AAOS Bulletin - June, 2006

In Brief

California
California’s insurance commissioner is investigating allegations that some of the state’s largest health insurers canceled a number of heath insurance policies after covered individuals filed claims. An attorney for patients asserted that post-claim underwriting, which is illegal under state law, has become common. A spokesperson for the insurance commissioner says the office is investigating to see if these occurrences are isolated incidents or if a pattern of behavior is at work.

Florida
Florida has voted to end joint-and-several liability for economic damages in the state, meaning that a court no longer can shift the burden for economic damages to the party who has the deepest pockets. Formerly, the law said that every defendant in a lawsuit was completely responsible for economic damages regardless of his or her degree of fault. Florida ended joint-and-several liability for noneconomic damages in 1986.

The recent professional liability reforms, including a cap on noneconomic damages, are showing their effectiveness in attracting new insurers to the table. The state’s largest malpractice insurer reported a record profit in 2005, and at least six new insurers have entered the market in the past three years. Despite this, Florida physicians pay among the highest medical liability premiums in the nation. Fewer physicians are willing to take the associated liability risks of serving on-call in emergency rooms, resulting in a crisis of access to care.

Illinois
Illinois passed a cap on noneconomic damages the past year, but insurers are discovering that there is more to the legislation. State regulators have used another provision in the law to order the state’s largest professional liability insurer, ISMIE, to lower physicians’ premiums next year. Regulators heard testimony in public hearings and reviewed a considerable number of documents to determine if the insurer could justify its current rates. ISMIE initially blasted the action, but later announced a premium cut larger than what the state was requesting.

Massachusetts
Massachusetts made headlines in April by becoming the first state to require all its residents to purchase health insurance. Concerns have been raised regarding affordability for poor residents and the costs to employers. Some have criticized the action as a major expansion of government power and an unprecedented level of interference with personal decision making. Some experts noted that circumstances unique to the state (such as a low number of currently uninsured people, a low unemployment rate and a large base of employers who already provide health insurance) made passage possible, but could prevent this action from being successfully applied in other states.

New York
The creation of a “preferred drug list” for Medicaid recipients that excludes expensive drugs when cheaper versions are available has saved New York State $200 million in its first year of operation. The program currently has a “physician override” that allows physicians to specifically prescribe drugs not on the preferred list if they believe they are needed for their patients. Governor George Pataki (R) has claimed that repealing the physician override would save the state another $36 million. Opponents of the governor’s attempt to remove the override, including AARP and the Consumers Union, have expressed shock at the plan.

Governor Pataki vetoed 57 health-care items from the budget that had been approved by the state legislature. Among the items vetoed was an increase in Medicaid reimbursement rates for emergency room visits. Both Democrat and Republican legislative leaders have vowed to fight the vetoes.

Pennsylvania
In his 2002 gubernatorial campaign, Ed Rendell (D) promised that he would support efforts to limit “the unjust effects of joint-and-several liability.” So it may have come as a surprise when Governor Rendell vetoed the Fair Share Act, a bill that would have made major reforms to Pennsylvania’s tort law as it relates to joint liability. The governor said that the bill did not go far enough to protect the rights of victims in cases of negligence.

Vermont
In 2004, Vermont’s attorney general settled a suit that claimed Pfizer’s Warner-Lambert unit violated state law in promoting its product. According to a recent announcement, a portion of the settlement money would be used to administer a program to educate physicians about drug company marketing practices. The program also hopes to help doctors find independent, unbiased information about drugs.

Wisconsin
Approximately eight months after the Wisconsin Supreme Court struck down a cap on noneconomic damages, the state has a new cap. Governor Jim Doyle (D) signed a bill that will set the cap at $750,000. At the time the previous law was struck down, the cap was set at $445,775, and it expanded every year. The new cap will be reviewed every two years to see if any changes are needed. The cap limits the total noneconomic damages a defendant can collect for an incident, regardless of the number of defendants. Two of the three legal experts consulted by the governor’s office stated that they believe this new cap will hold up under court scrutiny.

This roundup was prepared by Bruce Allain, JD, a legislative analyst in the department of socioeconomic and state society affairs. He can be reached at allain@aaos.org


Close Archives | Previous Page