August 2003 Bulletin

AAOS Medical Liability Campaign supports state legislative efforts

By Susan Koshy, JD, MPH

As part of the AAOS commitment to bring about national and state medical liability reform, the organization has set aside funds to support state medical liability reform campaigns. The first two grants under this program were awarded in July to the Texas Orthopaedic Association (TOA) and the Florida Orthopaedic Society (FOS).

Texas campaign

The AAOS awarded the TOA $75,000 from the AAOS Medical Liability Reform Fund. The TOA submitted a detailed proposal requesting financial assistance from the AAOS for passing medical liability reform legislation in Texas. After considerable review and discussion of the proposal with the TOA leadership, the AAOS decided to fund this worthwhile proposal. The decision to fund the Texas proposal was twofold:

  1. The chances of success in passing medical liability reform in Texas were considerable; and
  2. the TOA and its coalition partners were well prepared to meet the challenges facing them.

The AAOS faith in the TOA legislative effort proved to be justified. Medical liability reform legislation successfully passed both houses of the Texas legislature in early June. The legislation contains a cap on non-economic damages and various other important tort reform measures. The TOA and its coalition partners immediately began working to educate the public on a proposed constitutional amendment needed to ensure that the legislature has the power to enact a cap on non-economic damages. The vote on the proposed amendment will be in September 2003. Initial polling reveals that 69 percent of Texans favor a constitutional amendment that caps non-economic damages.

History of reform in Texas

The Texas legislature has been attempting to address the issue of rising medical liability insurance costs since the 1970s. In 1977, the Texas legislature passed a bill containing a $500,000 cap on non-economic damages. The Texas Supreme Court overturned the cap as unconstitutional in 1990. Since that ruling, the physician community in Texas has been actively involved in electing judges who support tort reform to the Texas Supreme Court.

In 2002, Texas was classified by the AMA as a medical liability insurance crisis state. Liability insurance premiums have doubled over the last three years in the state. Only five insurance companies continue to write policies in Texas (including the Joint Underwriting Association) while 14 others have left the state since 1999.

According to a Texas Medical Association study, "more than half of all Texas physicians—including those in the prime of their professional careers—are considering early retirement due to the state's medical liability crisis." As many as 80 percent of physicians who practice in the Rio Grande Valley are thinking about moving or retiring.

In response to the liability crisis in the state, House Bill 4 was introduced in the legislature this year and passed with a $250,000 cap on non-economic damages. The Senate passed a bill with a cap of $250,000 for physicians and $500,000 for health facilities. After tense negotiations—and at the last possible minute—the legislature agreed to a compromise of a $250,000 cap for all physicians, a $250,000 cap for a defendant institution and another $250,000 cap if a second institution is named in the suit.

Not only does this legislation provide for a cap on non-economic damages but it also lowers the interest rate on judgments, allows periodic payments of future damages, creates a 10-year statute of repose (a hard-cap statute of limitations), toughens expert witness rules, and deals with many other issues.

David Teuscher, MD, the legislative chair of the TOA, gave the introductory speech prior to the signing of H.B. 4 by Governor Rick Perry. Dr. Teuscher was presented with the pen used by the Governor to sign the bill.

To ensure the viability of the bill, the TOA is working with its coalition partners to pass a constitutional amendment clarifying that the legislature has the ability to enact caps on non-economic damages.

Florida campaign

The Florida Orthopaedic Society also submitted a proposal requesting funding from the AAOS Medical Liability Reform Fund. Florida is a key state for medical liability reform and the AAOS is committed to supporting orthopaedic surgeons in Florida to achieve this goal. The AAOS, after careful consideration of the FOS proposal, voted to award $32,000 to FOS help pass medical liability reform in Florida. The governor of Florida and members of the Florida House of Representative are committed to passing medical liability reform, including caps on non-economic damages, and some type of medical liability reform is likely to pass in 2003.

Legislative history in Florida

Like Texas, Florida has been experiencing a liability insurance crisis. In 1986, the Florida legislature passed a law limiting non-economic damages to $450,000 in all tort actions. In 1987, the Florida Supreme Court ruled the cap on non-economic damages to be unconstitutional. The Florida legislature then enacted a voluntary binding arbitration process to encourage settlement of claims. As part of the arbitration process, a cap of $250,000 on non-economic damages was established if parties agree to arbitration, and a cap of $350,000 was established at trial if the plaintiff refuses arbitration. The Florida Supreme Court upheld these provisions as constitutional if they applied to each claimant.

Despite various legislative efforts, medical liability insurance premiums continued to rise. In 2002 Florida was designated a medical liability crisis state by the AMA. Governor Jeb Bush created a task force composed of university presidents to study (continued on p. 26) this problem. The task force came up with a $250,000 cap on non-economic damages, which the governor has consistently supported as a primary solution to the crisis.

In 2002 the average medical liability premium in Florida was 55 percent higher than the national average. Average insurance premiums in Florida have increased by 64 percent since 1996, while nationally premiums increased by 26 percent. Only four companies currently write medical liability insurance in Florida. According to the governor's task force, about 25 percent of Florida physicians are going "bare."

In 2000, Florida's frequency of medical malpractice claims was 36 percent higher than the national average. The average "per premium" loss per Florida doctor has grown from 15 percent above the national average in 1991 to 50 percent above that average in 2000.

During the legislative session in 2003, the Florida House of Representatives passed a bill containing a $250,000 cap on non-economic damages, but the Senate refused to pass a similar measure. Instead, they passed legislation that combined insurance and patient safety reform. The Senate and House have often been at odds despite the fact that Republicans control them both.

The regular session ended on May 2 without passing a tort reform bill. Immediately thereafter, about 120 physicians in Jacksonville, including orthopaedists, suspended or limited their practice. The Jacksonville Orthopaedic Institute—a group of 22 physicians—stopped seeing new patients, responding to emergency room calls or performing surgeries, although it continued to counsel existing patients. They resumed seeing new patients on June 16. Recently, the President of the Florida Medical Association also suspended his practice to new patients. Doctors in Broward County, including orthopaedists, are limiting their practice to emergency call.

The legislature met in special session in June and the House again passed a bill with a $250,000 cap on non-economic damages. The Senate passed a measure that had a $500,000 cap covering all practitioners, a $500,000 cap covering all facilities and a $500,000 cap covering all other defendants. For catastrophic injuries, each of the caps would be raised to $2,000,000. The two houses failed to reach a compromise and the special session was adjourned.

Governor Bush has promised to keep calling the legislature back into session until there is an agreement, preferably at a $250,000 cap.

Susan Koshy, JD, MPH, is manager, AAOS department of socioeconomic and state society affairs. She can be reached at koshy@aaos.org

Medical liability campaign materials available for state societies

The AAOS has developed a series of materials on the current medical liability crisis at the state level. These materials can be used by state orthopaedic societies and their members to educate patients and the public on the liability crisis. They can be modified by each state orthopaedic society to address specific state tort reform issues.

The "Long Road to Recovery" is a video developed by the AAOS to educate patients about the liability crisis and its potential impact on access to care. This four-minute video can be viewed by patients in orthopaedic offices. It is available to state orthopaedic societies for purchase and distribution to their membership. Anyone interested in obtaining a copy of the video should contact their state orthopaedic society for more information.

The AAOS has also developed sample brochures for orthopaedic offices and talking points for physicians to use when discussing the liability crisis with patients. Sample talking points for physicians to use when speaking to legislators are also available. Anyone interested in urging their legislators to support tort reform at the state level will find them helpful in making the case for reform.


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