Is There a Future for Nationwide Tort Reform?

A clear victory for trial lawyers, tort reform never saw its way into the Patient Protection and Affordability Plan (PPACA) signed into law last year. Proponents of tort reform wanted to see the usual talking points appear in the bill: caps on the amount of money juries can award a patient, letting jurors consider a patient’s other sources of income when making an award and assigning damages based on how much a physician and/or hospital contributed to an injury. These principles of traditional tort reform did not make it into the law.

Rashmi Nijagal

Rashmi Nijagal

Instead, PPACA includes two small provisions related to tort reform. The “Sense of Senate” in Section 6801 sets forth the hope that health care reform can usher in tort reform by stating that “health care reform presents an opportunity to address issues related to medical malpractice and medical liability insurance.” The health care act encourages states “to develop and test alternatives to the civil litigation system as a way of improving patient safety, reducing medical errors, encouraging the efficient resolution of disputes, increasing the availability of prompt and fair resolution of disputes, and improving access to liability insurance, while preserving an individual’s right to seek redress in court.”

The second, and more substantive, provision of the law is Section 10607 which authorizes $50 million over a five-year period for demonstration grants, or pilot projects, to states for the “development, implementation and evaluation of alternatives to current tort litigation for resolving disputes over injuries allegedly caused by health care providers or health care organizations.”

To qualify for the grants, a state must demonstrate that its pilot project:

  • Makes the medical liability system more reliable and efficient;
  • Encourages the disclosure of health care errors and enhances patient safety;
  • Improves access to liability insurance;
  • Fully informs patients about the differences in the alternative and current tort litigation;
  • Provides patients the ability to opt out of or voluntarily withdraw from participating in the alternative at any time;
  • Does not conflict with state law and will not limit or curtail a patient’s existing legal rights.[1]

These pilot projects will not be funded until October 2011.[2] How- ever, there are a significant number of states that have already implemented, or have tried to implement, some form of tort reform. Since 1975, about 30 states have adopted caps on noneconomic or total damages in medical malpractice cases.[3] California’s cap of $250,000 on noneconomic damages (not adjusted for inflation) is, for many tort reform advocates, the gold standard. Former President George W. Bush proposed capping plaintiffs’ damages in medical malpractice cases along the lines of California’s cap but was obviously unable to succeed in those efforts. Other states, like Illinois and Wisconsin, have attempted to implement caps on damages in medical malpractice cases as well but their courts overturned the tort reform laws they passed.

For reasons that are evident and understandable, physicians have aggressively pushed for tort reform as their medical malpractice insurance premiums have risen astronomically over the years. Yet the American Medical Association (AMA) backed President Obama’s health care law last year, despite the act’s lack of meaningful tort reform. Although certainly the AMA has not given up on tort reform as a top priority, a recent article in The New York Times offers insight on a trend that has been growing over the years. More physicians have been giving up their traditional private practices for employed, salaried positions with hospitals, particularly in the North and increasingly in the South.

This trend is not visible in California where, with few exceptions, it is against the law for hospitals to employ physicians. However, in states where hospitals can employ physicians (which are most of the states in this country), salaried positions often come with medical malpractice coverage, removing concerns amongst these salaried physicians about the cost of their medical malpractice premiums. “That change,”  the article states, “could have a profound effect on the nation’s health care debate.”[4]

The Times article points to the situation in Maine as a case study where “doctors have abandoned the ownership of practices en masse, and their politics and points of view have shifted dramatically.” The change in doctors’ attitudes in Maine was apparent in February this year when Republican State Senator Lois A. Snowe-Mello introduced a bill in the Republican-controlled state legislature to limit doctors’ liability. To Ms. Snowe-Mello’s surprise, the doctors’ lobby asked her to shelve the bill. The article observes that as the doctors in Maine abandon their private practices for salaried positions, the policies that they have supported are now less focused on tort reform to and more on public health and safety concerns.

Although the AMA’s apparent retreat from insisting on tort reform in PPACA cannot be completely explained by the trend seen in Maine, as more doctors abandon private practice for salaried position, the age-old fight between doctors and lawyers may continue to wane. However, it remains to be seen what role, if any, PPACA’s Section 10607 pilot programs will have on reigniting the push for nationwide tort reforms in the health care arena. These recent developments make one thing clear: PPACA’s distilled efforts at addressing tort reform, coupled with a gradual, but perceptible, shift in direction for many physicians’ lobbying groups, means that tort reform on the federal level faces an uphill battle.

Rashmi Nijagal is an attorney with the Ware Law Group, focusing primarily on healthcare law. A former medical malpractice litigator, she now practices regulatory and administrative law representing medical staffs at hospitals.

[1] David A. Hyman and William M. Sage, “Do Health Reform and Malpractice Reform Fit Together?” The American Enterprise Institute, April 1, 2011.

[2] Andrew Cohen, “Funding Opportunities in the Affordable Care Act” Center for Health Law and Economics, University of Massachusetts Medical School, October 2010.

[3] David Hyman et al., “Estimating the Effect of Damage Caps in Medical Malpractice Cases: Evidence from Texas,” Journal of Legal Analysis 1, no. 1 (2009): 355.

[4] “As Physicians’ Jobs Change, So Do Their Politics” The New York Times, May 30, 2011.

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