surgeon who went "bare" told the Associated Press : "If I really injure somebody and do something wrong, I want them to be compensated for it. But I don't want some crackpot jury to decide that I should lose everything I've worked for my whole life because of it."

The fight between the docs and the lawyers in the Sunshine State is just heating up. The docs are seeking to place a measure on the November ballot that would limit the lawyers' cut in malpractice awards. Lawyers, not to be outdone, are gathering signatures for a measure mandating that patients be charged same fees for identical services and want to make it easier to revoke licenses of doctors against whom multiple malpractice suits have been brought.

States that have balked at placing caps on damage awards are taking other measures to placate the doctors. New Jersey has recently created a $78 million fund to help doctors cover insurance costs. Maryland, too, may soon pass a law placing some of the rising insurance costs on the state government. Last fall, Medical Mutual Liability Insurance Society of Maryland, the state's largest malpractice insurer, raised premiums by some 28 percent. The Democratic state legislature has opposed the caps on pain and suffering payments that Republican Governor Robert L. Ehrlich Jr. supports, while Elrich has rejected the idea of placing a tax on the HMOs. In Illinois, malpractice reform is seen as key to reaching an agreement on the budget. Recently, the state's Senate passed legislation protecting doctors' personal assets and making it more difficult for patients to initiate malpractice suits.

Trial lawyers and some consumer groups say that the hoopla over frivolous lawsuits is overdone. The medical lobby and the insurance industry, they say, are simply steering the passage of favorable legislation by exaggerating the extent of frivolous lawsuits and downplaying the suffering caused by medical malpractice. As the consumer advocacy group the Center for Justice and Democracy, puts it:

"It may be hard to understand why 'tort reform' is even on the national agenda at a time when insurance industry profits are booming, tort filings are declining, only 2 percent of injured people sue for compensation, punitive damages are rarely awarded, liability insurance costs for businesses are minuscule, medical malpractice insurance and claims are both less than 1 percent of all health care costs in America, and premium-gouging underwriting practices of the insurance industry have been widely exposed."

This week's Supreme Court decision on HMOs effects the rights to sue of some 130 million Americans and Senator John Kerry, who has criticized the outcome, promised to make patient's rights an issue this election season: "A real patients' bill of rights has bipartisan support, and it could become law if the Bush administration was not standing in the way."

The Supreme Court's ruling may, somewhat inadvertently, prompt Capitol Hill to get serious about passing the long-overdue patients' bill of rights. As USA Today argues:

"In handing the insurance industry a victory in this dispute over refusing to pay for care recommended by doctors, the court did the nation a favor. It called attention to Congress' failure to enact legislation that could protect millions of patients from bad medical decisions by cost-conscious HMOs."