December 2004 Bulletin

The results of state tort reform 2004

Success stories in the 2004 election cycle

By David D. Teuscher, MD

The 2004 legislative, judicial and electoral cycle saw success for medical liability reform at the state level across America. On Nov. 2, voters—physicians and patients—went to the polls and voiced their support for reform.

AAOS activities with state orthopaedic societies involved several distinct, coordinated initiatives and yielded unprecedented results over the past two years.

AAOS initiatives such as the Medical Liability Reform (MLR) State Grant Program, Doctors for Medical Liability Reform (DMLR), the Protect Access to Care and Treatment project (PACT), and the American Association of Orthopaedic Surgeons-Political Action Committee (PAC) were instrumental in achieving a shift in support of tort reform.

Nine state orthopaedic societies have already received grants from the AAOS MLR Committee to support their efforts to achieve meaningful and constitutionally sustainable state reforms. State orthopaedic societies in Florida, Georgia, Mississippi, Nevada, New Jersey, Oregon, Pennsylvania, Texas and Wyoming received grants, which were funded by your generous voluntary contributions. Without the commitment of AAOS Board members and contributions by individual fellows, the coordinated MLR Campaign could not have achieved these early successes.

Florida

The Florida Orthopaedic Society and “Floridians for Patient Protection” were key players in the passage of three constitutional amendments. Amendment 3 (The Medical Liability Claimant’s Compensation Amendment) was backed by doctors and passed with 63 percent of the vote.

After passing a relatively weak noneconomic cap in 2003 and being unable to find a legislative fix in 2004, the physicians of Florida took their case to the people. Amendment 3 immediately limits lawyer contingency fees in medical liability cases to 30 percent of the first $250,000 and 10 percent of any recovery over that amount. In a $1 million award, for example, lawyer fees would drop from $400,000 to $150,000. Lawyers’ expenses will still be paid in addition to the fees.

Florida trial lawyers filed “revenge initiatives,” Amendments 7 and 8, which also passed. Amendment 7 could potentially open confidential peer review records of “adverse” medical incidents. It is unclear what negative effect this may have on physician participation in peer review and maintenance of patient confidentiality. The Florida Hospital Association has already filed a court challenge blocking implementation.

Under Amendment 8, a physician with three or more adverse verdicts would lose his or her medical license. It is unclear whether out-of-court settlements are included in the three strikes. The Florida Legislature must act to implement Amendments 7 and 8; extensive litigation is anticipated before final implementation.

Physicians raised more than $7 million, and were outspent nearly $4 to $1. But the physician grassroots campaign won with patient education and voter motivation. The combined contributions of individual Florida orthopaedists, the AAOS MLR grant, and the Florida Orthopaedic Society exceeded $250,000.

Nevada

The Nevada Orthopaedic Society (NOS) was a key member of the “Keep Our Doctors In Nevada” coalition that won an outstanding triple victory in November. The coalition led a a signature drive to get Question 3 on the ballot, and it won with 60 percent of the votes. Trial lawyer-backed Questions 4 and 5 were defeated by even greater margins.

Question 3 eliminates the exceptions (for gross negligence or exceptional circumstances) to the previously enacted $350,000 noneconomic cap. It also limits lawyer contingency fees, makes provisions for periodic payments on awards over $50,000 and changes the extension to the statue of limitation to one additional year if injury is not immediately apparent.

In addition to AAOS and NOS contributions, Nevada orthopaedic surgeons personally contributed more than $100,000 to the successful campaign.

Oregon

Despite a Herculean effort by the Oregon Association of Orthopaedists (OAO), ballot measure 35, which would have reinstated a $500,000 cap on noneconomic damages overturned in 1999, was defeated by a razor-thin margin. Reform efforts were led by Oregonians for Quality Affordable and Reliable Health Care, which mobilized grassroots support and won all but four counties.

In addition to volunteering their time and voices to the reform movement, Oregon orthopaedic surgeons individually contributed more than $100,000 in addition to the AAOS and OAO contributions. An effort to identify and seek other reform measures is now underway in Oregon.

Wyoming

Wyoming voters split a narrow vote margin for Amendment C and against Amendment D. Voters gave the state legislature the right to require medical review panel and/or alternative dispute resolution, but refused to allow them to enact noneconomic damage caps. The legislature must now debate and pass legislation, with the details yet to be determined.

The Wyoming Orthopaedic Society and its members were leaders in forming and funding the Partnership to Protect Affordable Healthcare. Generous individual contributions were combined with the WOS and AAOS contributions for the statewide coalition effort. Unfortunately, the situation in Wyoming continues to deteriorate, with 51 physicians leaving their practices this year.

Judicial victories

Unable to effect a legislative solution despite repeated efforts, Illinois physicians took the judicial route in 2004. Voters sent a physician-backed Republican candidate to the state Supreme Court. The $9 million spent on the race was the most ever spent on an Illinois judicial race. For the first time ever in Illinois, a trial lawyer-backed candidate lost an Appeals Court retention vote.

Mississippi, Ohio, Alabama, Arkansas, Michigan, Montana, New Mexico, Texas and West Virginia also enjoyed Supreme Court electoral victories. The importance of these races is highlighted by the inevitable attempts to overturn legislative reforms, as has previously happened in eight states. Currently there are appellate challenges to reforms in several states, including Ohio and West Virginia.

Recently, the Utah Supreme Court upheld medical tort reform by ruling that the state’s cap on noneconomic damages was constitutional. Without a constitutional amendment, court challenge is inevitable and can take 10 years for a final ruling. Since the late 1970s, 26 state courts have ruled on some aspect of medical tort reform legislation.

Legislative reform results

State legislatures in Arizona, Mississippi, New Jersey, North Carolina, Ohio, Oklahoma, West Virginia and Wyoming passed tort reform. Although some of these reforms may have little effect, others have shown early promise, including states which passed reforms in 2003.

In 2004, Mississippi strengthened the reforms passed in 2003, including a $500,000 noneconomic cap without exceptions or indexing, venue reforms, and elimination of joint and several liabilities. The liability climate has now stabilized but rates are not expected to drop until more carriers enter the market and the dispensation of “old law” cases is known.

New Jersey passed reforms this year without a cap on noneconomic damages. The state will establish a subsidy fund for excess premiums of high risk specialists, reform expert witness requirements, allow for periodic payment over $1 million awards and give judges discretion to reduce verdicts in certain circumstances.

The Ohio legislature created a state professional liability carrier alternative, reformed the rules for expert witness (including requiring a temporary license for out-of-state experts), required an affidavit of merit and made an apology protected speech.

This year the Oklahoma Legislature established a $300,000 noneconomic cap that will apply if the settlement offer made was at least 66 percent of final judgment. It does allow exceptions to the cap if nine jurors find clear and convincing negligence. Other reforms included eliminating joint and several liability if defendants are less than 50 percent at fault and reforming expert witness requirements.

In Texas, reforms passed in 2003 have resulted in rate cuts of 17 percent by the state’s largest carrier. Additonally, the number of medical liability lawsuits filed is down 75 percent from pre-reform levels, specialists’ recruitment has improved and a legal challenge has not been filed.

What will we do in 2005?

Are we finally going to have reform on the federal level? The prospects certainly appear more hopeful. Federal reform would protect against federal judges overturning state reforms and ensure reform for crisis states with recalcitrant legislatures.

Prospects have improved in several states, including Georgia, Missouri, Kentucky, South Carolina and Tennessee. Elections are two years away, but already the search for fair-minded appellate and supreme court candidates is underway.

Until national reform is enacted, the AAOS MLR plan is to actively pursue meaningful and constitutionally sustainable medical liability reform one state at a time. With a very successful Phase I of the MLR campaign concluded, we can all take pride in the accomplishments of the AAOS and state orthopaedic societies. National reform or reform one state at a time is no longer a matter of if, but when. Phase II is coming. Get ready. We’ll need you to win.

David D. Teuscher, MD, of Beaumont, Texas, is chairman of the AAOS Professional Liability Committee and a member of the AAOS Medical Liability Reform Oversight Committee. He can be reached at sportdoctor@gt.rr.com


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