Looking For Answers On The Malpractice Crisis
The scene has been played out at varying degrees throughout the country. Doctors are walking out of hospitals, practitioners are struggling to pay malpractice insurance premiums and juries are awarding millions of dollars to patients who have sued for malpractice. Many perceive a malpractice crisis is affecting the entire healthcare field and DPMs are among those who may feel the crunch. Across the United States, doctors of several disciplines have found themselves unable to practice due to malpractice costs, leaving patients unable to access healthcare. Last year, the University of Nevada Medical Center closed for 10 days because its surgeons’ premiums increased sharply. Indeed, some of these surgeons saw their premium increase from $40,000 to $200,000, according to a July 2002 report from the U.S. Department of Health and Human Services (HHS). In Pennsylvania, 44 doctors in one Philadelphia suburb left practice in 2001 due to high insurance costs. During that same year, premiums for many Ohio physicians tripled, according to the HHS report. Sixty-five percent of New Jersey hospitals reported physicians leaving due to higher premiums that had increased 250 percent over three years. Around the country, some doctors have walked out to protest higher malpractice insurance costs. Such walkouts have occurred in Florida, Mississippi and West Virginia. In New Jersey, 5,000 doctors left work and protested at a rally several months ago. “More and more doctors seem to be getting fed up with today’s medical environment and are leaving this career altogether or opting for early retirement,” says Anthony Poggio, DPM, who practices in California. “Many of the doctors I personally know who have chosen to leave medicine were all very dedicated and competent doctors. Their skills will be missed.” The Costs And Consequences Of Higher Premiums Practitioners who are staying in medicine find themselves paying escalating premiums. Doctors spent $6.3 billion in 2001 to acquire coverage and hospitals and nursing homes spend billions more, according to the HHS report. Michael Downey, DPM, Chief of the Division of Podiatric Surgery at Presbyterian Medical Center in Philadelphia, says he paid $7,000 in premiums five years ago, but paid $21,000 last year. “Doctors don’t really have that much recourse. They pay it. They have to,” says Janice Roven, JD, an attorney who has represented podiatrists. “It’ll get to a point in time where podiatrists or any doctors … will restrict what they’ll do because they’re afraid of being sued.” In addition to doctors leaving areas that are deemed to be cost-prohibitive for insurance, one DPM says the word about higher costs gets out quickly so new practitioners are reluctant to come to certain areas. In the long run, he says this could lead to a potential shortage. While some DPMs are relocating or retiring early, attorney Jeffrey Cohen notes many doctors are insuring themselves and protecting their assets. “The malpractice insurance industry is in crisis in Florida,” says Cohen, who works in Florida. “Premiums continue to soar and the number of insurers continues to diminish. The results are that clients are scrambling to find coverage.” When Rising Premiums Are Combined With Decreasing Reimbursement Several DPMs note that increased malpractice insurance costs may be passed onto consumers, but this can have a potentially damaging ripple effect as well. “Office fees may go up and for cash patients, this may put medical care out of their reach,” explains Dr. Poggio. He notes patients with limited incomes may be burdened if they are charged for previously complimentary services like filling out forms. However, when you consider the combination of escalating insurance premiums and declining Medicare reimbursements for services, physicians don’t seem to have a lot of options. “Increasing malpractice premiums in a climate of decreasing reimbursement have made it economically unfeasible to accept the lower fee schedule,” says Michael Hriljac, DPM, JD. “The provider can no longer agree to the discount that is hallmark of most PPO plans. The increased fee comes directly out of the patient’s pocket and the health care delivery systems suffer.” Dr. Poggio also notes that increasing insurance costs and decreasing reimbursements can result in limited pay raises, and reduced or eliminated benefits for staff. One can try to increase revenue by seeing more patients, but Dr. Poggio says this may lead to shorter and more hurried visits for patients. “Hence the patients may get fewer services and there is a higher potential of things slipping through the cracks or errors being made,” explains Dr. Poggio. How The Strain On Insurers Factors Into The Equation Adding to the problem is the fact that more insurance companies have gone out of business in recent years, including the St. Paul Companies, the largest carrier in the country. “There is a malpractice crisis,” notes Jerry Brant, DPM, who is the President and CEO of the Podiatry Insurance Company of America (PICA) Group. He says when there are less insurance companies to write policies, costs increase for the existing insurers. Dr. Brant points out that costs have increased for PICA, which has 9,000 policies nationwide. In a discussion of malpractice issues at the New York Podiatric Clinical Conference in February, Dr. Brant noted that PICA pays 10 to 20 percent more each year in reimbursement, experienced a 9.5 percent premium increase last year and will see a 20.6 percent overall rate increase in 2003. “Premiums for professionals have escalated for the past couple of years and will continue to do so,” says Dr. Brant. He emphasizes that PICA tries to increase awareness of the problem among DPMs and sponsors risk management seminars at podiatric meetings. National Tort Reform May Be On The Way Are there any solutions on the horizon? The HHS report cites one study’s estimates that limiting non-economic damages from malpractice suits could reduce healthcare costs by 5 to 9 percent and not adversely affect the quality of care. Such changes would save $60 to $108 billion a year in healthcare costs, permitting an extra 2.4 to 4.3 million Americans to get health insurance. Podiatrists and other healthcare professionals may soon see some relief in the form of tort reform legislation and jury verdict caps. In March, the House of Representatives passed House Resolution 5, which would: • limit punitive damages to $250,000 or two times the amount of economic damages awarded, whichever is greater; • cap non-economic damages at $250,000; • limit the number of years in which a plaintiff may file a healthcare liability action to ensure that claims are brought while evidence and witnesses are available; and • allocate damages fairly in proportion to a party’s degree of fault. The American Medical Association (AMA) backed the resolution and praised the bill’s passage by the House. “(When doctors are) forced to move out of state, take early retirement or stop practicing high-risk procedures because of skyrocketing insurance premiums, (it leaves) much of the nation in an access-to-care crisis or near-crisis situation,” the AMA notes on its Web site. “Capping non-economic damages at $250,000 will help curb the jackpot lottery mentality that is jeopardizing patient care in this country.” However, a recent draft of the Senate’s version of the bill proposed an increase of the cap on non-economic damages to $500,000 and would still allow awards up to $2 million in cases of severe disfigurement or death. As this issue went to press, the AMA was evaluating its support of the increased Senate cap, according to the Associated Press. Is there a strong link between premium increases and caps? In the last two years, premiums increased by 30 percent or more in Nevada, Mississippi, North Carolina, Pennsylvania, Florida, Ohio and Illinois, all states without reform, according to the HHS report. In Virginia, which also has no reform, premiums increased 75 percent. Premiums have increased by 44 percent in states without caps and by 12 to 15 percent in states with caps of $250,000 to $300,000. The HHS report also notes that in 2000, premiums did not increase at all in Hawaii, North Dakota and South Dakota, three states with “meaningful” caps. What The Experts Say About The Potential Of Tort Reform Will tort reform help solve the crisis? DPMs and attorneys have given mixed verdicts to such reforms. “Reforms including caps on pain and suffering may help slow down the rate of increase of the cost of malpractice insurance,” says Jeffrey Galitz, MD, DPM, who practices in Florida. “However, in order to truly have long-term stability of malpractice rates, fundamental changes involving malpractice will be needed.” Dr. Galitz cites California’s cap system, which he says seems to have slowed down increasing insurance rates. The state’s Medical Injury Compensation Reform Act (MICRA) of 1975 caps non-economic damages at $250,000 and limits the time in which lawsuits can be brought to three years. As a result, premium costs have risen by 167 percent since 1975, compared to 505 percent in the rest of the country during the same period, notes the HHS report. “The California system could work anywhere if there is the desire to make it work,” says Dr. Poggio. “The counter-arguments tend to prey on the fears that the medical system will run amok unless there are these huge case settlements to keep the doctors in check. Test cases are always those that draw national headlines. But these are the very minority of cases, not the norm.” Dr. Poggio notes some cases of insurance fraud and abuse can be “horrendous” but are limited to a small number of doctors. “Yet, the ensuing rules that are created may unnecessarily impact all of the doctors,” he says. “These additional rules, which often are unnecessary and burdensome, may then start to negatively affect patient care rather than improve it.” Why Tort Reform May Not Be The Ultimate Remedy “Clearly, meaningful tort reform can have a positive effect,” notes Dr. Brant. He points out that PICA has its largest business in California and its settlements are in line with those in the rest of the state. However, he says he is “not terribly optimistic” about caps and cautions that even when you have meaningful tort reform, it doesn’t provide “immediate relief,” noting that such reform would benefit practitioners three to five years later. Cohen says tort reform may not be the “panacea” some tout it as being. “Industry experts (say), even with caps on non-economic damages, the best we will see is a roughly 20 percent reduction over perhaps three years,” explains Cohen. “If they are correct, caps would have little effect since premiums have doubled and tripled in the past couple of years and are expected to rise further.” Cohen notes in the insurance industry, some see the malpractice crisis as a reflection of bad market conditions and a failure of the “lost leader” approach to take market share. Given the strong lobbies, Roven says “I doubt that you will ever have real reform.” “I believe that caps on pain and suffering, which is being considered in Florida as well as nationally, could help to reduce the costs of malpractice claims,” says attorney Joseph Brooks. “From a most practical standpoint, I believe that there are a number of suits that could be avoided if all physicians, including podiatrists, remained conscious of the importance of good relationships with their colleagues in the general medical community.” Dr. Hriljac says while capping jury awards may be helpful, “it is far from a cure and is punitive in some severe cases of malpractice. It also does not address the ongoing problem and may result in a greater number of suits.” Jury Verdicts Are Escalating Sharply However, malpractice woes do not end with high premiums. Some experts say high jury verdicts are also fueling the fire. As the HHS report notes, the average jury malpractice award rose 76 percent from 1996 to 1999, when the median award was $800,000. In the last five years, states without award caps have seen their share of multi-million dollar suits. Mississippi and Pennsylvania each experienced a jury award of $100 million. At a seminar at the New York Podiatric Clinical Conference, Winfield Butlin, DPM, noted two very high jury verdicts. One attorney demanded $88 million for a driver whose legs were amputated and the jury award was $55 million. In another case, a woman in Nebraska with Grave’s disease had her left leg amputated and the jury awarded her $22 million, 65 percent of which was against one physician, according to Dr. Butlin. Dr. Hriljac notes there is a risk of minimizing the reparations to truly injured parties who deserve the settlements. He suggests reviewing the concept of caps on non-economic damages and perhaps having a cap with a review panel for certain cases that may warrant additional damages. “Unless a state has adopted limitations on non-economic damages, the system gives juries a blank check to award huge damages based on sympathy, attractiveness of the plaintiff and the plaintiff’s socioeconomic status,” the HHS notes. Exploring The Possibilities For Deterring Meritless Claims In contrast to malpractice cases involving grave outcomes like amputation, there are cases that may have questionable financial outcomes. Dr. Downey cites one case in which a person received a $450,000 judgment for pain and suffering after a bowel procedure, which both sides admitted was done properly, left him with temporary diarrhea for four months. “Until you put a cap on punitive damages like that, I think you’re going to have a lot of frivolous cases,” says Dr. Downey. Brooks believes the single biggest cost is the number of “meritless claims brought at the low cost and seemingly ubiquitous expert opinion testimony which starts the whole process under our current medical malpractice litigation scheme.” He cites a Florida Supreme Court case (Fabre vs. Marin, 623 SO.2d 1182 (Fla. 1993)) that encourages plaintiffs’ attorneys to include every possible physician in a lawsuit. “Fabre, and our entire pre-suit system, in my opinion, fails miserably in deterring claims that should never be brought,” says Brooks. “It takes months, even years in some instances, to extricate our doctors from meritless claims.” “The courts should (also) have the ability to levy fines on patients and their attorneys for cases, which are brought on solely by malicious intent on the part of the patient with no medical basis,” adds Dr. Poggio. Roven notes it is harder to sue in different parts of the country but patients can usually find a lawyer willing to take on a case. She also points out that patients do sue more during hard economic times. Dr. Poggio advocates basing attorney fees on a fixed percentage based only on the medical costs of the case and not including the pain and suffering component. This may reduce any financial impetus for the attorney to push for some of these large awards. For large dollar awards, Dr. Poggio suggests possibly having a state board review cases for appropriateness. He notes the jury on a case would probably be made up of lay people with limited medical knowledge. “Their decision may be influenced by emotions associated with an apparent devastating case rather than true medical issues and appropriateness of care,” he says. If a state board had major problems with such a verdict, it could issue an opinion to the judge before the case is ultimately closed, according to Dr. Poggio. What About Reforms Within The Medical And Insurance Professions? Reforms need not only originate in the legal system. Some reforms may also involve the insurance industry and doctors themselves, according to some experts. Dr. Hriljac suggests improving insurance company underwriting standards and reviewing insurers’ books to determine if there is any “price-gouging.” Both Drs. Hriljac and Poggio suggest the review of independent boards. Dr. Hriljac says the mandatory institution of arbitration with independent expert witnesses may help. The parties who refuse to accept the arbitration process would be responsible for the expense of litigation if they do not prevail, according to Dr. Hriljac. Dr. Poggio suggests that all potential malpractice cases undergo a preliminary review by an independent party, such as an arbitration board, that would rule on the merit of the case. The ruling would be non-binding and the patient could pursue the case further but he says such a system would give an indication of the merit of the case. He says this would hopefully cause cases to be settled out of court at less expense to those involved. Improving oversight of the so-called “bad doctors” and implementing disciplinary measures may help malpractice costs, says Dr. Hriljac. Dr. Poggio also suggests reforming the National Data Bank, a database of lawsuits against healthcare professionals. He says small nuisance amounts shouldn’t be posted in the data bank unless there are more than a certain number of such cases. “This will still allow patients to be compensated for losses but may not force litigation simply to avoid being listed in the National Data Bank,” offers Dr. Poggio. Editor’s Note: For further reading, please see “What You Can Learn About Nightmare Malpractice Cases” in the August 2002 issue.