February 2002 Bulletin

In Brief


Responding to bipartisan appeals, Governor Gray Davis restored $25 million in funding to prop up the state’s ailing trauma-care network. The proposed cuts were part of an effort to reduce the state’s $12.4 billion budget deficit. The governor’s proposal to slash $30 million from trauma centers sparked loud complaints, especially from lawmakers in Southern California. The $25 million is the state’s first direct contribution to the public and private hospitals that make up the trauma network. Trauma centers depend largely on reimbursement for insurance companies and local government funding. Each county has its own system, and health officials were hoping to use the $5 million Davis did not restore to develop a statewide approach.

The California Court of Appeal, Second District ruled that medical staff bylaws do not create an enforceable legal contract between a physician and a hospital. It is the first time a California appeals court has ruled on whether breach of contract suits can be based on hospital bylaws. In 1998, a federal court in California interpreted California law to mean that hospital bylaws create binding contracts in the state.


One bill before Maine lawmakers would eliminate the regulatory process called certificate of need (CON), and another bill, supported by the governor, would revise provisions of the existing process. Doctors told lawmakers January 8 that eliminating CON would give patients and insurance companies more choices, and the competition would lower prices. The state’s hospitals told lawmakers that the move would drive medical expenditures higher.


In December the Michigan Senate passed a prompt pay bill that will go to its House of Representatives early this year. The bill requires clean claims to be paid within 45 days. The section requiring insurers to report their compliance with the state government was deleted and the amount delinquent insurers can be fined was reduced from $50,000 to $10,000. Lastly, the section allowing the recovery of attorneys’ fees in private civil actions was deleted, which makes private suits economically questionable.


The State Attorney General ruled in December that since the state law was ambiguous chiropractors could now call themselves "chiropractic physicians." The Nebraska Medical Association is concerned about the ruling and is considering its options which include going to court for a ruling or passing legislation to clarify that only MDs and DOs can call themselves physicians in Nebraska.

New Jersey

Acting Governor Donald T. DiFrancesco signed legislation banning health care facilities from requiring nurses and other hourly employees to work overtime, except in emergencies, beginning in 2003. The law does not apply to physicians.

North Carolina

A patient’s bill of rights was passed expanding the external review procedures, outlawing financial disincentives to care, extending continuity of care provisions and increasing ability of patients to obtain standing referrals.


Pennsylvania Governor Mark Schweiker called for tort reform to help allay the medical malpractice premium crisis in that state, asking the General Assembly to make malpractice reform its top priority. This comes on the heels of State Attorney General Mike Fisher asking the Pennsylvania Supreme Court to take steps to alleviate the high costs of medical malpractice insurance.

In a Pennsylvania Orthopaedic Society/Pennsylvania Medical Society survey, 40% or orthopaedic surgeons responding stated that as of January 1, 2002 their malpractice insurance was either cancelled or not renewed. Thirty-one percent of the orthopaedists have been unable to obtain new coverage for 2002. The rising cost of malpractice coverage was felt in other states during 2001, such as West Virginia, Ohio, Florida and Mississippi. The issues of rising malpractice premiums and the need for tort reform will certainly resurface in state capitols during 2002.

At the direction of Governor Schweiker, Insurance Commissioner Diane Koken requested that private medical-malpractice insurers delay the collection of the Medical Professional Liability Catastrophe (CAT) Fund surcharge from physicians who were granted insurance policies in January, until April 30. Koken said Pennsylvania’s largest provider of malpractice insurance, Pennsylvania Medical Society Liability Insurance Company (PMSLIC), has agreed to delay collecting the CAT fund surcharge for the 7,000 physicians it wrote policies for in January. If other malpractice insurers follow suit, up to 20,000 physicians would be able to delay paying the surcharge. This will provide them time to better prepare for their increased premium payments.


The State Attorney General approved participation of the first group of physicians, including an orthopaedic surgeon, in a joint negotiation. Texas is the only state with a joint negotiation law, which creates antitrust exception under the state action doctrine that allows physicians to jointly negotiate contracts with insurers.


Governor Howard Dean used his State of the State address on January 8 to push for health care coverage for every state resident. Governor Dean told a joint session of the legislature he has found a way to allow businesses with 30 or fewer employees and moderate-income residents to buy their health insurance cheaper through the state Medicaid program. The expansion of the program would not cost the state any money, he said. Governor Dean has made universal health care coverage a key aim during his decade in office. The proposal could concern doctors, hospitals and other health providers who argue they receive too little compensation when they treat Medicaid patients. The Governor said he plans to compensate providers for the additional Medicaid patients by increasing the fees they receive through the separate Medicare program.

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