STATE LEGISLATIVE UPDATE

JUNE 2004

STATE LEGISLATIVE UPDATE

The beginning of summer saw no letup in the medical liability crisis in the states. For a toolkit on medical liability reform visit www.pactproject.org.

As of the end of the month, the following state legislatures were in regular session: CA, IL, MA, MI, NC, NJ, NY, OH and PA. In June the legislatures in DE, LA, NH, RI and SC adjourned. Through June there have been 114,007 bills introduced in the states in 2004 and 20,366 have become law.

Some of the bills the Department of Socioeconomic & State Society Affairs is tracking are outlined below. If you have any questions please give Jay Fisher a call at 800-346-2267, x4336.

TORT REFORM

The Mayor of the District of Columbia introduced a broad-based medical liability reform bill in June. The bill includes a $250,000 cap on non-economic damages, eliminates joint and several liability, requires a certificate of merit and limits attorney contingency fees.

In special session the legislature in Mississippi passed a medical liability reform bill that was then signed by Governor Barbour. The bill eliminates the future increases in the cap on non-economic damages and maintains the cap at $500,000. The bill also includes in the cap damages for disfigurement. These damages previously were not within the cap. Furthermore, suits can only be brought in the county where the care was provided. Lastly, the bill completely eliminates joint and several liability and defendants are only liable for the percentage of damages equal to their percentage of fault.

The major medical liability insurer in Maryland, Medical Mutual, filed for a 41% rate increase in June. Governor Ehrlich created a task force to consider ways to relieve the crisis. The Governor continues to support lowering the cap on non-economic damages to $500,000. The talk of calling a special session to address the crisis is intensifying. An appellate court in Indiana ruled that the statute of limitations (SOL) for minors in the state medical liability statute was unconstitutional. The SOL for a minor had been two years, except that children under six had until their eighth birthday to sue.

A special session was called in Wyoming to deal with the problem of medical liability. The special session will be held in July. The legislature is considering various ideas including a constitutional amendment to allow a cap on non-economic damages, creating a state-run risk retention group to insure physicians, and subsidizing physician premiums based on the amount of Medicaid care they provide.

The Illinois legislature did not pass a budget by their May 31 st adjournment deadline or by the end of the fiscal year on June 30 th. There has been talk by the Republicans of trying to tie passing a budget to passing medical liability reform. Discussions continue as the session drags on into July, but action is uncertain.

The Governor in New Jersey signed the reform bill that does not contain caps, but does create a subsidy program for physicians in high-risk specialties. The game of ping-pong continued in Pennsylvania where the House and Senate keep passing constitutional amendments in different form to allow caps. In June, the House ignored the version passed by the Senate and instead passed a bill with different language.

Ohio Governor Taft signed legislation that protects statements of apology, sympathy, condolences, etc. made by a physician to a patient. The bill also deems out of state expert witnesses to be licensed in Ohio, thus allowing Ohio to take disciplinary action against them for fraudulent testimony. Additionally, the bill requires a certificate of merit be filed by a similarly board-certified expert, allows a defendant to be dismissed from a case by filing a motion of non-involvement and requires expert witnesses to be certified in the same specialty as the defendant.

PHYSICIAN OWNERSHIP OF HEALTH CARE FACILITIES

Governor Bush in Florida signed legislation prohibiting licensing of specialty hospitals. In Massachusetts a provision that had been inserted in the budget was dropped that would have banned referrals to MRIs in which the physician had a financial interest. This would have included in-office MRIs.

Legislation passed both houses in New Jersey to enact a tax on ambulatory surgery centers (ASCs). All non-hospital owned ASCs with at least $300,000 in gross receipts will pay an assessment equal to 3.5% of their gross receipts up to $200,000. Revenues from hospital-owned ASCs must be counted in the hospital revenue that is already taxed.

INSURER LIABILITY

The United States Supreme Court dealt a deathblow to state insurer liability laws by ruling 9-0 in the case of Aetna Health, Inc. v. Davila that the Texas insurer liability law violated the federal ERISA statute. The case affects the right to sue laws in ten other states as well. The decision should not affect state external review, prompt payment, or any willing provider laws. The Court ruled that insurers are not covered by state tort law and cannot be sued for violating a state-imposed duty of ordinary care. The only remedy available to injured patients is to sue under ERISA and obtain the costs of the services that were denied.

The only avenue to impose the same duty on insurers that is imposed on physicians is Congress. Congress can pass a patient protection act that amends ERISA to allow damages if an insurer violates a duty of ordinary care.

SCOPE OF PRACTICE

Physical therapy and podiatry bills passed both houses in California after earlier being amended to be acceptable to physicians. A bill was introduced in Delaware that would force insurers to reimburse PTs for treatment provided without a physician referral. The New York houses are playing ping-pong with PT direct access bills with both the House and Senate passing different versions within days of each other in June.

JOINT NEGOTIATION

A joint negotiation bill passed the House in Rhode Island. Other states considering legislation this year include Connecticut, Massachusetts, Missouri, New York and Pennsylvania.

PRACTICE MANAGEMENT

Legislation was signed into law in Florida requiring HMOs to provide fee schedules to their physicians.