Day On Torts : Tennessee Injury Lawyer & Attorney : John Day : Personal Injury, Accidents : Serving Memphis, Nashville, Knoxville

A bill has been introduced in the Tennessee General Assembly to cap "non-economic" damages in medical malpractice lawsuits to $1,000,000, regardless of the degree of harm suffered by the patient.

Non-economic damages are defined as " damages for physical and emotional pain and suffering, inconvenience, discomfort, physical impairment, mental anguish, disfigurement, loss of enjoyment of life, loss of society and companionship, loss of consortium, injury to reputation, punitive damages, and all other nonpecuniary losses of any kind or nature."

The effort to limit patient rights comes notwithstanding the fact that medical malpractice filings are dropping significantly and there are less than seven jury verdicts for patients in the entire state per year.  

Regular readers will recall that Tennessee has very few million dollar verdicts in any type of tort case.  For the fiscal year ending July 31, 2009, there were just 15 verdicts of $1,000,000 or more in tort cases in the entire state.  Those verdicts include economic and non-economic losses.  

This legislation is yet another attempt by health care providers and their insurers to seek special treatment in our court system.  We worked with the providers in the last two years to make it more difficult to file medical malpractice lawsuits so that we could reduce cost and stress on doctors, and the re-payment is that they now want to limit damages recovered by those who have meritorious cases.  

It never stops.  

Read the bill here.  The bill is sponsored by two leading Republicans.

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Legislation has been introduced that would require a patient suing an emergency room doctor, on-call specialist, or hospital providing emergency room services to prove that the negligence of the provider rose to level of gross negligence.

Given the declining number of medical malpractice cases and the fact that there are only 6 or 7 verdicts for patients in any given year, one must wonder about the need for such legislation.  It springs from arrogance, greed, or both.

That being said, I support the legislation, with one little amendment that says this:

(a) Every  Internet or print advertisement or other publication by a hospital or doctor that provides any type of emergency treatment  in the emergency room of a hospital shall include the following language in bold type of not less than 18-point font on each page:

This health care provider is not liable for its negligence in caring for you in an emergency room unless you or, if you die, your family can prove gross negligence.  Under Tennessee law, gross negligence is a conscious neglect of duty to care for you or a callous indifference to whether you are injured or die as a result of our care.  No emergency room in any adjoining state is protected by such a law.

(b) Every radio or television advertisement by a hospital or doctor that provides any emergency treatment in the emergency room of a hospital shall have the three sentences immediately above read out loud as a part of the advertisement.

(c) Any hospital which or doctor who agrees to waive the gross negligence standard in a writing filed with the Department of Health no later than July 1 of each year beginning in 2010 need not comply with the requirements of (a) or (b) and may advertise that (i)  it has agreed to be liable for negligence and (b) may identity the health care providers that have chosen to be liable only for gross negligence.

I mean, if you really think you are entiltled to special treatment, why would you be embarassed about telling your prospective patients about it?  

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The National Practioners Data Bank collects data about malpractice claims paid by health care professionals.   The NPDB has a report that lists all of medical malpractice paid claims against all Tennessee health care providers between September 1, 1990 through November 29, 2009, a period one month short of 20 years.  To understand what data is collected by the NPDB click here.

The total number of paid claims against all health care providers in the United States is 340,463, or about 17,000 claims per year.  Recall the National Institute of Medicine said that there were 98,000 documented deaths per year in our nation's hospitals.

After the jump I have listed the number of paid claims by type of provider in Tennessee.  The data does not include hospitals or nursing homes except to the extent the payment was made by a hospital or nursing home on behalf of an individual provider after receipt of a written claim or lawsuit.

I have not added up the Tennessee claims but the number is less than 4500 in the course of 20 years or about 225 per year.

 

 

 

Continue Reading...

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 From the American Association for Justice:

 

State tort reforms have provided a boon to insurance companies, leading to record profits while physician and patient premiums continue to skyrocket.

An analysis of data from the National Association of Insurance Commissioners (NAIC) and company annual statements shows malpractice insurer profits are 24 percent higher in states with caps.  In these cap states, insurers took in 3.5 times more in premiums than they paid out in 2008.  In contrast, insurers in states without caps took in just over twice what they paid in claims.

The findings also show absolutely no correlation between the cost of malpractice premiums and health insurance premiums.  For example, Maine has the ninth lowest malpractice premiums but the fourth highest health insurance premiums.  Conversely, Nevada has the third lowest health insurance premiums nationally, but malpractice premiums are the country's ninth highest, despite having a cap in place for eight years.

"The data are clear: tort reform is just another insurance company handout," said American Association for Justice President Anthony Tarricone.  "Insurers cried wolf and demanded tort reform, only to pocket the profits and never pass savings onto physicians or patients.  While 98,000 people die every year from preventable medical errors, it's nonsensical to limit patients' rights simply to fill insurance company coffers."

The report also shows how medical negligence laws were passed under false pretenses.  The medical malpractice insurance industry has seen a 47 percent increase in profitability in the last 10 years. Overblown "reported" losses were used by the insurance industry to justify new measures restricting the rights of those injured by medical negligence.

Now that over 30 states have malpractice caps, insurance companies are enjoying extremely high levels of profit. In 2008, the average profit of the 10 largest medical malpractice insurers was higher than 99 percent of Fortune 500 companies and 35 times higher than the Fortune 500 average.

Finally, the report explains the dynamics of the insurance cycle and trends in premium pricing, which are well-known by analysts within the insurance industry.  Remarkably, the industry’s leaders are already positioning to claim another “tort crisis” and to lobby for even more severe restrictions on patients’ rights in 2012.

To view a copy of Insurance Company Handout: How the Industry Used Tort Reform to Increase Profits While Americans' Premiums Soared, visit http://www.justice.org/clips/Insurance_Company_Handout.pdf.

 

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Maine requires that a medical screening panel hear a medical malpractice case before it can be heard by a jury.   Tennessee had screening panels in the late 1970s and early 1980s, when they were abandoned because all agreed that they were ridiculous. 

Now, Senator Snowe wants to require that states adopt screening panels as a condition of receiving Medicaid funding.  Here is a copy of the proposed amendment: www.dayontorts.com/uploads/file/Snowe-2948.pdf

How are the panels working in Maine?  Well, 37.61% of claims filed in 2005 have yet to be heard by a panel while 69% of claims filed in 2006 are still pending.  Maine Chief Justice Saufley has called the two-trial system “a cumbersome process with unpredictable results that cost both the plaintiffs and the defendants money and time in a way that was not intended by the Legislature.”

In addition, Maine screening panels are stacked in the favor of the defense.  If the defense wins any one of three questions unanimously (negligence, comparative fault, causation) at the panel, the jury learns of such a finding.  However, the victim must prevail on ALL THREE questions before the jury learns the victim prevailed at the panel.  The process is also stacked to the defense because it allows the defense to change their experts if they lose at the panel.  The defense is not required to keep the same experts and doctors when they go to trial.  This means victims have to go through, and pay for, a complete second round of expensive discovery.  Besides being grossly unfair, this system is incredibly inefficient. 

Senator Snowe's numbers are as follows:  Washington, DC: (202) 224-5344  Portland, ME: (207) 874-0883

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Senator Ensign (R-Nevada) introduced an amendment to limit contingent fees in medical malpractice cases.  The Senator attempted to attached the language to amendment SA 2786 to H.R. 3590, which is intended to amend the Internal Revenue Code of 1986 to modify the first-time homebuyers credit in the case of members of the Armed Forces and certain other Federal employees, and for other purposes.

Senator Ensign's amendment was defeated  by a vote of 32 - 66 (2 Senators did not vote).  Both Tennessee senators voted in favor of the amendment to restrict fees.

The following Democrats voted to limit fees as set forth in the amendment:  Senators Hagan, Warner, Lieberman, Lincoln, and Kohl. The following Republicans voted against the amendment to limit fees:  Senators Bennett, Chambliss, Cochran, Collins, Crapo, Hatch, Johanns, LeMieux, Risch, and Shelby.

Here is the full text of the amendment.

SA 2927. Mr. ENSIGN (for himself and Mr. INHOFE) submitted an amendment to be proposed to amendment SA 2786 proposed by Mr. REID (for himself, Mr. BAUCUS, Mr. DODD, and Mr. HARKIN) to the bill H.R. 3590, to amend the Internal Revenue Code of 1986 to modify the first-time homebuyers credit in the case of members of the Armed Forces and certain other Federal employees, and for other purposes; as follows:

At the appropriate place, insert the following:

SEC. X. LIMITATION ON AMOUNT OF ATTORNEY'S CONTINGENCY FEES.

(a) In General.--An attorney who represents, on a contingency fee basis, a plaintiff in a medical malpractice liability action may not charge, demand, receive, or collect for services rendered in connection with such action (including the resolution of the claim that is the subject of the action under any alternative dispute resolution system) in excess of--

(1) 33 1/3 percent of the first $150,000 of the total amount recovered by judgment or settlement in such action; plus

(2) 25 percent of any amount recovered in excess of the first $150,000 recovered by such judgment or settlement,

unless otherwise determined under State law. Such amount shall be computed after deductions are made for all the expenses associated with the claim other than those attributable to the normal operating expenses of the attorney.

(b) Calculation of Periodic Payments.--In the event that a judgment or settlement includes periodic or future payments of damages, the amount recovered for purposes of calculating the limitation on the contingency fee under subsection (a) may, in the discretion of the court, be based on the cost of the annuity or trust established to make the payments. In any case in which an annuity or trust is not established to make such payments, such amount shall be based on the present value of the payments.

(c) Definitions.--In this section:

(1) CONTINGENCY FEE.--The term ``contingency fee'' means any fee for professional legal services which is, in whole or in part, contingent upon the recovery of any amount of damages, whether through judgment or settlement:

(2) HEALTH CARE PROFESSIONAL.--The term ``health care professional'' means any individual who provides health care services in a State and who is required by the laws or regulations of the State to be licensed or certified by the State to provide such services in the State.

(3) HEALTH CARE PROVIDER.--The term ``health care provider'' means any organization or institution that is engaged in the delivery of health care services in a State and that is required by the laws or regulations of the State to be licensed or certified by the State to engage in the delivery of such services in the State.

(4) MEDICAL MALPRACTICE LIABILITY ACTION.--The term ``medical malpractice liability action'' means a cause of action brought in State or Federal court against a health care provider or health care professional by which the plaintiff alleges a medical malpractice claim.

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The Commercial Appeal wrote an interesting story on medical malpractice litigation in today's paper.  Read it here.

An excerpt:

Nationwide, the number of payments physicians made for malpractice claims fell to 11,037 last year -- the lowest figure since the National Practitioner Data Bank began tracking data in 1990. Adjusted for inflation, the total $3.6 billion they paid was the second-lowest sum on record.

I was interviewed by the reporter and gave him the data that readers of this blog have seen about how few medical malpractice claims are filed in relation to the number of malpractice injuries and deaths and how the new statute has impacted the number of case filings.   He was kind enough to accurately quote me on one point:

"What's happening to all the other dead people? All the injured people? The cases just aren't being brought," said Nashville attorney John Day. "Is there a problem with too many lawsuits? I could make the argument that there's not enough."

 

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An article by Robert Heath in Monday's  Washington Post   gives us some of the financial details of the practice of Dr. Robert Hardi, a D.C. gastroenterologist.

Dr. Hardi has about 4500 patient visits per year and performs about  1150 procedures.  He works about 47 weeks per year. 

Thus, Dr. Hardi has about 5650 patient contacts per year, and each of those contacts presents an opportunity for a claim to be asserted against him (because each presents the possibility of making an error or omission that could result in injury).  The cost of Dr. Hardi's malpractice insurance is $45,000 per year.  The amount of his insurance coverage was not disclosed in the article.  The cost of his malpractice insurance per patient contact is $7.96.

(Note:  in Tennessee an interventional gastroenterologist would pay  a gross amount $13,993 for a $1million / $3 million policy and $16,684 for a $2 million / $4,000,000 policy.  The actual cost is likely to be 20% less.  Thus, the cost per patient contact would be less than $3.50.)

In other words, Dr. Hardi's patients pay $7.96 each time they go to the doctor for an office visit or procedure to allow Dr. Hardi to purchase insurance to protect himself from the economic consequences of any error he might make that rises to the level of medical negligence and that results in an injury to his practice.  It also protects him from a patient who makes an unmeritorious claim, because his malpractice insurance will pay the costs of defending any claim. 

I don't know what Dr. Hardi charges for an office visit but I am quite sure it varies depending on the complexity of the visit and the actual services rendered during that visit.   In Massachusetts office visits for gastroenterologists  cost between $198 - $351.  If that is true in Dr. Hardi's practice,  the cost of the malpractice insurance is between 2.5% and 4.5% of the cost of the visit.

Let's say that the AMA's dreams come true: a cap of $250,000 is  placed on damages for pain and suffering, joint and several liability is abolished (in those few places where it still exists) and the entire wish list is granted. If that were to occur tomorrow, no one believes, and certainly will not guarantee, the malpractice insurance rates will drop 20%.  The drop in malpractice insurance rates, if any, will be less.  Assuming a 20% drop, however, the cost per patient contact is reduced from $7.96 to about $6.35, or about $1.61 per visit.

What patient in his or her right mind would agree to restrictions on the right to trial by jury  or making difficult medical malpractice cases even more difficult for a patient to save  the cost of a large cup of coffee at McDonald's per doctor office visit?  

Permit me to add one thing.  This post is not intended to pick on Dr. Hardi.   The article in the Post did not indicate that Dr. Hardi was complaining about the amount he paid for malpractice insurance or that he had any problem with a legal system that holds everyone - including doctors - responsible for the harm they cause.  I wrote this post because we rarely get an opportunity to know how many patients doctors actually see and thus have difficulty translating the annual cost of malpractice insurance to a cost per patient contact.  What the article reveals is that at Dr. Hardi's office - and many, many others, I assume -  each patient pays less for malpractice protection per contact with a doctor  than he or she pays for a full price movie ticket. 

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Senator Orin Hatch (R-Nevada) asked the Congressional Budget Office to update its previous findings concerning the effect that restrictions on the rights of patients to hold the health care industry responsible for errors that kill or injure patients ("tort reform").

Here are some of the findings from the report:

1. "National implementation of a package of proposals similar to the preceding list would reduce total national premiums for medical liability insurance by about 10 percent, CBO now estimates. ... CBO estimates that the direct costs that providers will incur in 2009 for medical malpractice liability—which consist of malpractice insurance premiums together with settlements, awards, and administrative costs not covered by insurance—will total approximately $35 billion, or about 2 percent of total health care expenditures. Therefore, lowering premiums for medical liability insurance by 10 percent would reduce total national health care expenditures by about 0.2 percent."
2. "Combining the effects on both mandatory spending and revenues, a tort reform package of the sort described earlier in this letter would reduce federal budget deficits by roughly $54 billion over the next 10 years. That estimate assumes that a change enacted in 2010 would have an impact that increased over time, achieving its full effect after four years, as providers gradually changed their practice patterns. Of course, the estimated effect of any specific legislative proposal would depend on the details of that proposal."  Note:  the proposals listed in the letter was a $250,000 cap on non-economic losses, abolition of joint and several liability, changes to the collateral source rule, caps on punitive damages, and reducing the statute of limitations to 1 year for adults and 3 years for children.
3. "Because medical malpractice laws exist to allow patients to sue for damages that result from negligent health care, imposing limits on that right might be expected to have a negative impact on health outcomes. There is less evidence about the effects of tort reform on people’s health, however, than about its effects on health care spending because many studies of malpractice costs do not examine health outcomes. Some recent research has found that tort reform may adversely affect such outcomes, but other studies have concluded otherwise."

Let us put these numbers in perspective.  Americans spend over $45 billion per year on pet care.

 

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From the American Association for Justice's new report, The Insurance Hoax: How Doctors and Patients Pay for the Huge Earnings of Medical Malpractice Insurers :

As Congress debates nationwide health care reform, a new analysis reveals malpractice insurers have long-played a cruel hoax on legislators and the public. By systematically distorting profits and losses, insurers created phony “financial crises,” so lawmakers would limit the legal rights of injured patients. Today, while premiums and health care costs skyrocket, malpractice insurers have average profits higher than 99 percent of Fortune 500 companies.

The key findings of the report, which analyzes the annual financial statements of the 10 largest U.S. medical malpractice insurers, include:
• The average profit of these insurance companies is higher than 99 percent of all Fortune 500 companies and 35 times higher than the Fortune 500 average for the same time period.
• Malpractice insurers have seen their profit margins range from 5.9 percent to 74.8 percent, with an average of 31.2 percent.
 

Read the entire report here.

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This column from the Business Section of today's Los Angeles Times attacks the myth that restriction of the rights of patients to hold health care providers responsible for harming patients must be a part of national healthcare reform.  

An excerpt: 

Every circus needs a sideshow, which must be why every time the issue of rising medical costs gets debated, politicians start clamoring for "tort reform."

The article explains who wins if patient's rights are restricted.  Here is on example:

How great a business is malpractice insurance nationwide? At American Physicians Capital (an insurer active in the Midwest), claims were falling so fast in 2007 that its chief executive publicly compared his underemployed claims managers to "the Maytag repairman." The next time you find yourself nodding in assent while some politician carries on about tort reform, remember that its benefits will go to characters like this.

Thanks to Brandon Bass for bringing the article to my attention.

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I recently wrote this post about the certificate of merit law struck down by the Washington Supreme Court.  Here is an editorial from The Olympian  which supports the Court's decision.

Here is an excerpt:

The justices were right to keep the barrier between the legislative and judicial branches of government. They were equally correct to strike down the barrier to malpractice lawsuits.

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Here is an op-ed from today's Politico titled "Putting Trial Lawyers out of Business."

August was quite the month in the ongoing health care saga. Death panels. Scaring seniors. Angry mobs discovering new villains to blame for the terrible health care system we find ourselves having to fix today. 

And then we have the tried-and-tested scapegoat for all of America’s ills and woes: trial lawyers. 

Let’s face it: Trial lawyers — and all attorneys, for that matter — aren’t revered by the public at large (unless you need one). But for those who want to stick it to the trial bar, this bill is your chance. We can lower costs, help cover the uninsured and even put trial lawyers out of business. 

No, it’s not tort reform. We’re demanding solutions that actually work. And preventing medical errors in the first place — an epidemic that plagues our entire health care system — will result in less litigation, lower costs and healthier patients. 

Let’s cut the wheat from the chaff: Tort reform will do nothing to fix health care. Forty-six states have already done it, and costs have continued to skyrocket. The Congressional Budget Office and Government Accountability Office have said tort reform will save practically no money, and they found no evidence of defensive medicine. Medical malpractice suits are less than 1 percent of all civil filings — and this has declined 8 percent during the past decade. The research is definitive and absolute, and those claiming otherwise are just trying to obstruct health care reform altogether. 

More than 98,000 people die every year from preventable medical errors, according to the Institute of Medicine. That report is 10 years old, and estimates are the number has gotten significantly worse. This is the equivalent of two 737s crashing every day for a whole year. If planes were crashing like this today, would we focus on giving airlines immunity or making air travel safer? 

So this is how you really put trial lawyers out of business: Just cut down on the errors. Fewer errors mean fewer complications — or fewer people who will need legal recourse. Electronic medical records, bar-coding equipment, tagging surgical instruments and routine operating room checklists are just a few measures that can decrease errors. And there are countless more that can corral this epidemic and make patient safety a priority once again. 

In the past few weeks, some pundits or talking heads have demanded to know, “What have the trial lawyers sacrificed to get health care passed?” But this isn’t about trial lawyers. It’s about patients, hurt through no fault of their own, left with debilitating injuries or worse. This bill is about health care, not bargaining away people’s legal rights. 

But health care reform may still provide ample opportunity to put away the trial bar. We would welcome it. Fewer people who need legal recourse means injuries are more infrequent and health care is getting safer. 

But taking away people’s legal rights is the entirely wrong way to do it. That’s saying it is acceptable for 98,000 people to die every year, with thousands more injured, because of preventable medical errors. And that’s also saying it is OK to dictate what their lives are worth or whether they should have any recourse at all. Such a proposition is ridiculous. 

We welcome a health care system that has fewer injuries, safer patients and lower costs. But bargaining away people’s legal rights isn’t a suitable alternative. That isn’t a bill we can call health care or reform. 

 

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President Obama announced yesterday  that the government will set aside $25 million to support state grants for pilot programs to reduce medical malpractice lawsuits.  

ABC News describes the grant process  this way:

The Department of Health and Human Services will oversee the process for states to launch and test initiatives that meet the following parameters:  
• Put patient safety first and work to reduce preventable injuries; 
• Foster better communication between doctors and their patients; 
• Ensure that patients are compensated in a fair and timely manner for medical  injuries, while also reducing the incidence of frivolous lawsuits; and 
• Reduce liability premiums.

The effort will be directed by  Health and Human Services Secretary Kathleen Sebelius.

Here is the "fact sheet" released by the White House when it announced the project.  

 

 

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The Washington Supreme Court has struck down the filing of a certificate of merit in medical malpractice cases in Washington state.   The certificate is required by RCW 7.70.150.

The opinion said that the statute was unconstitutional because it violated the separation of powers between the Legislature and the Judiciary and it denied medical malpractice victims equal access to the courts. 

The Court said that

“Requiring medical malpractice plaintiffs to submit a certificate prior to discovery hinders their right of access to courts. Through the discovery process, plaintiffs uncover the evidence necessary to pursue their claims. Obtaining the evidence necessary to obtain a certificate of merit may not be possible prior to discovery, when health care workers can be interviewed and procedural manuals reviewed . ...  It is the duty of the courts to administer justice by protecting the legal rights and enforcing the legal obligations of the people. Accordingly, we must strike down this law

The case is Putman v. Wenatchee Valley Med. Ctr.,  Docket No. 80888-1 (September 17, 2009).  Here is the Court's opinion.  Here is the concurring opinion.

 

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The Georgia Legislature imposed a cap on noneconomic damages in meritorious medical malpractice cases in 2005.   The cap is $350,000.   In a case tried in Fulton County several years ago, the jury's verdict exceeded the cap, and the Georgia Supreme Court is now considering whether the cap is constitutional.

According to a press release from the Georgia Trial Lawyers Association and re-printed on the Atlanta Injury Lawyer Blog

“Betty Nestlehutt was the face of her real estate business,” said Malone. “Her face was so horrifically disfigured that she was no longer able to even leave her house. Photographs of her disfigurement are even too gruesome for public distribution. The damage is permanent. Years later she has to wear layers of special makeup to try to give the appearance of normalcy.”

The damage award?  $115,000 for past and future medical expenses and $1.15 million in noneconomic damages, including $900,000 for her pain and suffering.   The damage cap would have the effect of reducing the award by over 50%, down  to $465,000.

The press release has an extended summary of the trial judge's ruling that struck down the caps as unconstitutional on three different grounds.  Click on "Continue reading" to see the summary of Judge Diane Bressen's order as set out in the press release.

 

 

 

Continue Reading...

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Max Kennerly has done it again.  Read this post on the Litigation and Trial bog which looks behind the allegation that the American people support medical malpractice reform.  Before you do,  read the following:

DO YOU AGREE OR DISAGREE WITH THIS STATEMENT: As part of any health care reform plan, Congress needs to change the medical malpractice system so that cases are resolved quicker, and more reliably, on behalf of those who are in the right.

Did you say "Yes?"     I did.

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I have released three prior posts on the financial condition of State Volunteer Mutual Insurance Company - click here to read them:  Part 1, Part 2, Part 3.

The bottom line is that conservative financial management at SVMIC has permitted the company to accumulate a quarter of a billion dollars in net worth, even as the number of policyholders has declined 4% of the last year.

So how is that impacting rates?

In 2007 SVMIC reduced rates for Tennessee doctors by an average of 4.2%.  Now, the conpany will decrease rates again for new and renewal business written as of May 15, 2009.  The average rate decrease will be 2.5%  Some doctors will see greater declines (e.g. pediatrics - down 10%, interventional pulmonary medicine, down 5.3%, maternal and fetal medicine down 2.7%).   Only emergency medicine doctors will see a rate increase (5.0%).    Thus, out of the 10, 391 doctors insured by SVMIC in Tennessee only 204 will receive a rate increase.   IN 2007 74% of the insureds received a rate decrease and 26% received a rate increase.

These rate changes are based on policy limits of $1,000,000 / $3,000,000.  Here are some examples of what Tennessee doctors with 5 over more years in practice pay for insurance:

Type of Doctor                                          $1M / $3M                            $2M / $4M

Pediatrics - No Surgery                            $8510                                     10,049

Infectious Disease                                    $9302                                      10,887

Radiology - Major Interventional             $17,536                                   20,971

Anesthesiology                                          $14,606                                    17,425

Emergency Room                                      $36,263                                    43,407

Gen. Surgery - No Cosmetics                 $40,504                                    48,438

Neurological Surgery                                $54, 698                                   65,404

Maternal and Fetal Medicine                    $58,207                                    69,600

These are list prices.  There is a 10% discount for those physicians who attend the annual loss prevention seminar.   Those doctors who are designated as "full-time faculty" at a teaching institution pay only 60% of the normal rate.  Multi-physician groups can earn up to a 30% discount for other loss prevention, peer selection, and record-keeping practices.   Those who pay for the entire year earn a 5% discount.

Two final notes.  First, he 2009 rate increase probably does not yet take into account the substantial changes to the medical malpractice law in the areas of pre-suit notice and certificates of good faith.  There is no way to know that for certain, but (a) SVMIC is a conservative company and (b) the changes just came into effect October 1, 2008 and July 1, 2009.  I predict further rate decreases in 2010.

Seond, in the event this four-part series is viewed as a complaint about capitalism in general or the business practices of SVMIC in particular, readers may wish to view my thoughts on the subject set forth in this post of October 11, 2008.

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This is the third post about State Volunteer Mutual Insurance Company's 2008 financial results.  Click on the links to see Part 1 and Part 2.

New malpractice claims asserted against SVMIC insureds dropped 2.5% in 2008.  The company reports that 83% of all cases were resolved in favor of it's policyholders on a company-wide basis.

(One of the things I frequently address at seminars for young lawyers is the evaluation of potential medical negligence cases.  I tell them that the best way to make money on medical malpractice cases is to refuse to represent the next ten people who call asking the lawyer  to represent them in a medical malpractice case.  Obviously, that is ridiculous, but the fact remains that SVMIC "wins" almost 9 out of 10 cases.   A fair number of those cases are filed by lawyers who do not have the experience to recognize a bad case from a good case..)

As of the end of 2008 there were 2,603 cases pending against the company, and some unknown percentage of those cases involve multiple policyholders.  The company reports that the total payout for claims in 2008 declined by 6.7%.

The company paid a total of $138M in claims and loss adjustment expenses in 2008.  That figure is only $500,000 less than 2007.  Since the company says that claim payments decreased by 6.7%, loss expenses (defense attorney's fees and more) must have increased.  This is certainly consistent with what those of us who practice in the field are seeing - defense firms are working these cases much harder and thus one would expect defense costs to be increasing.

I do not know how many claims SVMIC settled in 2008.  The data for all medical malpractice settlements and judgments in Tennessee will not become available until November.  In 2007 there were 7 jury verdicts for the patient in the entire state and a total of 492 settlements.  2007 also brought 2238 medical malpractice cases dismissed with no payment and 306 jury verdicts for the health care providers, for a total of 2534 cases resolved in a manner adverse to the patient. 

I will have Part 4 for you in a couple of days.

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Our last post discussed State Volunteer Mutual Insurance Company's  $251,321,000 policyholder surplus.  This post will discuss other aspects of the company's finances.

As of December 31, 2008, SVMIC had total assets of $1,324,500,000 assets.  (That's $1.3 Billion).  The vast majority of those assets are in government (federal, state and local) and corporate bonds, although the company does have some stock holdings ($53M).  The conservative allocation of monies among these investment vehicles resulted in only a very small loss in investments in 2008.  The loss on the value of these investments sold was only $1.7M, although the the investments that continued to be held had a decline in value of about $23M. 

The total revenues of the company in 2008 were down about $12,000,000 to $246,000,000.  It is important to note that the number of policyholders decreased from 16,155 to 15,501, which certainly had an impact on revenue. 

Despite the fact that revenue fell, net income of the company increased by almost 20%, from $28.4M to $34.5M.   For the first time in years the company paid a dividend to its policyholders - the amount of the dividend was $3,900,000. 

My next post will discuss claims.

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SVMIC continues to enjoy wonderful profitability, even as the number of physicians it insures declines.

SVMIC - State Volunteer Mutual Insurance Company - is a physician-owned insurance company that was created over 30 years ago.  It has grown from a company with paid-in capital of $7,500,000 to a entity with a policyholder surplus (think: net worth) of $251,321,321.

Let me explain what that means.   Policyholder surplus is determined by subtracting reserves for claims payments and claims expenses from assets.  Each time a claim is made a reserve is set.  The size of the reserve is based on the severity of the claim, the likelihood of payment and the anticipated defense costs.  The amount reserved on a claim changes over time, but the idea is that the sum total of reserves should pay all existing claims and all future defense costs.  There is also a category of reserves known as IBNR - Incurred But Not Reported.  This is for claims that the company "knows" to be out there but have not yet been reported to the company.

The amount reserved for a claim reduces that year's income.  In other words, if SVMIC (or any P&C insurer) sets aside money to pay a claim today, they can deduct it from this year's income, even though the money may not (and probably will not) be paid on that claim until a later year. 

Last year SVMIC increased its reserves by $51,786,000.  That means that in the future it believes that it will have to pay $52M is losses and loss adjustment expenses (litigation-related costs) more than it thought it would have to pay as of December 31, 2007.  Of course, that number is based part in a revision of pre-2008 claims plus the setting of reserves for all claims reported in 2008.

So, a policyholder surplus takes all of that into account.  It means that if SVMIC were shut down for business on December 31, 2008 and it did not collect one more dollar in premiums it believes that it has set aside enough money to pay claims and defense costs and still have $251,321,100. 

SVMIC has 15,501 insureds (down from a high of 16,415 in 2005).   The number of policyholders decreased in Arkansas and Virginia because competitors have been reducing rates.

If that policy surplus was divided between its 15,501 insureds, each insured (who after-all is an owner of the company and would be entitled to whatever money is left if the company were liquidated) would receive an average of $16,213.

Let me hasten to add that the fact that SVMIC has $251M in "extra" money does not necessarily mean that it can reduce rates or make dividend payments to its owners.   I don't pretend to understand it all, but suffice it to state that good business practice and state law require companies to maintain a level of surplus appropriate to the business of and size of the company.  In a simple way, it is like your personal financial situation - the fact that you have a positive net worth does not mean you can or should quit working.  I have no idea rather SVMIC's policyholder's surplus is too high or too low, but the high rating given to the company by A.M. Best Company - an "A (Excellent)" rating tells me that it is what it should be.

A later post will discuss other aspects of SVMIC's financial position.

 

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Torts Prof lets us know that the elected representatives in Arizona believe that ER doctors should not be held responsible for their negligence unless the patient can prove his case by clear and convincing evidence.

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Maxwell Kennerly's Litigation and Trial blog is a must-read for lawyers who practice civil litigation of almost any type.  His posts are timely, thoughtful, and relevant.

Take this post, "'How Other Countries Judge [Medical] Malpractice,'" By A Law Professor Who Doesn't Know Medical Malpractice Law", in which Maxwell appropriately blasts an editorial by a torts professor who needs a reality check.

The author of the editorial, Richard A. Epstein, has been a law professor since he finished law school at Yale in 1968.  He is almost certainly a very bright man.  But, based on his understanding of the law, he would have accepted each of  the ten or fifteen potential medical malpractice cases I will turn down this week..   And by the Summer of 2011 he would have been broke.  Flat broke.  Or he would have rejected every case in which he thought the defendant should not be held responsible for her conduct because the defendant would say it was an honest mistake.  This mindset would cause him to reject all cases, because that defense is asserted in every case.

Then again,  the good Professor has probably never seen a defendant submit an expert witness disclosure that it was not below the standard of care to operate on the wrong limb.  I mean, why would one expect a doctor to know whether he should be operating on the left ankle or the right?  Left.  Right.  An honest mistake, right?  I mean, he had a 50% chance of getting it right.  Or is it getting it left?

Note:  I would be remiss if I did not mention Eric Turkewitz's excellent post on this issue.  Here it is.  And here is an excerpt:

Epstein also identifies four "procedural features that drive up malpractice costs." They are:

The first is jury trials, which can veer out of control and in any case introduce significant uncertainty.

This "procedural feature" is called a constitutional right. The Seventh Amendment's right to jury trials in civil actions is what Epstein is actually complaining about. I reprint it here so that he doesn't have to look far for it:

In Suits at common law, where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved, and no fact tried by a jury, shall be otherwise re-examined in any Court of the United States, than according to the rules of the common law.

Epstein's real problem isn't with some procedural feature, it's with the Bill of Rights and our nation's founders and the desire to disperse power away from power-hungry governmental types and put it in the hands of the people. And as to uncertainty with jury verdicts, an alternative system does not ameliorate that issue. Someone somewhere still has to decide the issue. And that person (or people) will come with biases.

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"Malpractice Lawsuits Are ‘Red Herring’ in Obama Health Plan" is the title of this article from Bloomberg.

Am excerpt: 

While Obama vowed to address physicians’ malpractice worries in a speech yesterday, the annual jury awards and legal settlements involving doctors amounts to “a drop in the bucket” in a country that spends $2.3 trillion annually on health care, said Amitabh Chandra, an economist at Harvard University, in a telephone interview. Chandra estimated the cost at $12 per person in the U.S., or about $3.6 billion, in a 2005 study. Insurer WellPoint Inc. said in a report last month that liability wasn’t driving up health premiums.

 

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Walter Olson at Point of Law shares a study from the Pacific Research Institute on the effect of various tort reforms.  The study, was authored by Nicole V. Crain, W. Mark Crain, Lawrence J. McQuillan, and Hovannes Abramyan,  and is titled "Tort Law Tally: How State Tort reforms affect Tort Losses and Tort Insurance Premiums".

Here is an excerpt from the executive summary:

Of the 25 tort reforms that we examine, the statistical analysis identifies 18 reforms to state civil-justice systems that significantly reduced tort losses and tort insurance premiums from 1996 through 2006. For some categories of tort cases, specific reforms cut payouts by more than 50 percent. The cumulative effect of reforms across all tort categories is a 47-percent reduction in losses and a 16-percent reduction in insurance premiums for consumers. Some tort reforms are highly effective at reducing costs in certain tort categories, but are ineffective in other tort categories. It is important that reformers pick the right tool for each problem. If we order the tort reforms according to each reform's ability to reduce aggregate tort losses, the top eight reforms are: attorney-retention sunshine (12 percent), Daubert/Frye (10 percent), frivolous lawsuits (7 percent), jury service (6 percent), appeal-bond caps (4 percent), negligence standard (3 percent), non-economic-damage caps (2 percent), and medical-malpractice damage caps (1 percent).

Thanks to Torts Prof for alerting me about the paper.

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The requirement of pre-notice and a certificate of good faith (T.C.A. Sec. 29-26-121 and 122) has had a significant effect on filings of medical malpractice cases.

From October 1, 2008 (when the new law came into effect) until April 30, 2009 there were only 111 medical malpractice cases filed in the entire state.  During the same seven-month period a year earlier there were 314 filings.

Here is the data for the some of the larger counties in the state:

County                            2007-08                   2008-09

Shelby                                  81                               30

Davidson                             73                               25

Knox                                     32                               12

Hamilton                             10                                  1

Rutherford                           13                                 4

Montgomery                          3                                  0

Washington                         14                                 5

Sullivan                                 20                                 4

Maury                                      4                                  1

Sumner                                  3                                  0

Anderson                               3                                  3

Wilson                                    3                                  3

Dickson                                  3                                  2

 

Thus, in the first seven months of the year, medical malpractice filings are down by about 60%.  There is no reason to believe that there is any less malpractice in Tennessee  than there was last year, so one can readily point to the new law as the reason for the drop in filings.

However, as I said when I reported the data for the first three months after the pre-suit notice and certificate of good faith bill came into effect, we are going to have to see data for at least a full year to get a true feel for the effect of the legislation.  Quite frankly, I would have expected more filings in the first four months of the year.  In the first three months after the statutes were in effect only 28 cases were filed, and this data shows that 83 were filed in the next four months. 

I expect that we will see 140 to 175 cases filed between now and September 30.  At 175, the total filings for the year will be 286.  In the fiscal year ending June 30, 2008, there were 537 medical malpractice filings.  If my guesstimate is correct, filings will be down about 40%.

The defense bar is feeling the pinch.  Several defense lawyers have told me that their pipeline is not being re-filled.  I remember hearing several years ago that it cost an average of $15,000 (or was it $18,000?) to defend a case that was quickly defeated on summary judgment (no in-depth discovery, etc.).  If my memory is correct, and if case filings are down by, say,  200 per year, and the cases not being filed are those type of cases, that is $3,000,000 less paid to defense firms to defend those cases.

Look for defense counsel to defend  cases with even more vigor (if that is possible).

As I mentioned in a post on Thursday, June 4, the General Assembly has a passed a bill modifying the law passed October 1.  The Governor is expected to sign the bill any day now.  This bill eliminates some of the basic unfairness in the pre-suit notice provisions, but may actually further decrease filings because of the new requirement that the certificate of good faith must be filed with the complaint.

To learn more about the legislation click here.

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According to the Wall Street Journal Law Blog,  the Chamber of Commerce is going to start running short films before feature films in movie theaters in the Washington, D.C,area.  The films "tell a story of supposed “Lawsuit Abuse” — cases in which people were allegedly dragged into the legal system with the filing of a frivolous lawsuit."

From the blog:  “'Lawsuit abuse and the harm it brings to everyday Americans and small businesses is one of the great American tragedies,'” says Lisa Rickard, the president of the Chamber’s Institute for Legal Reform, formerly of Akin, Gump. "'That’s why the silver screen is the perfect venue for these Faces of Lawsuit Abuse short films.'”

After a one month run in DC, the Chamber is going to take the films to select theaters elsewhere in the country.

Watch the four films here.

These films demonstrate that the Chamber is so concerned about the adverse image of the business community in this economy that it feels compelled to engage in jury tampering in local theaters.  Lawyers and consumers who care about the civil justice system should vote with their feet and refuse to attend movies in theaters where the short films are played.  How do you know if the ads will be played in your favorite theater?  Call and ask, and if you you find out the films will be shown, tell them you won't attend and why.

The Chamber has the legal right to produce these ads.  Theaters have a legal right to accept money to show them.  And we have a legal right to withhold our money from theaters that choose to show propaganda.

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Liability insurance companies make money in two major ways.  First, they make money on the insurance product - doing good underwriting, setting appropriate rates, and properly managing claims.  Second, insurance companies make money holding today's premiums to pay tomorrow's claims (and claim expenses).  That money is invested, and the investment income and capital gains on the investments are a big part of the net income of insurance companies.

Now, the stock market is in the toilet and the bond market is more complicated than ever.  Short-term cash yields virtually no interest, and Treasuries have a very reduced yield.  It is reasonable to assume that investment income is down, way down.

So, will rates be increasing?  Yes.  Will lawyers and juries be blamed?  Of course.

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There is a lot of talk about capping fees in medical malpractice cases.  Fees are already capped, of course, at one-third of the recovery, but the health care industry wants further limitation on fees charged to plaintiffs in successful cases.

Why?  Because they're not stupid.  They understand that a lower  fee cap means that fewer cases will be filed and those that are filed will be filed by less qualified lawyers.  Why?  Because lawyers generally will not file cases when they cannot earn a fair return for their efforts on the case.  And more qualified lawyers will file still fewer cases because they can earn a better return on other types of work.  Reduced filings mean reduced indemnity payments and defense costs, which means more profits for insurers, which presumably will lead to reduced insurance rates.  Filings by less qualified lawyers means more defense wins, which means more profits for insurers, which once again will presumably lead to reduced insurance rates.

What about statutory limitations on fees paid to defense counsel?  Wouldn't that save defendant's money?  Of course it would, but that would affect the quality of the lawyer who is willing to defend malpractice cases.  A very good or great lawyer will not be willing to work for below-market rates.

But doesn't  fee caps for patient's lawyers and no fee caps for defense lawyers that mean that medical malpractice defendants will be able to hire better lawyers than patients?  And doesn't it mean that those lawyers will be able to do more work on each case making it more difficult for the plaintiff's lawyer to economically prosecute the case successfully?  Exactly. 

I was provoked to write this post by an article I read in the December 8, 2008 edition of the  National Law Journal.  White & Case of New York has one or more partners who charge $1260 per hour (that's over $20 per minute).   It's lowest associate rate is $365 per hour (that is more than 10 cents per second for a first-year lawyer) and the highest associate rate is $665 per hour.

The numbers were reported for only two Tennessee firms.  Baker Donelson's rates  for partners range from $230 to $525 per hour and $120 -$330 for associates.  Bass Berry's rates for partners range from $240 to $575 per hour and $180 to $310 for associates.

Let me be clear on three points.  I know that Tennessee defense lawyers don't earn the big bucks for defending medical malpractice cases.  However, they do get the freedom to charge the market rate, something plaintiff's lawyers are prohibited from doing (because of the fee cap, the market is not allowed to work).

Second, I could care less what big law firms charge for their services.  Once again, the market sets the rates, and one could hardly suggest that big-law's clients are not sophisticated consumers of legal services and therefore make informed decisions about what they should pay.  Big-law charges what it charges, big-law clients pay what they pay, and the world goes on.

My only point is that the market should be permitted to work, hampered only by the ethical responsibilities on lawyers as set forth our disciplinary rules.     Further fee regulation will only hamper the ability and willingness of high-quality lawyers to represent patients in medical malpractice cases.  Indeed, the current fee cap already contributes to the rejection of meritorious cases that cannot be economically pursued.  This leaves injured patients harmed twice -first by the health care system, and second by the legal system. 

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Here is the text an December 20, 2008 article on the CBS News website about the efforts of the U.S. Chamber of Commerce to take advantage of the opportunity created by the world's financial problem to seek legal protection for wrongdoers.  Thanks to Suzanne Keith at TAJ who forwarded it to me.

Made in America: Corporate Gall

Dec. 20, 2008

(CBS) Attorney Andrew Cohen analyzes legal issues for CBS News and CBSNews.com.

Like the child who kills his parents and then begs for mercy because he is an orphan, the U.S. Chamber of Commerce now is begging President-elect Barack Obama to protect corporate interests in the nation’s civil litigation system as a way of restoring jobs and bolstering an economy shattered largely (as we now know) by corporate greed and misfeasance.

Talk about your gall.

Here is what the president of the Chamber’s legal arm wrote in an open letter to Obama: “We understand the critical necessity of revitalizing the economy by restoring American jobs, encouraging the growth of U.S. businesses, and protecting the savings and investments of millions of Americans. However, we are concerned that the potential expansion of legal liability significantly impairs these much needed steps toward a national recovery.”

The quote may be roughly translated this way: “Now that corporate America has helped screw everything up and led us into the greatest economic crisis since the Depression, we need to make sure that corporate America isn’t aggressively punished for its misdeeds or legitimately thwarted from misdoing them again.”

This is either an astonishing hypocrisy - Is corporate America unaware that the rest of us are in on the secret of the causes of the recession? - or the clearest indication there can be that Big Business is, always has been, and always will be about protecting Big Business.

Continue Reading...

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Insurance companies know that they have little credibility in the fight over access to the courthouse.  This is particularly true in the medical malpractice area, where the evidence   in Tennessee demonstrates that (a) doctors and hospitals win over 96% of jury trials; (b) professional liability rates, adjusted for the medical  inflation rate, have been more or less flat for over 20 years; (c) the average settlement is $256,100 (for calendar  year 2007); and (d) $1,000,000 verdicts are extremely rare.

But that doesn't sell insurance.  And it certainly doesn't cause doctors to jump on the tort reform bus. 

What does?  Fear.  And it was an effort to create fear that gave rise to this statement by State Volunteer Mutual Insurance Corporation in a publication to their insureds:

While this policy [concerning how to handle unsolicited test results] may be helpful in defending a claim, we would not recommend absolute reliance on this position given the current legal climate where courts are prone to compensate injured plaintiffs at the expense of anyone capable of paying.  [Emphasis added.]

No one who understands the legal system in Tennessee could make this statement with a straight-face.  I could give lots of data to refute the SVMIC statement, but the strongest, least debatable point is that SVMIC and the health care industry win 96% of the trials.  Money is paid to patients (by settlement or judgment) in less than 25% of all claims.  And this shows that "current legal climate where courts are prone to compensate injured plaintiffs at the expense of anyone capable of paying?"

As implied above, I understand the politics of fear.  I understand why doctors who are too busy serving their patients and trying to make a living don't look beyond the statements of their own insurance company and try to determine the truth.  I also understand why busy legislators could fall for the disinformation.

But that doesn't make it right. 

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That's right.  The Chamber of Commerce believes in  the right to file suit if you have been aggrieved by the conduct of another.

As long as you are a car manufacturer and want to complain about new laws limiting greenhouse gas emission standards.

Read about the Chamber's latest hypocrisy  here.

Thanks to DC Dicta.

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The Manhattan Institute for Policy Research has issued a report extolling the virtues of a "loser pays" rule.

Here is an excerpt from  the "Executive Summary:"

This study explores the likely effects of adopting a "loser pays" rule for attorneys' fees in the United States. Loser pays, sometimes called the "English rule" but actually, in essence, the rule in place in the rest of the world, refers to the policy of reimbursement by the parties who lose in litigation of the winners' legal expenses, including attorneys' fees. This study argues that loser pays could be an important part of a larger effort to reduce litigation costs, better compensate prevailing litigants, and better align tort law with its goal of deterring socially harmful conduct. A loser-pays rule would discourage meritless lawsuits, but because any such rule should also ensure plaintiffs of modest means but strong legal cases access to justice, our proposal calls for:

1. A robust litigation insurance industry similar to those that now exist in other loser-pays countries; and

2. A cap on recoverable fees to eliminate the incentive that large litigants might have to attempt to "buy a verdict" under loser pays.

This study explores in depth how a loser-pays rule would change litigation in America. It includes key findings about the likely effects of loser-pays reform and evaluates previous experiments with loser pays in America.
 

Here is a copy of the complete report. 

And here is a link to a site where you can purchase your  own "Complete and Utter Bullshit" stamp so that you can mark the report appropriately after you read it.

Hat tip to the Torts Prof Blog.

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The Tennessee Department of Commerce and Insurance has released the 2008 Medical Malpractice Claims Report.  The report reveals data from medical malpractice cases settled and tried in Tennessee in calendar year 2007.

The numbers:

Total judgments for plaintiffs  

2004           6       

2005           5

2006           6       

2007           7

Total settlements                     

2004         444

2005         461

2006         453

2007         492

Cases Dismissed   With No Payment

2004        1916

2005        2361

2006        2514      

2007        2238  (plus another 306 claims dismissed on defense verdicts for a total of 2534)

Total settlement $                

2004   $108,000,000

2005    $119,000,000

2006   $100,000,000

2007    $126, 225,485  (this includes two settlements made after trial, one pursuant to a high-low agreement and one a traditional post-trial settlement.  The amounts of these settlements are not reported.)

Total judgment $              

2004   $1,950,00

2005    $6,100,00

2006     $4,950,000

2007    $9,533,574  (plus two settlements, one pursuant to a high-low agreement and one post-trial settlement.  The amount of these two settlements are unknown.  Of the judgments, three were $350,000 or less, one was $3,500,000 and one was $5,313,574.)

As mentioned above, there were two jury verdicts over $1,000,000 in medical malpractice cases in 2007.

The average settlement was $256,100 in 2007.  The average was $221,000 in 2006;  in 2005 it was $258,000.

The average attorneys' fee received by claimant's counsel in cases that were settled was 29.45%.  The average for cases that were tried was $32.12%.  

Thus, claimant's lawyers were paid about $40,000,000 on cases settled or tried in 2007.  Defense lawyer fees paid during that same period were $66,485,000.     The total fees paid to defense counsel for cases closed in 2007 and claims  pending as of the end of the year (there are 5,541 pending claims) was $158,000,000.  This includes fees paid in previous years for those claims.  

In other words, defense counsel were paid 4 times the amount paid to plaintiffs' counsel for claims resolved in 2007.  Obviously, defense costs were incurred for many claims for which plaintiffs' counsel received no money (because the claims were unsuccessful).

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One repeated argument for restricting the right to trial by jury is that we need to have a state where businesses will want to settle, thereby creating more jobs and strengthening our economy.

Well, to the extent that is a relevant factor in the tort deform effort it is should be off the table in Tennessee.  Why?  The Tennessean  reports that "Site Selection, an Atlanta-based magazine that annually ranks states' attractiveness to investors, placed Tennessee behind only North Carolina. Tennessee moved up four notches from last year's rankings."

Read the article here.

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There is alot of public outcry about the profits of Exxon Mobil for the 3rd quarter of fiscal year 2008.  The company reported profits of $14.83 Billion for the three months ended September 30, a 58% increase.

Exxon Mobil had revenue of $137.74 Billion during the 3rd quarter of 2008.  So, the company had a profit of 10.76% of total revenue.

So why is Exxon Mobil talking about getting into a new line of business?  

Because they have learned that  there is one company that has a much higher rate of profit on revenues - our friends at State Volunteer Mutual Insurance Company, the doctor-owned medical malpractice insurer in Tennessee.  In 2007 SVMIC had an after tax, net income of $30,463,000, a shocking  profitability rate of  16.4 %  when measured against total revenue.  That's right - SVMIC is over 50% more profitable than Exxon Mobil.

Why continue to drill for oil and fight the wrath and unbridled criticism of mavericks like  Gov. Palin when one can obtain the higher profits available  from writing medical malpractice insurance for Tennessee doctors?

 

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Yesterday, AAJ released a new report on complete immunity preemption titled, Get Out of Jail Free: A Historical Perspective of How the Bush Administration Helps Corporations Escape Accountability. This report reveals how in a stealth effort coordinated at the highest levels of the Bush administration, federal agencies were repeatedly ordered to usurp state law and undermine consumer protections. To date, seven federal agencies have issued over 60 proposed and final rules with preemption language in the preamble and claimed the authority to provide immunity from state law. 

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Last week I wrote a post called “SVMIC Rate Increase – NOT.”  The post explained that SVMIC had not raised its insurance rates for its owner-doctors in 2008.  Read the entire post here.

I then received this comment from Tom:

What's wrong with making a profit?  I am sure as a business owner that is your goal as well.  Have you reduced the rates to your clients or decreased your contingency % this year (or in a year that you had large profits or extensive reserves)?  While you may not like SVMIC's clients or practices, they appear to be a well run company.  Well-run company's [sic] make profits.  Poorly-run company's [sic] get bailed out by the government.

My response:

Tom, there is absolutely nothing wrong with anyone making a profit.  Indeed, any objective review of my post would not lead one to the conclusion that I objected to SVMIC making a profit or that I was suggesting that SVMIC should decrease its rates.  I simply pointed out that SVMIC's profit made it unnecessary for them to raise rates.

Let me explain my view of SVMIC and its owners in more detail:

1.      SVMIC has a right to run its company any way it wants to so long as it operates consistent with the laws of the State of Tennessee.

2.      I have no reason to believe that SVMIC operates its business in a matter inconsistent with the law.

3.      SVMIC is a very successful company.  It did not exist forty years ago.  It is now approaching a billion dollars in assets.  That is impressive.

4.      I have no problem with SVMIC's owners, who also happen to be their insured physicians.   

5.      Most of the doctors I know are responsible people.  Indeed, most of the doctors I have sued are responsible people.  I have referred patients to several doctors I have sued and I can immediately think of one defendant that I would use as a physician if I ever had the need of a physician in that specialty.

6.      I  believe that doctors are human and can negligently cause harm.  To the extent that a doctor believes doctors are not human or cannot negligently cause harm I respectfully disagree.

7.      To the extent that a doctor (or SVMIC) agrees that medical negligence does occur but believes that doctors should get special treatment in courtrooms I respectfully disagree.

8.      I could care less what SVMIC owners decide to charge themselves for professional liability insurance.  They can raise rates, lower rates, or keep them the same.  As long as they are following the law, and I assume that they are, they have the right as owners of the company to charge themselves whatever amount they deem appropriate.

9.      I don’t care how much profit SVMIC makes.  It is the doctors’ company, not mine, and they can increase their own insurance rates as much as they want so as to make as much of a profit as they can in the market.

10.  I don’t care how SVMIC manages claims.  They have the right to force every case to trial if they want to do so.    They have the right to permit their insureds to control the decision to settle the case, no matter how unreasonable those insureds are.  They have the right to encourage or permit their lawyers to turn over every rock two or three times, thereby greatly  increasing  the cost of litigation.  They have the right to refuse to settle valid cases and spend ungodly sums on meritorious cases that could be settled for a fraction of defense costs.  Why?  Because it is their company, not mine, and they can manage it the way they want to a(s long as they follow the law) and have the right to elect hardball strategy if they choose to do so.  Other insurers take a different view, balancing exposure and defense costs, but SVMIC has a right to choose its own strategy.

11.  In fact, I will admit that  I admire doctors who were unreasonably jacked around by professional liability insurers in the 1970s  and had  the foresight and wisdom to start their own insurance company and manage it so as to accumulate  a net worth of hundreds of millions of dollars in less than 40 years.  I wish lawyers had the foresight and wisdom to do the same.

12.  I also admit that I get frustrated with some of my fellow plaintiff’s lawyers who get upset at SVMIC’s strategy and tactics.   Plaintiff’s lawyers often forget that the doctors set up SVMIC to work for them, not for their patients.  The company is run to protect doctors - it does not pretend to look out for the interests of patients.  The view of plaintiff's lawyers that SVMIC's strategy and tactics hurts the public's view of doctors may or may not be correct, but at the end of the day the decision on how to run the company is the company's, not that of adverse lawyers.

13.  However, I do care when SVMIC or its owners attempt to suggest that professional liability insurance rates are generally increasing when they are not in inflation-adjusted dollars.

14.  I do care when SVMIC and its owners seek special treatment and protections for the owners in courtrooms.

15.  I do care when SVMIC attempts to suggest that there is a crisis in medical liability in this state.  The facts don’t support it.  Only a fraction of the meritorious cases are even filed, and although I can’t prove it I would be willing to bet that SVMIC's files are full of cases which contain memos that indicate the presence of medical errors causing injury or death in which a jury later ruled for the defense or the case was dismissed on summary judgment.

16.  I reserve the right to point out to the Legislature or anyone else who will listen the facts about SVMIC’s profitability and its insurance rates and permit the listener to make an informed judgment about the whether the right to trial by jury should be restricted when the defendant has an “M.D.” behind his or her name.

17.  I reserve the right to point out the hypocrisy of insisting on juries in cases, applauding them when they find for the defense, and criticizing them as morons motivated only by sympathy in the five or six times a year they find for a patient.  I also reserve the right to comment on the hypocrisy of insisting on juries in cases while at the same time lobbying to restrict what juries can award in cases.

18.  I reserve the right to question the wisdom and morality of giving one class of people special treatment in courtrooms.

19.  I reserve the right to challenge the constitutionality of laws sought by  SVMIC and it owners  that give the owners special privileges in the courtroom.

I have had cases against SVMIC insureds for over 27 years and have followed the public disclosures of the finances of the company for over 20 years.  As I said above, I have respect for what the company has accomplished and indeed I am impressed with the people I know who work for the company.  The fact that we have disagreements over several issues should not be interpreted as my being opposed to capitalism in general or SVMIC’s pursuit of profit in particular.   

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Did you hear about the State Volunteer Mutual Insurance Company rate increase?  No, you didn't - because it didn't happen.

Typically the media gets a press release from SVMIC saying that insurance is increasing X% and we hear from the TMA that the world is coming to come to an end as a result of it.

This year, nothing.  Recall of course that the inflation rate in 2007 was close to 3% and this year it is running over 4%.  The health care inflation rate is almost double the normal inflation rate.  Thus, is would be  reasonable to assume rates would increase every year.

Last year, 74% of the doctors insured by SVMIC got a rate decrease and 26% got an increase. 

What's going on?  SVMIC is making enormous profits, that is what is going on.  In 2007 after-tax profits were reported at $30,463,000, up  almost 30% from a year earlier.   (Total after-tax profits for the last 5 years are approximately $91,000,000.)  Surplus, the insurance industry equivalent of net worth, increased almost $28,000,000 in 2007 to a total of $245,000,000. This follows a $33 million dollar increase in 2006 and a $16.4 million dollar increase in 2005.   Net admitted assets  total led $941,000,000 at the end of 2007, up over $70,000,000 from one year earlier.  The Company should hit a billion dollars in assets in 2008 or the first quarter of 2009.

So, it makes perfect sense that SVMIC isn't raising rates - it doesn't need to.  And since it is a mutual company, owned by the insured doctors themselves, why in heaven's name would they raise rates when it is unnecessary to do so.

I wonder why we haven't seen  a press release that says that?

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The Mississippi Supreme Court accepted review of  a case where the plaintiff failed to attach either an attorney’s certificate of consultation, or an expert disclosure in lieu of the certificate, as required by Mississippi Code Annotated Section 11-1-58 (Rev. 2007).  The question is whether that fact required a dismissal of the suit as set forth in the statute.

The Court held that "a complaint, otherwise properly filed, may not be dismissed, and need not be amended, simply because the plaintiff failed to attach a certificate or waiver."   The basis of the ruling was the seperation of powers between the Legislature and the Court.  The Court said:

Section 11-1-58's requirement that a certificate accompany the filing of the complaint contradicts these provisions of the Mississippi Rules of Civil Procedure. Furthermore, the statutory requirement is totally inconsistent with Rule 8(f)’s requirement that 'pleadings shall be so construed as to do substantial justice.'

The Court did not strike the entire statute.  It said:

[O]ur holding today has no effect on the constitutionality or applicability of other provisions or requirements of Section 11-1-58. Indeed, we guard just as diligently the Legislature’s prerogative to set forth in legislation whatever substantive, presuit requirements for causes of action, and prerequisites to filing suit, it deems appropriate.

The case is Wimley v. Reid, No. 2007-CA-007593-SCT (Miss. Sept. 18, 2008).  Read it here.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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State Volunteer Mutual Insurance Company , the doctor-owned medical malpractice insurance carrier, continues to enjoy profitability, according to my review of its 2007 Annual Report that was recently filed with the Tennessee Department of Commerce and Insurance.

A few highlights:

* Surplus, the insurance industry equivalent of net worth, increased almost $28,000,000 to a total of $245,000,000. This follows a $33 million dollar increase in 2006 and a $16.4 million dollar increase in 2005.

*The increase in surplus occurred even though total earned premiums dropped by $4,000,000.  Incurred losses were down by almost $20,000,000. 

* Net admitted assets now total $941,000,000, up over $70,000,000 from one year earlier.  The Company should hit a billion dollars in assets in 2008 or the first quarter of 2009.

* After tax profits were reported at $30,463,000, up  almost 30% from a year earlier.  2006 profits totaled $23,000,000  and in 2005 profits were $14,730,000. Total profits for the last 5 years are approximately $91,000,000.

*  The company paid a total of 152 claims in the entire state of Tennessee last year.  The payments totaled 62,833,000.  The average payment per claim was $413, 375.   In 2006, the company paid out money to plaintiffs in 158. The total amount paid was $56,660,652. The average payment per claim was $358,611.

* As of 12/31/07 there were 1,716 pending malpractice claims against SVMIC insureds.  Note that this is not pending lawsuits, but rather claims. 

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Tortsprof Blog has been kind enough to let us know that Directorship has released its second annual Boardroom Guide to State Litigation Climates. According to the Guide:

Directorship’s Best and Worst States for Business


The 10 Best

1. Tennessee
2. Utah
3. Indiana
4. Ohio
5. North Dakota
6. North Carolina
7. Nebraska
8. Virginia
9. Michigan
10. South Dakota

Improving

1. Oklahoma
2. South Carolina
3. Mississippi
4. Louisiana
5. Tennessee

The 10 Worst

1. Illinois
2. West Virginia
3. Rhode Island
4. Pennsylvania
5. California
6. Florida
7. Montana
8. New York
9. Maryland
10. Alabama

Declining

1. Kansas
2. Washington
3. Colorado
4. Hawaii
5. Oregon

Here is what the magazine says about Tennessee:  "Moving up from 11th place in last year’s rankings, Tennessee is now the top-ranked state. Pacific Research Institute’s 2008 report listed Tennessee as the state with the lowest litigation risks in the country. While the state’s liability climate encourages growth and job creation, it’s also a state to watch because its tort laws do not place limits on non-economic and punitive damages and there are some plaintiff-friendly venues in Tennessee. The state Supreme Court is considered neutral on liability issues."

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A story that is of no surprise to anyone who knows anything about human beings ... except a decreasing number of doctors and hospitals.

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The Chamber of Commerce does an annual ranking of the "lawsuit climate" in the fifty states.  The winning state - Deleware - has the most pro-business climate.  The losing state - West Virginia - has the most anti-business climate.  How are the rankings determined?  By a "sample of in-house general counsel or other senior corporate litigators to explore how reasonable and balanced the tort liability system is perceived to be by U.S. business."

Tennessee is ranked 22nd, down (or is that up?) from 6th last year. 

That's interesting, when one considers that there have been virtually no changes - and certainly no dramatic changes - in  Tennessee's substantive law in the previous year.  And the judiciary is 95 percent the same.  Perhaps Tennessee moved lower because other states moved higher.

Or perhaps the rankings have nothing to do with reality at all.

Here are the survey results for Tennessee. 

Here is the full report.

Here is a complete copy of the survey.

Here is the Wikipedia site for Kool-Aid.

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Tennessee ranks 12th of the 50 states on the U.S. Tort Liability Index.   The list measures the  tort climate from the standpoint of the business and insurance community, so a rank of "1" is a pro-business, pro-insurance company state and a rank of "50" is that dark, dreary place inhabited by jurors who are anti-gun, anti-life, pro-child pornography, tree-hugging communists  (hereinafter referred to as "liberals") and the greedy, scum-sucking trial lawyers who love and manipulate them.

North Dakota ranks first.  Florida ranks fiftieth.    North Carolina, Virginia, and Mississippi each have a higher rank than Tennessee; the other southern states rank lower.

In terms of "litigation risks"  Tennessee has the best pro-industry ranking in the country (doesn't that give you a warm, fuzzy feeling?).

Tennessee was one of five states earning "saint" status.  What is a saint state?  It is a state that has "relatively low monetary tort losses and/or few litigation risks and relatively strong tort rules on the books. These states are well positioned to contain their tort liability costs in the future if the rules are implemented as written."

Want to read the entire report?  Here it is.

Now,  one might expect that the nursing home industry would ask for the withdrawl of  the pending legislation to limit the responsibility of nursing homes after they kill or injure their residents  now that it has learned that  Tennessee is ranked in the top quarter as a pro-defendant state.

Yea, right.      

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Governor  Bredesen gave his State of the State address last night .  He did not say that he had any desire to limit the right to trial by jury for any citizen against any defendant in any industry.

This comment scares the nursing homes:  "My job is to open more doors to alternatives here in Tennessee. If you want to stay in your home, if it makes sense to do so, this is the year we’re going to start making it easier."  Tennessee spends about $1B per year of its Medicaid money on nursing home care; even a 10% shift will have an impact on the cash flow on the facilities.

The facilities always argue that they lose money on Medicaid patients.  Not true.  It is true that Medicaid payments may not always cover the average cost of keeping a patient in a nursing home.  The government's goal, however, is for the payments to cover the marginal costs associated with keeping the Medicaid patients in the facilities and the payments usually do so.

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This study in PLoS Medicine reports that, based on estimates from publicly available data, drug manufacturers probably spend more money on advertising than they do for research and development.

In the words of the study:   "From this new estimate, it appears that pharmaceutical companies spend almost twice as much on promotion as they do on R&D. These numbers clearly show how promotion predominates over R&D in the pharmaceutical industry, contrary to the industry's claim. While the amount spent on promotion is not in itself a confirmation of Kefauver's depiction of the pharmaceutical industry, it confirms the public image of a marketing-driven industry and provides an important argument to petition in favor of transforming the workings of the industry in the direction of more research and less promotion."

This study makes it clear that it is using estimates to reach its conclusions.  The manufacturers don't report this data, so the authors had to take the limited available information and do what they could.  Obviously, they could be wrong.

So, why bring this to your attention?  We all remember a time when hospital ads did not appear on every seventh billboard and drug companies were absent from the print media and television.  The substance of ads from hospitals can be used in malpractice cases against those hospitals.   So to the drug company ads - and they can also be used to attack the outdated learned intermediary doctrine.  Finally, as the health and drug industries continue their assault the civil justice system on the grounds that financial responsibility is affecting their ability to offer new services and products, it is fair to demand answers to the questions of how they spend their money.   Is the public really being served by drug ads? 

Now, before I get attacked for being a socialist, let me add that I don't care how much money the drug companies spend on ads.  That is between them and their shareholders, and so long as the ads are not unfair or misleading and otherwise comply with the regulations, I don't care whether they advertise or not.  What I do care about it the effort by the industry to say that they can't afford to develop drugs because of product liability suits at the same time they appear to be spending billions of dollars to sell drugs - when they secured more than adequate profits for decades before they started advertising.  If the drug companies want special protection from lawsuits, then they should be required to disclose what they spend to sell drugs and how they spend it.  That way, legislatures can make a choice about whether  it is in the public interest to grant legal protections to the drug industry and preserve its choice to spend its money on Madison Avenue rather than in a laboratory in New Jersey.

Once again, the DC Medical Malpractice Law Blog informed me of the existence of this article.

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We are hearing it again this year:  doctors are leaving the state because we don't have caps on damages in medical malpractice cases.  When pressed for evidence on this point,  a doctor will refer to "some guy in Memphis" or "some woman in Knoxville" who quit practicing medicine because of the risk of being sued.

Set aside the fact that the risk of being sued exists whether there are damage caps or not.  Are doctors leaving the state?

Well, consider this.  In 1975, at the time of the first medical malpractice crisis, Tennessee had 11.3 doctors of medicine in patient care for every 10,000 residents.

As of 2005, the number jumped to 24.1 for every 10,000 residents.

That's right, the number of doctors per Tennessean has increase by about 120% in the last thirty years.

And how does that compare with the nation as a whole?  For once, Tennessee is above the national average of 23.8 doctors for every 10,000 residents.

But there are more doctors in states that have caps on damages, right?  I mean, that's where doctors want to live, right? 

The facts in some "caps" states:

Mississippi - 16.5 per 10,000

Texas - 19.4 per 10,000

Missouri - 21.5 per 10,000

North Dakota 22.3 per 10,000

Colorado - 23.6  per 10,000

Louisana - 23.2 per 10,000

California - 23.3 per 10,000

You see, I think doctors think about about factors in selecting a place to live than just the risk of being sued.  They think about climate, location of family, familiarity, income opportunties, quality of life and all the things most other people think about if they are fortunate enough to select where they want to live.

Source:  Health, United States, 2007 as published by the CDC.  Go to PDF page 372.

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Here is an interesting article from the LA Times that discusses the cost of caps.

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An Illinois trial judge has declared that caps on certain medical malpractice cases imposed by the Illinois Legislature violate the rights of medical malpractice victims.

Read more here.

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A new report issued by the Tennessee Department of Commerce and Insurance re-affirms what everyone in the state knows:  further restrictions on patient rights are not necessary in Tennessee.

The doctors (and occasionally the hospitals) have beat the tort reform drum for over thirty years, seeking further restrictions on the rights on patients to bring malpractice claims.  They launched an attack on Justice Holder's re-election effort.  They write op-ed pieces, talk to their patients, spend hundreds of thousands of dollars on political contributions each legislative cycle, and employ more and more lobbyists - all to get the Legislature to give them even more special treatment in the courtroom.

The legislative effort has failed to date, but the jury pool has been contaminated.  Those of us who handle medical malpractice cases know this from our experience, but a new report from the Department confirms that experience.

The numbers:

Total judgments    

2004           6       

2005           5

2006           6               

Total settlements                     

2004         444

2005         461

2006         453

Cases Dismissed   With No Payment

2004        1916

2005        2361

2006        2514           

Total settlement $                

2004   $108,000,000

2005    $119,000,000

2006   $100,000,000

Total judgment $              

2004   $1,950,00

2005    $6,100,00

2006     $4,950,000

(Dollar values rounded) (I originally had a beautiful table to display these numbers but my software will not let me publish in table format.  'Sorry about that.

There were two jury verdicts over $1,000,000 in medical malpractice cases in 2006.  One verdict was $8630.

The average settlement was $221,000 in 2006;  in 2005 it was $258,000.

This report sends one other message:  statistics like these are absolutely essential to having an informed discussion about the need for any sort of litigation reform.  The law that mandates the reporting of this information is due to expire in one year.  The law needs to be extended so that the public can continue to have access to this important information.

Here is a copy of the full report.

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I think you will enjoy this article from the on-line version of the Fayetteville, North Carolina newspaper.   A few excerpts:

"Annual statements of Medical Mutual Insurance Co. of North Carolina filed with the N.C. Department of Insurance from 2001 through 2006 were studied and evaluated by former Missouri Insurance Commissioner Jay Angoff and some of his findings are:

Underwriting gain — the amount they earned on their insurance business — was up by 948 percent in only two years, from $2.1 million in 2004 to $22 million in 2006.

The surplus they hold, in addition to the amount which they set aside to pay claims in the future, nearly quadrupled in six years, rising from $35.3 million in 2001 to $127 million in 2006. Despite the surplus, no dividends were paid to their policyholders (physicians) in any year throughout the period 2001-2006.

They increased rates for physicians in 2006 even though their own data indicated that both the size and frequency of claims were decreasing. From 2001 through 2006, they collected $621 million in premiums and paid out only $184 million in claims.

While malpractice carriers have consistently jacked up rates for physicians, some are now finally leveling off, which makes sense since malpractice claims are at an all-time low in North Carolina. According to data maintained by the N.C. Administrative Office of the Courts, from 1998 through 2006 malpractice cases comprised .3 percent of all civil filings in North Carolina. In 2006, North Carolinians filed a total of 510 malpractice lawsuits across the state, an 11 percent decrease from 2005 and a 24 percent decrease from 2004. "

We will not have data about SVMIC until the Spring of 2008, but my guess is that we will see a decrease in both the number of claims and the average claim payment again. 

Thanks to the folks at Tort Deform for letting me know about this article.

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The people opposed to the efforts to restrict the right to trial by jury in personal injury and wrongful death cases are fighting back - this time with a video on YouTube.

Watch it here.

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Good news for all concerned.  SVMIC, the doctor-owned professional liability insurer, has announced a rate reduction.  You probably won't read about falling medical liability insurance rates in the newspaper, but you can tell your friends and neighbors that rates are dropping even though the Legislature has not placed caps on damages in medical malpractice cases.

Here are the rate changes, by specialty:

Anesthesiology      - 14.1%
Cardiac Surgery    - 14.1%
Gynecological Surgery      - 14/1%
Family Practice – non-procedural     - 9.3%
Orthopedic Surgery       - 9.3%
Pediatrics          - 9.3%
Pulmonary & Critical Care Medicine       - 5.2%
Internal Medicine          + 3.3%
Infectious Disease, Hospitalists        + 3.3%
Gastroenterology       + 5.0%
Interventional Cardiology         + 5.8%
Pathology           +10.0%
Emergency Medicine       +15.0%
Most other specialties        - 4.5%

The overall change for all doctors in the state is a decrease of 4.2%.   The rate change is effective with renewals after May 15, 2007. 

Approximately 74% of doctors will get a rate reduction under the new rate structure.  Conversely, 26% of doctors will get a rate increase.

The 464 OB-GYNs  that are insured by SVMIC will get a rate reduction of 4.5%.  An OB-GYN with five years experience will pay  $59, 792 for $1M / $3M in coverage.  He or she can purchase $5M / $7M in coverage for $80,505.

A FP/GP who does not do OB will pay $15,959 for $1M / 3M in coverage and can double that coverage by paying $18,896.  If the FP / GP does OB work but no major surgery the rate increases to $21, 702 for $1M/3M in coverage and $25,672 for twice that amount.  The rates for these docs decreased by 4.5% effective May 15.

Even these numbers tell only part of the story.  These rates are list prices.  The rate is decreased by 10% if the doctor attends a loss prevention seminar and 5% if the premium is paid up front,  Thus, an OB/GYN who purchases a $5M/7M policy can save over $10,000 by attending a seminar (offered on-line and paying up front).

In addition, the premium includes a provision that if the doctor retires, dies, or becomes disabled during the policy period he or she is provided tail coverage at no charge.  This increases rates by over 4%.

By the way, the rate decrease is projected to still permit SVMIC to increase its surplus by 5% next year.  Surplus increased $33,000,000 to a total of $217,000,000 in 2006. This represented an increase of almost 18% in one year. This follows a $16.4 million dollar increase in 2005.  If the projection is correct, SVMIC's surplus will rise to almost $230,000,000 by the end of 2007.  I suggest that the projection is a conservative one and, unless SVMIC grants a dividend, the surplus will be even higher.

(Surplus in the insurance industry is substantially equivalent to net worth in the traditional business world.  It means that is SVMIC was to stop doing business as of 12/31/06, it could have paid all of its claims, paid all of its loss adjustment expenses, and still had $217,000,000 left.  Because SVMIC is a mutual company, the surplus would become the property of the physician-owners.)

Does this mean that SVMIC is the evil empire?  Of course not.  SVMIC is a business.  It has the right to - and should - price its product so as to protect doctors, provide for injured patients, and increase its surplus to a reasonable level given the total risk it has undertaken. 

My only point is that the Legislature needs to consider these facts in determining the need for reforming the legal system to provide for special privileges for the health care industry.  And it needs to ask: what will we get in return for what we are asking our injured and deceased citizens to give up?

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Pardon me, but I have always been a fan of facts.  Opinions are like ... noses, everybody has one. 

The Kaiser Family Foundation has analyzed paid claims data and discovered that in 2005 Tennessee had 10.1 paid med mal claims per 1000 active, non-federal physicians.  Total paid claims were 156.  The national average was 17.1 paid claims per 1000 active, non-federal physicians.

Tennessee ranked 12th lowest in the Nation by this measure.  We are the fourth lowest in the South Census Region.

By the way, Tennessee has 17,888 active physicians not employed by the feds, the 16th highest total in the nation.   And while I cannot vouch for the authenticity of this number (it comes from the AMA) another website that cites the Kaiser data from two years earlier says that at that time Tennessee had 15,447 physicians.  If Kaiser got its data from the AMA for both years, and if the other website accurate quotes the Kaiser website from 2004, then Tennessee has seen an over 10% increase in physicians in the last two years.  And I thought I heard doctors were leaving the state.

The average payment in a Tennessee med mal case is 13 % less than the national average.

Our healthcare employment percentage is higher than the nation as a whole.

And while the number of hospitals in the nation is shrinking, Tennesse has added 6 hospitals in the six-year period ending in 2004. 

But then again, these are just facts. 

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The Arkansas Supreme Court struck down that portion of legislation requiring a plaintiff in medical negligence cases to file affidavits of merit in medical malpractice cases within 30 days of filing the complaint or face dismissal of plaintiff's complaint.

The Court ruled that the statute imposed a requirement for commencement of an action that was greater than that imposed by Rule 3 of the Arkansas Rules of Civil Procedure.  The Court went on to say that "[t]he constitutional infirmity in § 16-114-209(b) is the provision for dismissal if the affidavit does not accompany a complaint within thirty days. We do not hold today that the balance of § 16-114-209(b), requiring a reasonable-cause affidavit, is constitutionally infirm. Having said that, it appears that without the time limit of thirty days, the statute largely is duplicative of § 16-114-206 regarding the plaintiff’s burden of proof and medical expert testimony concerning breach of the standard of care in the community."

The case is Summerville v. Thrower, No. 06-501, (Ark. S. C. March 15, 2007).  Read it here.

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Larry's recent column on the med mal issue.

Update:   link repaired.

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Here is an article that talks about the negotiations concerning the med mal legislation currently pending in the General Assembly.

This excerpt tells it all:  ""Basically [the potential compromise] was done between the legislators themselves representing probably both sides of the interests," Miller [VP of the TMA] said. "One of the things that didn't come through was that doctors _ who are probably the main focus of this legislation _ were not party to these negotiations."

He is right.  The main push for and therefore focus of the legislation is doctors.  Not patients.  Not the common good.  Not justice.

The focus is doctors.  And while I believe have more respect for doctors than the average person (because my work on behalf of patients for the last 25 years has helped me begin to realize the science and art of medicine) I simply do not think that any special interest group should be granted special advantage in our courtrooms.

I participated in these negotiations and can say without hesitation that the people involved worked in good faith to address real issues with real solutions in an effort to advance the cause of justice. 

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State Volunteer Mutual Insurance Company , the doctor-owned medical malpractice insurance carrier, continues to enjoy profitability, according to my review of its 2006 Annual Report  that was recently filed with the Tennessee Department of Commerce and Insurance.

A few highlights:

* Surplus, the insurance industry equivalent of net worth, increased $33,000,000 to a total of $217,000,000.  This represents an increase of almost 18% in one year.  This follows a $16.4 million dollar increase in 2005.

* After tax profits were reported at $23,000,000, up over 50% from a year earlier, when profits were $14,730,000.  Total profits for the last 5 years are approximately $49,000,000.

* The company paid out money to plaintiffs in only 158 cases across the state last year.  The total amount paid was $56,660,652.  The average payment per claim was $358,611. 

* Most of the premium income was from Tennessee doctors, but the company also does substantial business in Arkansas ($40M in premium income) and Kentucky ($22M).  Interestingly, neither of those states have damage caps on compensatory damages.

Last year SVMIC had no real increase in insurance rates for its doctors, and this data tells me that there will not be a rate increase in 2007.  Now, let me hasten to add that  I don't pretend to be an actuary or an expert in the insurance business.  I am applying my version of common sense rooted in part in my experience of looking at these financial statements for over 20 years. 

Don't look for a rate decrease either.  My guess is that rates will stay the same and, if SMVIC has another good year, it will return to the practice of paying dividends to its insured doctors.   Dividends have the net result of reducing rates.  Reducing rates is unrealistic in an inflationary economy, especially when the health care inflation rate runs 7 - 8%.  Insurance rates in this market suffer from what economists call "the downward stickiness of prices."  That is, a market conditions change, rates tend to go up more quickly than they go down.  (Think gasoline. Crude goes up $10 a barrel and gas jumps 30%.  Crude goes down $10 a barrel and gas drops 20%.  Or so.)

The good news is that SVMIC now seems to have rates in line after bowing to competitive pressures and a great investment market in the 1990s, which resulted in the company not raising rates when underwriting considerations probably required it.  Let me hasten to add that I am not slamming SVMIC here - they were threatened with some new competition in the 1990s and my information is that they held down rates to save market share.  That's just business.  But those decisions also gave rise to higher rate increases in the new millennium than would have been necessary in the absence of those decisions.  Note to SVMIC:  if I am wrong about this I would be happy to post the company's position on this issue on this blog.  I am always eager to learn more about the insurance industry.

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The Tennessean published an op-ed piece I wrote today.  Read it here.

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The bill to limit health care provider's responsibility for their errors comes up in Senate Judiciary tomorrow afternoon.  Here is a list of some recent posts on the issue:

"The Great Medical Malpractice Hoax"

Another Aspect of the Big Lie

Top Ten Medical Malpractice Verdicts - 2000-2005

More on the Big Lie

More Evidence of the Big Lie

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"It's not personal responsibility I have a problem with.  It is the constant threat of litigation that gets to me.  And that's why we need to cap damages in malpractice lawsuits."

How many times have you heard some member of the health care industry say that? 

I guess that the argument means that the industry doesn't mind valid lawsuits (how can they say anything else?) but they don't like non-meritorious lawsuits.  But how does capping damages stop non-meritorious lawsuits?  Capping damages only limits recoveries for claims already found to be meritorious.

The bottom line is that the industry doesn't trust juries.  It don't think any claim has merit unless they say it has merit.  So, even if a jury demanded by and selected by both parties decides a claim has merit they want to cap damages because they don't trust it to act fairly.  Hold it - that's not correct either.  They will accept a jury acting unfairly by giving too low an award of damages - otherwise they would set a floor on damages.  (Every death case is worth at least x but not more than y.) And they don't trust judges either - trial judges or appellate judges - the men and women who can adjust or reverse jury verdicts not based on the facts or the law.

Now, on the threat of litigation.  Let me tell the industry this.  The rest of us feel it every day, too.  Every single day.  Those of us who have enjoyed the benefits of higher education and made the decision to serve the public go through the same experience.  It is a fact of life - the  thing that makes us think just a little harder, spend a couple extra minutes on that issue, and document just a little better.  And for that extra risk we professionals enjoy a better lifestyle than the men and women who paid the taxes to fund the colleges and universities that got us to where we are and who pay us to use our education and talent to serve them.  I think the threat of litigation is a good thing, not a bad thing.

To be sure, we need to find a better way to ensure that frivolous cases are kept out of the courthouse.  But capping damages on meritorious claims won't do that.

And they know it.

 

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SVMIC, the well-managed, physician-owned liability insurance company that insures an estimated 90% of the doctors in the state, publishes a newsletter called "Riskpoints."  It is available on their website.

The Fall 2006 edition of the newsletter  (article in on Page 2 of the newsletter). listed the top ten jury verdicts against SVMIC insureds in the six year period 2000-2005.  Four of those verdicts were by out-of-state juries (SVMIC writes insurance in multiple states). 

The largest verdict was the verdict in Hunter v. Ura, a Davidson County case, in the amount of $5.8M.  The decedent, a six-figure wage earner, died as the result of an anesthesa error.  He left a wife and two minor children behind.

The other Tennessee verdicts were $5.5M for the death of a child,  $1.7M in a back fusion case for a 36 year old male, $2M for the death of a 46 year old male, $2.94M for what appears to be a brain injury to a child (judgement against doctor and hospital) and $1.8M for death of a 62 year old male in a failure to diagnose cancer case.

The article makes it clear that "[t]he amounts listed are the actual verdicts awarded by the court or jury. Keep in mind that a number of these cases subsequently were settled for significantly lesser
amounts during the course of post-trial negotiations."

Think about it folks.  Six years of cases.  Six adverse jury verdicts.  Less than $20M in total verdicts, some of which were admittedly settled for substantially less that the original judgmnent.

This is why the industry fought for so long not to have to reveal this information.  I have sought for years to find out not just numbers but facts - who is getting these multi-million dollar judgments?

Now we are beginning to learn.

The Legislature should mandate every malpractice insurer to reveal basic facts about every claim they pay over $100,000 so that it can determine whether juries are acting reasonably.

 

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This is a comment from "Chris" to my post on Tuesday

I agree that the main focus is economics. In general, one CV surgeon is needed for approximately every 35-50 thousand people. Now, it is impossible to do this if you are the only one as then there is constraint of constant call, etc. So, specialists tend to concentrate together. The other factor that brings these physicians into larger areas is that is where the hospitals are large enough to have a dedicated OR team, ICU and cardiac cath labs with the attending cardiologists. To further apply economics, it would cost more to place these facilities in a rural area that it would cost for an entire hospital. Also, the re-embursement for bypass surgery has greatly dropped and the risk of litigation is high. As a result, it is economically unwise to practice in a small area, with a small patient volume, inadequeate facilities.

Chris - what is the source for your data?  Are you aware of statistics that tell us what sort of population is required to support a each class of specialist?

Also, I understand why a CV surgeons would not want to practice alone and face 24/7/365 call.  Do you mean then that for two CV surgeons to enjoy an acceptable income (given the investment they have made in their careers) that they would need a population of 75K - 100K of people?

Thanks for taking the time to educate us.

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"We have to limit the liability of negligent health care providers because doctors are leaving medicine to work at Krystal (or whatever)."  That's the non-stop babble we hear from lobbyists and pr flacks for the health care industry.

Then, there are the facts.

Consider this:  cardiac surgeons are looking for work.  According to this article from USA Today, "[t]he use of artery-opening stents has helped lead to a sharp drop in the number of patients having cardiac bypass surgery and contributed to a tight job market for cardiac surgeons and falling interest in the specialty by medical school graduates."

USA Today goes on to report that "[a] survey of 88 cardiothoracic residents finishing their training found that 12% received no job offers in 2004, according to a 2006 article in the Annals of Thoracic Surgery. At the same time, the number of applicants choosing to pursue one of the 140 training spots each year has also declined. In 2005, there were only 104 applicants filling 100 of the 139 available spots, according to the article."

Jee whiz, we can use those doctors in Tennessee.  The health care industry keeps telling us that the only reason doctors won't move to rural areas is the threat of being held responsible if they make an error - as if they were truck drivers who ran a red light.  Imagine that!

So, to all you cardiac surgeons who read this I am happy to report my guess that there are dozens of Tennessee cities without cardiac surgeons so we have lots of jobs available.  Lynchburg doesn't have a cardiac surgeon.  Oh, you're concerned that there is no hospital in Lynchburg.  No problem - we'll build one.  Ridgley doesn't have a cardiac surgeon or hospital either, but we must need one and it is a great place to duck hunt. I could go on and on.

But won't.

Folks, principles of economics apply to the health care industry.  Demand almost always drives supply.  (Of course - you can create demand  under some circumstances, e.g. plastic surgery ads and drug ads.  You don't create demand for getting cancer or having a heart attack.)  Economic reality means that you can't put high-paid specialists in every hamlet because there simply is not enough demand for their services.  You can't put a hospital every 17.89 miles because you can't fill the beds.  You can't deliver babies in a hospital unless you have sufficient volume to justify the expense of staffing an OB unit 24/7/365.  So, you are not going to get neurosurgeons and OBs and oncologists to move to rural areas unless they have enough patients to make a decent living and a hospital capable of supporting their practices.

The health care industry knows this.  You don't consume over 13% of our nation's GNP and not understand economics.  But the industry continues to tell the world that they need limited responsibility for their actions because the rural areas are being deprived on convenient health care.

And that is why I call their argument "the Big Lie."

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In 2003 Texans passed Proposition 12.  It placed caps on human losses in valid medical negligence claims and put in place other restrictions on the rights of citizens injuryed by medical negligence to seek justice. "Patients were told to expect significant improvements in health care across the state, as well as dramatically lower medical liability insurance premiums for their family doctors."

So now what?  Or as a friend of mine would put it, "how's that workin' for ya?"

Here is a brief summary of a report from Texas Watch:

* "Statistics from the Texas Medical Board (TMB), the state agency responsible for licensing doctors, show that since 1997, Texas has seen a steady increase in the number of doctors licensed to practice medicine. Between 1997 and 2003, Texas had an average annual rate of increase in medical licensees of 3.5%. Not only was there not a decrease in the number of doctors obtaining licenses, but there was a dramatic jump in the rate of new licensees the year before Proposition 12 was debated and passed. In 2002, the rate of increase jumped to 5.11% – well above the average rate of growth. Moreover, there is no evidence that Proposition 12 has improved overall access to care. Indeed, Texas Department of Health statistics show that in 2006, Texas gained only 639 direct care physicians – those that are actually practicing medicine – a paltry increase of just 1.8%, which is slower than it was pre-Proposition 12."  [Footnote omitted.]

* "Every underserved region in our state has seen lower average growth in the rate of new doctors in the three years since Proposition 12 passed (2004-2006), than in the three years before (2001-2003). The trend leaves only one conclusion: Proposition 12 has failed to produce the results that were promised to Texans living in underserved parts of our state."

* "The Medical Protective, the nation’s largest medical liability insurance provider, asked for a 19% rate increase one month after Proposition 12 passed. In its filing to Texas insurance regulators, the company wrote, 'Non-economic damages are a small percentage of total losses paid. Capping non-economic damages will show loss savings of 1.0%.'" [Footnote omitted. Emphasis added.]

Read the full report for more information.

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Professional and hospital liability insurers have convinced their customers that malpractice premiums will go down if meritorious malpractice claims are capped by the state legislature.

But look what happened in Florida.  According to Tallahassee.com, "the Legislature three years ago capped pain and suffering awards to $500,000 per physician and $1 million per case. Since then, [ Florida Department of Financial Services' Consumer Advocate Steve] Burgess contends, insurance data shows medical malpractice legal costs and payouts have dropped 43.6 percent, from $989 million to $557 million."  And rates?  One insurer wants to cut them 8.6%.

Caps on human losses in malpractice cases will have no material effect on rates, and it the insurance companies believe that it will they should agree to a reduction in premiums as a matter of law.  The amount of the reduction should be determined by an independent actuary, the cost of employing such borne by each company.  The amount of saving should be available to the Legislature before voting on caps so that they can determine whether it is in the best interest of the state to save doctors and hospitals money by capping jury awards in meritorious cases.

Now, I know that the insurance industry will cry out that any caps will be subject to a constitutional challenge and that they cannot discount rates until after the constitutional challenge to the caps works its way through the courts.  I understand that, but then the mandatory reduction in premiums should be paid to the state to hold pending the constitutional challenge.  If the caps are struck down, the companies can get their money back.  If not, the money can be refunded to the payor.

Caps do save insurance companies money  by taking money away from (1) the claimants who have catastrophic losses and (2) eliminating downside-risk in cases involving injured or dead children, stay-at-home mothers, and the elderly, thus further suppressing settlements and judgments in cases for these people.  But the savings will not find their way to the the insureds and, even if they would, represent bad public policy.

There needs to be some reforms in the area of medical malpractice litigation.  There are too many expert witnesses - the number of experts per issue needs to be limited.  The locality rule is ridiculous and needs to be eliminated.  The contingous state rule makes no sense whatsoever, particularly concerning causation experts.  We need to address the issue of lawyers who file cases without consulting experts first - almost always a bad practice.  We need to encourage judges to force the cases to trial or other resolution quicker - lingering cases are not in the best interests of defendants or plaintiffs.   We need to find a way to entice family practice doctors to move to rural counties, while helping the residents of those counties understand that this state cannot afford an OB unit in every hospital or a neurosurgeon in every county. 

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The Economic Policy Institute has a different take on the impact of "tort reform" on the economy.

An excerpt:

The legal system for adjudicating tort claims in the United States delivers important bene?ts to the American people. Most notably, these benefits include the compensation of injured persons (including people harmed by giant corporations and other powerful interests), the deterrence of wrongdoing, greater investments in product innovation and safety, and the civilized, non-violent settlement of disputes. These benefits are rarely quantified, and critics generally focus exclusively on the system's costs, whose magnitude and impact they tend to exaggerate, claiming that job growth, productivity, health care, and corporate profits suffer under the current system. Although a full review requires an examination of both the costs and benefits of the system, this briefing paper reviews only the tort system's most commonly alleged economic costs and impacts and shows that most have little or no basis in reality.

Thanks to Bill Childs at TortsProf  for telling me about the article.

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In a recent post I set out in their entirety the comments of a doctor who told us of the fear he has testifying on behalf of plaintiffs in medical negligence cases.  He has written back - and here it is:

 

NOTE:  there are a bunch of unusal characters in the email.  I received the email in this format so I assume that something got scrambled in the transmission over the Web.  It is being published as it was received.

 

Hello again,

I’m the doctor who wrote previously and whom you quoted.

Though I don’t want to get into an extended debate on this, let me respond to a few of the comments.

First, you’re right that I should be willing to contact my representatives. I did send an email to my Congressman several years ago when we were in the midst of another round of furor over the “malpractice crisis”. I don’t remember precisely, but I believe I stated that I practice medicine in his state and though I do worry about malpractice suits and I would not be pleased to be subjected to one, I believe that the “crisis” has been exaggerated and that the focus should really be on reducing the mishaps that actually occur in medical practice. I think I also pointed out that in 20 years of practice I do not even know another physician who has ever lost a malpractice suit. I do know several who have gone bankrupt because they could not manage their practice to keep up with changes in managed care rules. Probably there are some that I don’t know about, but I don’t see it as a big problem. I think I made a few other comments about whatever was being proposed at the time.

About a month later a letter arrived from the Congressman. It started off “Dear Doctor….” so someone read my letter to that extent. But then it went on to say something like the following: “Like you, Congressman X is very concerned about problems caused by the current malpractice crisis. He is working closely with the AMA to find solutions to this problem that will be fair to all concerned.” So much for a meaningful communication with my congressman. But that doesn’t mean I shouldn’t try again.

Regarding Tony Duncan’s compliment (“That took a lot of guts”), I wish I had more “guts” (other than the physical guts that my belt is struggling to hold in. I wouldn’t write anonymously if I had more of the good kind of “guts.” But most people who write about sensitive or controversial issues on the internet actually should be careful. For example, if I do ever want to give depositions in cases again, it’s not going to be very good to have a paper trail of opinions about malpractice splashed over the internet. And if I get sued myself, it could complicate my defense regardless of what I say. Will Rogers once said “Never miss an opportunity to keep your mouth shut” and I hope that a few online comments aren’t too serious a violation of that rule.

Also, I agree with Tony Duncan’s other comments. Patients’ rights are important. I’m not only a doctor but I’m a patient too. Fortunately I’m not in the midst of any serious medical problem right now but we all will have them some day unless we just quickly drop dead. Through the years my family and that of my wife has had a moderate number of serious medical problems. There were a few incidents in which the medical care was really bad and in one instance it lead directly to a serious harm, e.g. my father-in-law’s death. We could have sued but no one in my family is really into suing. Almost 1/3 of the adults over 30 in our family are physicians and close to ½ are attorneys. Interestingly, the only members of our family who have ever sued anyone themselves are a few of the physicians, and then not for malpractice. My father-in-law was almost 90 and he didn’t have that many years left in him. That’s not to say that the lives of the elderly are not important, but when a person is extremely frail a small error is more likely to cause great harm. I think a significant percentage of the 100,000 (or even 200,000) deaths induced yearly in hospitals by medical mistakes are similar to the case of my father-in-law. If you admit a really old, frail person to a hospital enough times, he or she is very likely to die during one of the admissions, sometimes due to a mishap that probably could have been avoided but which would not have killed the average person. In any case, I mention that case only to show that I’m not an advocate of suing over small provocations—not even over a case in my own family resulting in death. But there are situations for which I would sue my physician or my family member’s physician and I don’t want to lose the ability to do so because of restrictions that are crafted just to reduce the number of lawsuits.

In reply to “RADICULOUS,” I disagree. I believe that if unbiased fair-minded persons were to examine what these review boards were doing, the majority of observers would come to the conclusion that they were bent on an agenda of punishing expert witnesses to suppress malpractice suits. Typically only plaintiff witnesses are even reviewed. This is, of course, almost inevitable because in most cases a person must be a member of the specialty society to even bring forth a complaint. Some may field complaints from others. But in any case, they have complete discretion over which cases they pursue. I have read the information about one of the most publicized cases, the Fullerton case. As far as I can tell, Fullerton did absolutely nothing wrong. He simply testified and gave opinions that seem very respectable and credible. Not everyone would agree exactly with his opinions. But this is what happens in lawsuits. The experts will differ and that does not mean that either one of them is doing anything wrong. The fact that there even exists this quasi legal mechanism whereby a medical society can attack him and hope to evade the consequences under the veil of peer-review immunity is more frightening to me than the whole issue of malpractice suits. I’m hoping he wins and gets millions and millions of dollars from each and every member of that board. If he put out a request for donations to pay his legal bills, I would probably give him some money.

Many aspects of so-called malpractice reform are not very fair. Consider the time limit to file a lawsuit. As I mentioned, my family and I have been blessed with pretty good health. But we have been sick. When you are discharged from the hospital having been treated for anything serious, I can tell you that for the next six months you are doing little else but sorting through the bills, a large percentage of which have serious errors almost all in the hospital’s favor. You don’t even regain your equilibrium for about a year even if everything has come out all right. If there is to be any just and fair adjustment on the time limit to file a lawsuit, I would think that it would be most fair to add a year to the time allowed for any other type of suit. Reducing the time is not done in the interests of fairness or justice. This is done simply because the AMA and other physician groups have pressured the legislatures to enact these time limits.

Continue Reading...

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That's the name of a new report issued by Public Citizen. From the press release:

"Public Citizen reviewed publicly available information from 1990 to 2005 from the federal government’s National Practitioner Data Bank (NPDB), which contains data on malpractice payments made on behalf of doctors as well as disciplinary actions taken against them by state medical boards or hospitals. According to the analysis, the total number of malpractice payments paid on behalf of doctors, with judgments and settlements, declined 15.4 percent between 1991 and 2005, and the number of payments per 100,000 people in the country declined more than 10 percent. In addition, the average payment for a medical malpractice verdict, adjusted for inflation, dropped eight percent in the same period. "

And this:

"“Despite assertions by the medical and business lobbies that physicians are leaving practice because of burdensome malpractice lawsuits, the number of doctors is increasing faster than the population,” said Laura MacCleery, director of Public Citizen’s Congress Watch group."

Here is a couple of items from the report itself:

"American Medical Association President Donald Palmisano told the 2004 Annual Meeting of the AMA House of Delegates that “what is driving this crisis are the out-of-sight awards some runaway juries are handing out in certain liability cases.”13 This assertion is incorrect on the facts – when adjusted for inflation, the median judgment grew only from $125,000 in 1991 to $139,100 in 2005, a mere $14,000 over 14 years. Such a modest increase hardly suggests that juries are irrational."

...

"Our analysis of NPDB data shows that only 33 percent of doctors who made 10 or more malpractice payments received any disciplinary action by their state medical board. Even more disturbing, NPDB data show that physicians with up to 31 medical malpractice payments totaling millions of dollars in damages never received any disciplinary action."

...

"The number of payments for easily avoidable errors, such as leaving a foreign object inside a patient, or operating on the wrong body part, fell from 874 in 1991 to 576 in 1997, and then remained relatively constant until 2004, when incidents increased dramatically. The most recent data reflect the highest number of such errors in 11 years."

...

"The vast majority of doctors – 82 percent – have never had a medical malpractice payment since the NPDB was created in 1990."

...

"Only 1.1 percent of doctors, having four or more malpractice payments, were responsible for 20.2 percent of all payments."

...

"Physician Number 33041 had at least 31 malpractice payments between 1993 and 2005, nine for failure to use proper aseptic technique, five for unspecified errors, three for improper management of obstetrics cases, three for improper performance of surgery, three for retained foreign object during surgery, two for failure to treat, one for surgery on the wrong body part, one for failure to obtain consent for surgery, one for delay in treatment of fetal distress, one for failure to treat fetal distress, one for an improperly performed delivery, and once for improper technique. The total damages were $10,150,000."  Note: this physican was not disciplined by the medical board in his or her state.

Click here to read the entire report.

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Just one segment of an op-ed piece in today's Tennessean:  "How bad is medical malpractice? According to an article in the Journal of the American Medical Association by Dr. Barbara Starfield of Johns Hopkins School of Public Health, the third-leading cause of death in this country after heart problems and cancer is adverse reaction to medical treatment and medical mistakes."

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I wrote two posts in the last year (here and here)about doctors who have been attacked by organized medicine for giving testimony on behalf of plaintiffs in medical malpractice lawsuits.  The goal of these efforts is not only to punish the doctors for having the audacity to testify for a plaintiff in a medical malpractice case but also to discourage other doctors from testifying.

This weekend I received this comment to one post :

I'm a physician but I do not want to reveal my real name because this topic is so controversial. In the past I would infrequently give depositions or testify in malpractice cases. I think I worked on a total of 20 cases in about 15 years. I have worked both with defense and plaintiff's attorneys but plaintiff work is easier to get so I did somewhat more of that. When I began to read about the horrendous ordeals some physicians went through when some board picked apart their testimony, I decided to give it up entirely.

I think the current approach, which appears to emphasize suppressing lawsuits, is very misguided. When I signed on to my specialty society, I know I agreed to follow their bylaws but I never dreamed this would subject me to abuse by a "kangaroo court" bent on killing off expert witnesses.

But for me this is simply not a significant enough source of income. I don't have the time, the energy or the resources to fight this, at least not individually. I hope that those who have more of an interest in this subject will campaign against the efforts of the various medical specialists to suppress malpractice cases.

There actually should be a law protecting expert witnesses from this type of abuse. Also, the theory that expert testimony constitutes medical practice is completely preposterous. The AMA and other physician groups should not be allowed to get away with it. I've tried speaking up about this at some medical meetings, but I now have given up. Most doctors are completely convinced that anything that one can do to make life harder for plaintiffs is to their benefit. I think that patients and patient advocates need to speak up and contact their representatives in Congress and the state legislatures or the AMA is going to get it's way.

To the writer:  Thanks for taking the time to express your thoughts on this important subject.  While I agree that patients and patient advocates need to speak out on this issue, I hope that you will do so, too.  As a physician, your observations and opinions will really help motivate legislators to action.

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The property and casualty insurance industry has reported after-tax profits of $44.9 billion for the first nine months of 2006, up 50.1% from a year earlier.  If this path continues for the last three months of the year, it "would lead insurers to their best financial performance in nearly 20 years," according to the Insurance Information Institute.

"Strong underwriting results are being reported in virtually every key line of insurance" including comp and auto insurance.

What is most interesting is that the combined ratio is down to 91.5, down from 99.8 for the same nine-month period in 2005.  The "combined ratio" is the cost of paying and adjusting claims compared with premium income.  A combined ration of 91.5 means that the industry paid out 91.5 cents for each dollar it collected in premiums.   If the industry ends the year with a combined ratio at 91.5 it would be the best result in nearly 60 years.

The industry also makes significant money with its investments.  Profits there were almost $40 billion.  Interestingly, the industry has less than 17% of its portfolio in the stock market.

These results will not stop the efforts to restrict the right of consumers to the right of trial by jury.  The successes the industry has had in previous years is working its way to the bottom line, and the industry will continue to press for more "reforms" that will improve predictability in a business that is all about risk assessment.  Over the last 20 years the industry has made extraordinary efforts to shift the focus (and expense) of the pro-tort reform movement to industry, and with record profits like these you can expect that they will continue to do so.

Read more here.

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The Oklahoma Supreme Court has struck down a requirement that an affidavit of merit  from an expert be filed with medical negligence lawsuits.

The statute at issue "requires that a plaintiff alleging medical malpractice attach an affidavit to the petition stating that the plaintiff: 1) has consulted with a qualified expert; 2) has obtained a written opinion from a qualified expert that the facts presented constitute professional negligence; and 3) has determined, on the basis of the expert's opinion, that the malpractice claim is meritorious and based on good cause. Plaintiffs may petition the trial court for an extension for filing the affidavit of merit not to exceed ninety days. The request must be accompanied by a showing of good cause. Although the defendant may obtain a copy of the expert's opinion, upon which the affidavit of merit is based, the opinion is inadmissable at trial and may not be utilized in discovery."

The requirement was struck down as a violation of a provision of the Oklahoma Constitution that provides that ""The Legislature shall not except as otherwise provided in this Constitution, pass any local or special law ... Regulating the practice or jurisdiction of, or changing the rules of evidence in judicial proceedings or inquiry before the courts."

In addition, the law was struck down because the cost of obtaining the affidavit - $500 to $5000 - creates an unconstitutional financial barrier to access to the courts guaranteed under the Oklahoma Constitution.  The Court said as follows:

 "Although statutory schemes similar to Oklahoma's Health Care Act do help screen out meritless suits, the additional certification costs have produced a substantial and disproportionate reduction in the number of claims filed by low-income plaintiffs. The affidavit of merit provisions front-load litigation costs and result in the creation of cottage industries of firms offering affidavits from physicians for a price. They also prevent meritorious medical malpractice actions from being filed. The affidavits of merit requirement obligates plaintiffs to engage in extensive pre-trial discovery to obtain the facts necessary for an expert to render an opinion resulting in most medical malpractice causes being settled out of court during discovery. Rather than reducing the problems associated with malpractice litigation, these provisions have resulted in the dismissal of legitimately injured plaintiffs' claims based solely on procedural, rather than substantive, grounds.

 Another unanticipated result of statutes similar to Oklahoma's scheme has been the creation of a windfall for insurance companies who benefit from the decreased number of causes they must defend but which are not required to implement post-tort reform rates decreasing the cost of medical malpractice insurance to physicians. These companies happily pay less out in tort-reform states while continuing to collect higher premiums from doctors and encouraging the public to blame the victim or attorney for bringing frivolous lawsuits."  [Footnotes omitted.]

And it went on to say this:

"This Court does not correct the Legislature, nor do we take upon ourselves the responsibility of legislating by judicial fiat. However, we are compelled to apply Oklahoma's Constitution. It has long been the policy of the Oklahoma Constitution, the statutes and this Court to open the doors of justice to every person without distinction or discrimination for redress of wrongs and reparation for injuries. Although art. 2, §6 does not promise a remedy for every wrong, it requires that a complainant be given access to court when a wrong suffered is recognized in the law.

Treating medical malpractice plaintiffs with rules inapplicable to all other negligence claimants interjects a degree of arbitrariness which sabotages equal access to the courts. Section 1-1708.1E creates the potential for a medical expert to usurp the functions of the judiciary and the trier of fact. The requirement that a medical malpractice claimant obtain a professional's opinion that the cause is meritorious at a cost of between $500.00 and $5,000.00101 creates an unconstitutional monetary barrier to the access to courts guaranteed by art. 2, §6 of the Oklahoma Constitution. "  [Footnotes omitted.]

The case is Zeier v. Zimmer, Inc.,  2006 Ok. 98 (12/19/06).  Read it here.

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Here are the latest stats on the state of the property and casualty industry as analyzed by Americans for Insurance Reform, a consumer group.

Some highlights:

* "The U.S. property/casualty industry's underwriting profit for the first half of 2006 was $15.1 billion - 31.8 percent higher than the first six months of 2005 which were already record-breaking."

* "[A]ccording to the third-quarter Council of Insurance Agents and Brokers survey of market conditions, commercial insurance rates are now dropping significantly across the country, irrespective of enactment of “'tort reform.'”

* “'It now appears clear that the industry’s record profits in 2004 and 2005, and the exceptional record profit about to be reported for 2006, are due in large part to the years of huge rate hikes in the earlier part of the decade, which were not caused by any accompanying increase in claims or payouts. In fact, inflation-adjusted payouts and claims never increased at all during this period. Rather, this is all part of a well-documented cyclical phenomenon for the property/casualty insurance industry.'”

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Remember Newt Gingrich?  Of course you do.  Former Speaker of the House.  Author of the Contract on America.

And now, the author of a new list of issues for Republicans to focus on during the coming months, which he titles  "11 Ways to Say: "We're Not Nancy Pelosi."

His introduction:  "Republicans should spend the next two months focused on 11 straightforward, morally grounded issues about which the American people have clearly defined beliefs.

Some of these issues will make Republican elitists uncomfortable, but these were the same elitists who were uncomfortable with President Reagan and who scoffed at the Contract with America and rejected its bold proposals.

A Republican majority in the House that spent the next two months on these eleven issues would go a long way toward clarifying the choice between the San Francisco values of Nancy Pelosi and those of a GOP majority. This refreshing approach would reject the "incumbentitis" of relying on pork-barrel spending for reelection and return to the basic populist conservative values which gave us a majority in the first place."

Here is the list:

1. Make English the Official Language of Government.

2. Control the Borders.

3. Keep God in the Pledge.

4. Require a Voter ID Card.

5. Repeal the Death Tax, for Good.

6. Restore Property Rights.

7. Achieve Sustainable Energy Independence.

8. Control Spending and Balance the Budget.

9. Tie Education Funding to Teacher Accountability.

10. Defend America From the Irreconcilable Wing of Islam.

11. Focus on Iran and North Korea.

Does everybody see what is missing? 

Read more here.

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Do you want to see how the tort deform movement has made an impact on the laws of the fifty states (and D.C.)? See this article.

The abstract: "This manuscript contains the most detailed, complete and comprehensive legal dataset of tort reforms in the U.S. The dataset records state laws in all fifty states and the District of Columbia over the last several decades. For each reform we record the effective date, a short description of the reform, whether or not the jury is allowed to know about the reform, whether the reform was upheld or struck down by the states' supreme courts, as well as whether it was amended by the state legislator. Previous and current scholarship which studies the empirical effects of tort reforms uses various different legal datasets, (tort reforms datasets and other legal compilations), some which existed online, some created ad-hoc by the researchers. Besides being different from each other, these datasets frequently do not cover reforms adopted before 1986, miss reforms superseded after 1986, miss court-based reforms, ignore effective dates of legislation, and do not accurately record judicial invalidation of laws. It is possible that at least some of the persisting variation across empirical studies about the effect of tort reforms might be due to variations across legal datasets used. This dataset builds upon and improves existing data sources. It does so by reviewing original sources of legislation and case law to determine the exact text and effective dates. It is hoped that by creating one "canonized" dataset our understanding of the impact of tort reform on our life will increase."

The author is Ronen Avraham, a Professor at Northwestern.

Thanks to the Torts Prof Blog for the info.

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Senators Clinton and Obama have written an article about the need for patient safety for the New England Journal of Medicine.

The opening paragraph: "We have visited doctors and hospitals throughout the country and heard firsthand from those who face ever-escalating insurance costs. Indeed, in some specialties, high premiums are forcing physicians to give up performing certain high-risk procedures, leaving patients without access to a full range of medical services. But we have also talked with families who have experienced errors in their care, and it has become clear to us that if we are to find a fair and equitable solution to this complex problem, all parties - physicians, hospitals, insurers, and patients - must work together. Instead of focusing on the few areas of intense disagreement, such as the possibility of mandating caps on the financial damages awarded to patients, we believe that the discussion should center on a more fundamental issue: the need to improve patient safety."

The Senators propose to pass legistation to address this issue. According to the article, "[t]his legislation would create an Office of Patient Safety and Health Care Quality within the Department of Health and Human Services. The director of this office will be responsible for establishing a National Patient Safety Database, conducting data analyses to inform policy and practice recommendations, establishing and administering the National Medical Error Disclosure and Compensation (MEDiC) program, and supporting studies related to MEDiC and the medical liability system."

Read the entire article here.

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Last week Tennessee's health care industry tried to hijack the Governor's Cover Tennessee bill in an effort to obtain caps on their liability. The effort failed, thanks to the efforts of the entire Democratic Caucus in the Senate, Chairpman Person (R-Memphis), Senator Williams, and others.

The industry worked to amend the Cover Tennessee bill on the floor to limit their responsibility after a jury determines that medical negligence occurred. Usually, measures of this type are brought up through the committee system and, in fact, a similar piece of legislation was defeated in a House subcommittee this year. But the doctors alone had spent no less than $500,000 this year to get the special treatment they think they deserve so they decided to use the Governor's health care bill to get what they wanted.

What is even more interesting is that they denied doing it. Why would they deny responsibility for trying to limit their responsibility? Because it is considered bad manners on Capitol Hill to try to bypass the committee system. And because you don't mess with the Governor's legislation without risking his ire. So, when the health care industry decided to do so, I guess they decided it was best to lie about what they were doing.

Now the industry will have to live with the consequences of its actions. The Governor will not forget that the industry was willing to derail the Tennessee Choice bill to get damage caps. The fact that the industry was willing to do so says volumes about the lengths to which some industries will go to limit responsibility for their actions.

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The property and causalty insurance cycle, understood by everyone except some (but not all) Republican lawmakers, continues to turn.

Insurance company profits are swelling and insurance price increases have come to a virtual halt. Last year premiums rose an average of one-half of one percent and net income increased 12%, despite record catastrophe losses. Surpluses (think "net worth") in the industry now exceed $427 Billion. The average rate of return on surplus was 10.5%.

This article tells us that one expert predicts that premium growth will slow in 2006 and, in fact, may be less than the rate of inflation. Insurers will have cut prices to maintain premium volume, which will cause underwriting losses. Some degree of underwriting losses are ok (last year the companies paid loss and loss adjustment expenses of $100.90 for every $100 in premium) so long as the companies can earn a decent rate of return on their investments. If they don't, however, they have to raise rates to maintain profitability. Of course, the companies then will blame those increases on GREEDY TRIAL LAWYERS.

Here is a report from the Insurance Information Insitute about the performance of the industry in 2005.

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The Senate has just had the cloture vote on S.B. 22.

The result was 48 - 42 to continue debate. Sixty votes were required to cut off debate.

The fillibuster stands; debate continues.

They are now voting on S.B. 23.

UPDATE AT 5:21: The result on SB 23 was 49 - 44. Debate continues.

The bills are dead.

UPDATE Tuesday morning at 4:50 a.m. : This is an embarassing defeat for Senator Frist. He pushed this issue to the floor once again and came more than 10 votes short of the number he needed to cut off debate. Either the Majority Leader cannot count, or this matter was brought to the floor for the sole purpose of raising campaign contributions for the health care industry.

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2:17 P.M. Monday: Here is the link to the CSPAN site where you can watch the debate:

Debate

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Senator Frist and his friends are back with another bill to restrict the rights of medical malpractice victims. Here is the bill, known as S.B. 22.

Expect a vote on cloture today or tomorrow.

The legislation includes caps on noneconomic damages, uniform statutes of limitations (except in states that have more pro-provider limits), expert witness rules, collateral source changes, and caps on attorneys' fees. The bill also enhances Rule 11 sanctions in medical malpractice cases.

A companion bill, S.B. 23, gives special treatment to people who commit malpractice on an expectant mother and her child or children.

Isn't nice that the country is in such good shape that the Senate can waste time on legislation like this? Good thing we are not at war, we have federal spending under control, our ports and airways are secure, we have a solid energy policy in place to secure our economic future, and all but 44 million people have affordable health insurance (and those 44 million people have no health insurance) so that we can spend time on legislation like this.

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Joint and several liability has been abolished in the State of Florida. Here is a copy of the bill, courtesy of Matt at Abstract Appeal.

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ATLA CEO Jon Haber's Statement in Response to Bush's Attacks Today on the Civil Justice System

(Washington, DC)-ATLA CEO Jon Haber issued the following statement in response to Bush's attacks today on the civil justice system:

"It would take the President less than a minute to discover the number of physicians is on the rise, not declining, and that the reason for inflated malpractice insurance premiums is directly attributable to insurance industry greed. Bush carelessly throws around terms like 'junk lawsuits.' But the civil justice system he is attacking protects families who lose children as the result of medical negligence and patients who suffer devastating injuries -- all of whom deserve accountability. So it appears the 'plethora of lawsuits' the President referred to must be buried out there somewhere with the weapons of mass destruction in Iraq."

The following are the facts:

AMA Data: The Number of Physicians Up Nearly 90 Percent Since 1980. According to data from the American Medical Association, the number of physicians is up nearly 90 percent since 1980 - from 467,679 to 884,974 in 2004.[1] In addition, the number of emergency room doctors has increased from 5,699 in 1980 to 27,864 in 2004 - an increase of 388 percent.[2] The number of OB-GYNs has increased by nearly 60 percent - from 26,305 in 1980 to 42,059 in 2004.[3] The number of neurosurgeons has also increased by nearly 60 percent - from 3,341 in 1980 to 5,288 in 2004.[4] Over the same time period, the total U.S. population increased by only 29 percent - from 227.7 million in 1980 to 293.9 million in 2004.[5]

CBO: Savings from Reducing "Defensive Medicine" Would be "Very Small." According to the Congressional Budget Office (CBO) "... some so-called defensive medicine may be motivated less by liability concerns than by the income it generates for physicians or by the positive (albeit small) benefits to patients. On the basis of existing studies and its own research, CBO believes that savings from reducing defensive medicine would be very small."[6]

GAO: The "Prevalence" and "Costs" Associated with "Defensive Medicine" Have Not Been "Reliably Measured." According to the Government Accountability Office, "[p]ysicians reportedly practice defensive medicine in certain clinical situations, thereby contributing to health care costs; however, the overall prevalence and costs of such practices have not been reliably measured. Studies designed to measure physicians' defensive medicine practices examined physician behavior in specific clinical situations, such as treating elderly Medicare patients with certain heart conditions. Given their limited scope, the study results cannot be generalized to estimate the extent and cost of defensive medicine practices across the health care system. ... Recent surveys of physicians indicate that many practice defensive medicine, but limitations to these surveys suggest caution in interpreting and generalizing the results."[7]

Study Shows that Leading Medical Malpractice Insurers are Price-Gouging Doctors. A study[8] of medical malpractice insurers entitled "Falling Claims and Rising Premiums in the Medical Malpractice Insurance Industry" has found that insurance companies have been price-gouging doctors by drastically raising their insurance premiums, even though claims payments have been flat, or in some cases decreasing. The study, conducted by former Missouri Insurance Commissioner Jay Angoff for the Center for Justice and Democracy, a consumer advocacy organization, compiled data from the 2004 annual reports of the 15 largest insurance companies, which are filed under oath with state insurance departments. According to the insurance companies' own numbers:

?ｺ Between 2000 and 2004, the amount malpractice insurers collected from doctors in premiums more than doubled, while their claims payouts have remained essentially flat. The malpractice carriers analyzed in the report collectively increased their net premiums by 120.2 percent during this time period, although their net claims payments rose by only 5.7 percent. Thus, they increased their premiums by 21 times the increase in their claims payments.

?ｺ During this time, even industry projections of claims they plan to pay out in the future - their justification for higher premiums - have decreased.

?ｺ Leading insurers increased their surpluses by a third - to a level far above what is recommended by the National Association of Insurance Commissioners.

The Bush Justice Department: The Number of Federal Tort Trials is Down Nearly 80 Percent Since 1985. The Bush Justice Department reported last year that the number of tort (personal injury) cases resolved in U.S. District Courts fell by 79 percent between 1985 and 2003. In 1985, 3,600 tort trials were decided by a judge or jury in U.S. District Courts. By 2003, that number had dropped to less than 800.[9]

The Bush Justice Department: The Number of State Tort Trials is Decreasing. According to the most recent data from the Justice Department's Bureau of Justice Statistics, the number of tort trials at the state level has decreased. These statistics were compiled as part of the Bureau's survey of state civil justice systems in the nation's largest 75 counties. Among these counties, the number of tort trials decreased 31.8 percent between 1992 and 2001.[10]

[1] "Physician Characteristics and Distribution in the U.S.," American Medical Association, 2006 edition, p.312

[2] Ibid

[3] Ibid

[4] Ibid

[5] U.S. Census Bureau data, http://www.census.gov/prod/ 2005pubs/06statab/pop.pdf

[6] Ibid

[7] "Medical Malpractice: Implications of Rising Premiums on Access to Health Care," GAO, 9/29/03, www.gao.gov/cgi-bin/getrpt?GAO-03-836

[8] "Falling Claims and Rising Premiums in the Medical Malpractice Insurance Industry," Jay Angoff, 7/05; http://www.centerjd.org/ANGOFFReport.pdf

[9] "Federal Tort Trials and Verdicts, 2002-03", Bureau of Justice Statistics, 8/17/05

[10] "Civil Trial Cases and Verdicts in Large Counties, 2001", Bureau of Justice Statistics, 4/04

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Lynn Swann, Republican candidate for Governor of Pennsylvania, has called for tort reform. Read more here.

Yet another reason for me to dislike the Steelers (except the Bus - I think the Bus is fantastic.)

Thanks to Torts Prof Blog for bringing this article to my attention.

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Texas passed damage caps and other legal "reform" measures and now people are starting to understand the harm that we predicted would occur.

This article explains the costs.

An excerpt: "But the reforms have exacted a high price, particularly among the very old and very young, patient advocates say. Because they can't ask juries for large pain and suffering awards anymore, lawyers now look for cases in which a patient or survivors have suffered a large economic loss - generally, lost wages as a result of injury or death. Complex malpractice cases can cost $100,000 to prepare. If injured patients' best earning days are behind them, or the patient is a child whose future income is impossible to predict, the potential rewards may be too small to make the case worth filing."

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Yesterday afternoon the Civil Practice Subcommittee of the House Judiciary Committee voted 3-2 to reject a bill offered by Rep. Doug Overbey that would have capped pain and suffering awards to medical malpractice victims and placed other limitations on recoveries. Voting against the legislation were Chairman Briley, Majority Leader McMillian, and Rep. Brooks. Fifteen to twenty doctors and the spouses of several attended the committee meeting and worked the halls before the vote. Several victims of malpractice also attended and spoke with some of the committee members.

The health care industry reportedly spent $500,000+ on this effort and one of their representatives has told me that they will be back next year. They want caps on damages and will accept nothing less.

The legislators opposing this legislation were under tremendous pressure to vote in favor of the health care industry and exercised great courage by standing up in favor of patients. Each of them deserve our thanks and our support.

The TTLA lobbying team did a great job on this legislation. We are fortunate to have a dedicated group of lobbyists, not just because they get paid to lobby but because they believe that we are right. Their tireless efforts were of great assistance in beating back yet another effort at "tort deform."

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The Civil Practice Subcommittee of the House Judiciary Committee meets today to hear testimony on the medical malpractice reform bill sponsored by Rep. Doug Overbey. The legislation caps damages non-economic losses at $250,000 against providers and $250,000 against factilities, with no more than $500,000 awarded in any one case. It mandates periodic payments of future damages, changes the rules concerning expert witnesses, limits the bond that must be posted by a defendant on appeal, requires a certificate of merit, and limits attorneys' fees. The Bill is HB 3693; read more about it here. The five-person committee will vote at the conclusion of testimony.

I will be spending the day at the Legislative Plaza.

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Here is an editorial from Wausau Daily Hearld Wisconsin, the county seat in my home county in the Northwoods.

A sample:

"Now legislators have pulled another number from thin air and set it as the cap after hearing tales of horror and woe from the state's physicians. You likely heard or saw some of their ads. They said that without a cap, doctors would flee the state for fear of being sued, or that health care costs would skyrocket to compensate doctors for increasing insurance premiums.

And they made villains of those handy bottom-feeding targets, trial lawyers. The cap, the ads suggested, wouldn't hurt those really injured by their hard-working doctors. It would just take money from the pockets of attorneys.

Problem is, not much of it is true."

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Tort reform swept through Georgia in 2005, and now the harm and the potential for harm is beginning to be felt. This article from Atlanta's leading newspaper explains the consquences of the offer of judgment rule.

I hasten to note that the Tennessean has editorialized against tort reform for years.

Thanks to Ken Shigley from telling us about this article.

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The Florida Supreme Court ruled that the limitation of attorneys' fees in medical negligence cases could be the subject of a knowing, voluntary waiver by a plaintiff in a medical negligence suit. It directed the Florida Bar (Florida has a unified bar association) to come up with an appropriate rule to guide Bar and the public on this issue.

Here is the proposed rule. The written waiver is on Page 47 and 48 of the linked PDF file.

Any state that has a fee cap that will make it impossible for a competent lawyer to represent an injured or deceased plaintiff in a medical negligence (or any other tort) action should look to Florida for guidance on the issue.

Once again, thanks to Matt at Abstract Appeal for giving me the link to the proposed rule. Matt has a great blog and I urge you to check it as often as time permits.

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Health care industry lobbyists: read this article and then try again to convince me that juries are solely motivated by sympathy.

In fact, given that most med mal cases concern serious injury or death (because of the economics of pursing the claims) what explanation do you have for defense verdicts in any of the cases?

And why is it everytime I do not demand a jury in a medical negligence case the defense demands one? Why would they want to expose themselves a crazy jury?

Why?

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This study by "Americans for Insurance Reform" says that the so-called crisis in the medical malpractice insurance market is over.

The introduction to the report:

"The most recent data from the Council of Independent Agents and Brokers now confirms that the large medical malpractice insurance rate increases that took hold around the nation in 2001 and 2002 have ended.

The average rate hike for doctors over the past six months has been 0 percent. This is following similar results for the last quarter of 2004, which saw rates rising only 3 percent at the end of that year. By comparison, rates jumped 63 percent during the same quarter of 2002.

This phenomenon it is occurring whether or not states enacted restrictions on patients' legal rights, such as "caps" on compensation."

Anticipating this, the health care industry has abandoned this as a argument for restricting patient rights. The new position: holding health care providers responsible for the harm they cause restricts access to health care.

Yeah, personal responsibility is a difficult thing for many people to accept.

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The Tennessean was kind enough to publish an op-ed piece I wrote. Here is the full article from today's paper.

Health-care industry sells snake oil about malpractice

By JOHN A. DAY

Tennessee's health-care industry has launched yet another assault on patients' rights, seeking once again to limit its financial responsibility for harm and death caused to patients by negligent acts and omissions.

For three decades, the industry has claimed that it needs special treatment in the eyes of the law so it could have lower malpractice insurance rates. Now, faced with overwhelming evidence that restricting the rights of injured patients have little, if any, effect on those rates, the industry has gone to "Plan B."

What is Plan B? Well, the industry now says it deserves special treatment because current law affects "access" to health care. That's right: They attempt to argue that if doctors and hospitals in Nashville get special treatment, there will be more doctors and hospitals in rural areas.

The industry press release gave these statistics to support its desire for a new set of laws that will further protect the industry: "81 of 95 counties have no residing neurosurgeon in patient care, 49 counties are without a residing orthopedic surgeon in patient care, 47 have no emergency physician, and 42 don't have a residing obstetrician/gynecologist."

Scary, isn't it? But before you agree to give away your rights, consider these facts and the implications of what the industry is saying.

It is true many rural counties do not have the full spectrum of medical specialists that you would expect to find in the big cities of our state. For example, Moore County, home to Lynchburg and 6,000 Tennesseans, does not have any medical specialists. Of course, it does not have a hospital either.

Should we build a hospital and have a team of highly trained medical specialists in Moore County, Tenn., when there is a hospital in Tullahoma just 5 miles away? Its emergency room has around-the-clock care and sees 17,000 patients a year. It has 75 doctors, six of whom practice obstetrics and gynecology, two of whom are neurosurgeons, and two of whom are orthopedic surgeons. A sick person in Lynchburg can be at a hospital quicker than a sick person living in the Shelby Park neighborhood of Nashville.

Not enough doctors in Tullahoma? Folks in Moore County can also go 19 miles away to Winchester. The Southern Tennessee Medical Center there has five doctors who deliver babies and four orthopedic surgeons. It also has a 24-hour emergency room. And just 26 miles south of Lynchburg is a hospital in Fayetteville that has three doctors who deliver more than 300 babies per year. The hospital also has two orthopedic surgeons and a fully staffed emergency room.

The 11,500 people in Lewis County do not have high-end medical specialists in the county and do not have a hospital where these specialists could work. Fortunately for them, just 33 miles away is Maury Regional Hospital, with 165 physicians. That facility has over 1,600 baby deliveries a year and has seven orthopedic surgeons and nine emergency room doctors.

There are similar examples across the state: small, rural counties that lack the population and facilities to attract highly trained specialists to set up a practice. That fact has nothing to do with the legal system; it has everything to do with economics and common sense. Neurosurgeons, obstetricians, orthopedic surgeons and emergency doctors need hospitals, and they need to have a team of nurses to help deliver care 24 hours a day, 365 days a year.

This is an expensive proposition, and a hospital must have a sufficient number of patients in each specialty to justify such services.

The health-care industry is engaging in the politics of fear in an effort to save itself money. To do so, it passes out statistics that even if accurate make no sense whatsoever. In a state that has all too few dollars to spend on health care, we simply cannot afford to build a high-tech hospital in each of our 95 counties and staff it with a team of specialists. Also, the industry makes no attempt to prove how reducing accountability for doctors in Nashville and the other big cities will cause medical specialists to move to small communities with no hospitals or hospitals that provide a small range of services.

Doctors and hospitals have more special protections from liability than any other industry or profession in this state. They have not proven that they are entitled to receive even more special treatment. -

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Here is the lead editorial in today's Tennessean:

Beware of quick fix on malpractice reform

It's a fact that Tennessee physicians, particularly those in some specialty groups, have to pay high rates for malpractice insurance. Those high premiums discourage young doctors from pursuing some specialties and drive practicing doctors out of some geographic areas.

But although the high malpractice insurance rates can be documented, it is not clear that state malpractice reform now being pushed in Tennessee is an effective answer for the problem. And if the reform is the wrong response, Tennessee citizens will be hurt.

Last week, the American Medical Association claimed Tennessee is in a "medical liability crisis," and that the soaring malpractice premiums in Tennessee leave some communities without a residing orthopedic surgeon or obstetrician.

The AMA's stern assessment of malpractice in Tennessee sets the stage for another attempt to pass malpractice reform in the General Assembly. The proposed legislation would cap non-economic damage at $250,000. It would also initiate a sliding scale payment for attorneys to assure that most damages go to the injured person, and it would require that every malpractice lawsuit be certified by a medical expert.

The data from the state do not seem to reflect a malpractice crisis in Tennessee. The Tennessee Department of Commerce and Insurance reported last October that in 2004, Tennessee had six malpractice judgments totaling $1.9 million. Insurance companies wrote premiums totaling $327 million, and 444 claims were settled by insurance companies totaling $108 million. According to the report, 81% of malpractice claims in Tennessee resulted in no payment.

Having a medical expert screen a malpractice claim to see if it has merit seems like an idea worth pursuing. Frivolous claims cost time, money and clog up the court system. But a flat $250,000 cap on non-economic damages for all instances of malpractice, no matter how egregious, is needlessly arbitrary. Juries who hear all the facts of a case are far better equipped to arrive at a fair judgment.

As this debate engages Tennessee legislators, they need to remember that their first duty is the protection of average citizens. Would they be willing to explain to a constituent that her breast, or her leg, or her ability to reason is worth no more than $250,000?

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Here is the full text of a press release from AARP in Georgia:

"ATLANTA - A full year after Governor Sonny Perdue signed into law some of the nation's most severe changes to the state's court system - stripping average Georgia families of their Constitutional right to access the justice system - liability insurance rates for the state's physicians continue to climb.

According to the Office of the Insurance Commissioner, five medical malpractice insurance companies filed requests to increase physicians' premiums over the past 12 months. In fact, First Professionals Insurance moved to hike physician's premiums just two days after Governor Perdue's bill signing ceremony at Northside Hospital. Other companies include G.E. Medical Protective, State Volunteer Mutual Insurance Company, Medical Assurance Company of Mississippi and Medical Mutual Insurance Company of North Carolina.

Insurance costs for Georgia physicians have risen steadily since 2001. While insurance industry lobbyists and the Medical Association of Georgia have blamed the legal system for recent rate hikes, the Property Casualty Insurers Association of America documented a record-breaking profit increase for the industry from 2002-2004: from $3 billion to over $41 billion. In September, the National Association of Insurance Commissioners (NAIC) announced that "the U.S. property and casualty insurance industry... holds assets in excess of 1.3 trillion dollars."

A coalition of statewide organizations - including AARP Georgia, the Georgia Network to End Sexual Assault (GNESA), the Georgia Council on Aging, Mothers Against Drunk Driving Georgia, the Women's Policy Group and Georgia Watch - fought the drastic changes contained in Senate Bill 3, which passed the 2005 General Assembly with little opportunity for amendment.

"The objective of Senate Bill 3 was to limit the constitutional rights of taxpayers to seek justice," said Georgia Watch Executive Director Allison Wall. "This law does nothing to address price gouging in the insurance industry, nothing to improve access to quality health care for our families, and it removes accountability where it is due - the insurance industry," Wall added.

In August, the U.S. Department of Justice announced that the number of tort trials declined by nearly 80 percent from 1985 to 2003. Furthermore, new research published in the Cato Institute's Regulation magazine by renowned economists at Harvard University and Dartmouth College indicates that arbitrary, one-size-fits-all limits on the compensation that medical negligence victims can recover - such as Georgia's $350,000 cap on noneconomic damages - have no impact on insurance premiums or the cost of practicing medicine.

There is growing evidence that the $350,000 cap also discriminates against families living on a fixed income, including retirees, war veterans and disabled Georgians. "Our worst fears have been realized over the past year," said AARP Georgia President Cas Robinson.

Real-life examples include:

-Fayetteville retiree Chester Yerger, Jr. died in March of repeated negligence during treatment for prostate cancer. Chester's wife and son began looking for legal representation immediately after his death, to no avail.

-In August, Bessie Lawrence, a 72 year-old Atlanta widow, went to an area hospital at her doctor's request for what was supposed to be an overnight stay to receive a Vitamin K treatment because her blood level was too thin. Ten days later, Bessie died because a doctor clipped her carotid artery while attempting to place a central line in her neck. Bessie's son, Melvin, continues his search for legal representation.

Other extreme provisions of the law - such as "offer of settlement" - require plaintiffs who successfully prove their case in court to pay the defendant's legal fees if the court's compensation falls short of 125 percent of any previous offers to settle. Jennifer Bivins, Legislative Committee Chair of the Georgia Network to End Sexual Assault, notes that such "winner pays" barriers to justice affect more than just those families who suffered from medical negligence.

"Laws that force victims to pay their attackers' court fees not only create re-victimization but also support a system that does not provide true justice," said Bivins.

One week after Governor Perdue signed Senate Bill 3 into law, the State Court of Cobb County ruled unconstitutional changes to expert witness qualifications. Since then, courts around the state - including the state's highest court - have struck down several key components of the law as unconstitutional, including provisions dealing with change of venue, offer of settlement and medical authorizations."

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The Georgia Supreme Court eliminated a key portion of an act passed by the Georgia Legislature in 2003 that changed the law of venue in medical malpractice cases.

The Georgia Constitution includes a provision about venue in multi-torfeasor cases; the Court found that a portion of the tort reform statute violated that provision. Read the opinion here.

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Today the health care industry in Tennessee launches its assault on the rights of malpractice victims. More tomorrow.

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Today the health care industry launches its assault on the rights of malpractice victims. More tomorrow.

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Today the health care industry in Tennessee launches its assault on the rights of malpractice victims. More tomorrow.

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Read this article to learn how tort reform has affected medical malpractice claims in Missouri.

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The manufacturers and others supporting a federal asbestos bill want it bad - so bad that they think it is appropriate to engage in conduct like this.

The sponsors of this site obviously do not let truth get in the way of their position. For example, they make this point in talking about opponents to the federal legislation: "Patrick Leahy (Vermont) $704,854 received from lawyers and lobbyists in the last election cycle. The lawyers and lobbyists were his largest contributors."

Senator Leahy supports the legislation.

Oh well, it could be worse: they could be spending this money on something that was effective.

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Here is the text of the Governor's State of the State Address.

You will note that the Governor did not call for restrictions on the right of patients to hold doctors and hospitals responsible for their negligence. This is a good sign. You can be assured that this was not missed by the doctors, hospitals and their insurers, and these special interest groups will be putting significant pressure on the Governor to get behind their efforts. And note that the Governor did say that he would be speaking with the Legislature "in a few weeks" about health care issues.

More specifically, he said this:

"But when we are number three in the country in obesity, as we are, and when we have the diabetes and heart disease statistics to go with being number three in obesity, there's something needed beyond insurance. That something is personal responsibility-there's no pill to make someone push their plate back or take a walk. We have had for a decade the most comprehensive health care program in the nation, and whatever the merits of TennCare -- and there have been many -- it has not succeeded in moving those public health indicators one notch. An insurance policy hasn't worked, but a policy of responsibility can.

When I speak to you about health care in a few weeks, I am going to propose that we commit ourselves in a major way to combating obesity and the accompanying explosion of diabetes in our state. With diabetes, like so many chronic diseases, a patient's lifestyle is in large part his treatment. Our state can't solve this patient's problems by taking responsibility for him; we can only help him take responsibility for himself."

The same concept of responsibility goes for doctors and hospitals. We, the people of the State of Tennessee, are not in the position of preventing errors that injure and kill patients. We can encourage doctors and hospitals to prevent errors (and have, through the Peer Review Privilege, for example) but at the end of the day doctors and hospitals need to be accountable for their errors just like a diabetic needs to follow doctor's orders in an effort to minimize the effects of this terrible disease on his or her life.

The Governor can help the health care industry prevent errors by forcing disclosure of those errors to regulators, therefore increasing public pressure on providers to have a good report card. The Governor can help the health care industry avoid excessive insurance costs by requiring insurers to justify their rate hikes. The Governor can help the health care providers by requiring the compilation and publication of data about the claims experiences of hospitals so that the Legislature and public can make informed decisions about the presence (or absence) of a problem.

But at the end of the day the industry - and the diabetic - have to be accountable for what they do. For the diabetic, the failure to act is can result in blindness, amputations, heart disease, even death. For the industry, accountablilty means the payment of compensatory damages for harm caused, determined by a jury, with appropriate supervision by a trial judge.

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Many people - lawyers and non-lawyers - don't worry about laws restricting the rights of victims of medical malpractice. Consumers tend to think that bad things happen to others and lawyers who do not do medical malpractice work are just glad that their practice isn't being attacked.

Well, look at what is happening in Illinois. One year after restricting the rights of patients the GOP wants across-the-board tort reform.

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I graduated from the University of North Carolina School of Law, and I can tell you that the home state of Jesse Helms does not share the political philosophy of, say, Seattle.

So, imagine my surprise when I read this article from Business North Carolina.

I will save the details for you, but you get a good feel for the story from this ending: "On a gray late-November day at her home in Raleigh, Sandy Lakey considers that. Twelve summers have passed since her daughter's life was forever altered by a product that a jury decided the manufacturer had sold knowing that it had maimed other children. "How lucky a lot of people will be," she says, "to never find out whether they really need a lawyer."

Thanks to Greedy Trial Lawyer for informing me about the story.

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Here is a proposed resolution that has been introduced in the General Assembly by Senator Finney, Republican from Maryville:

SENATE JOINT RESOLUTION 523
By Finney
A RESOLUTION relative to medical malpractice reform.

WHEREAS, a fair and efficient legal system free of frivolous and abusive litigation is necessary for a vibrant economy and access to affordable health care; and

WHEREAS, rapidly increasing medical malpractice awards are driving up medical liability insurance premiums, which costs are ultimately paid by the consumers of health care services, namely patients; and

WHEREAS, frivolous medical liability lawsuits lead to hospitals closing their doors, health care providers refusing to see new patients or patients with complicated conditions, and forcing health care providers to move to other states; and

WHEREAS, reasonable caps on damages protect patients from the rising costs of and diminishing access to health care resulting from medical liability lawsuit abuse; and

WHEREAS, victims who suffer losses, and not their attorneys, should receive the major portion of damage awards; and

WHEREAS, lawsuits filed and concluded in a timely fashion promote fairness for all parties; and

WHEREAS, medical tort reforms enacting caps on damages, allowing for the inclusion of collateral source payments in jury considerations, and imposing time limits on filing lawsuits will enhance access to health care, lower medical liability insurance premiums, and lower the cost of health care; now, therefore,

BE IT RESOLVED BY THE SENATE OF THE ONE HUNDRED FOURTH GENERAL ASSEMBLY OF THE STATE OF TENNESSEE, THE HOUSE OF REPRESENTATIVES CONCURRING, that this General Assembly does hereby strongly urge the United States Congress, and particularly Tennessee's Congressional delegation, to support meaningful medical tort reform.

BE IT FURTHER RESOLVED, that an enrolled copy of this resolution be transmitted to each member of Tennessee's Congressional delegation.

For those of you from out of state, Tennessee already has caps on attorneys' fee in medical negligence cases (1/3rd), allows consideration of collateral sources, applies a locality rule, has a one-year statute of limitation and a three-year statute of repose.

Plaintiffs won six jury trials in medical negligence cases in 2004 - in the entire state.

And, by the way, several of Senator Finney's fellow Republicans have filed legislation that gives negligent doctors and hospitals credit for life insurance and disability insurance purchased by the decedent or the decedent's family. That's right. The amount of the jury's verdict would be reduced by these "collateral sources."

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When we think of "tort reform" we usually think of insurance and corporate lobbyists trying to convince legislators to limit the ability of people to sue wrongdoers for personal injuries or wrongful death.

But the fight is much broader than that, as evidenced by this press release from the National Conference of State Legislators. Now, the FDA is considering a rule that would limit the liability of drug manufacturers from failure-to-warn suits if the drug's label was approved by the FDA. The rule would pre-empt state law, including state common law.

The FDA has argued before that its approval of medical devices pre-empted state law claims. The claim has been rejected in drug cases in the past.

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The medical liability insurers, hospitals and doctors are coming at Tennessee consumers this year in the Legislature - a full frontal assault in a effort to limit responsibility for negligence.

I have argued for years that the "reformers" use faulty numbers - and they do. The reformers have figured out that the numbers do not support what they want, so they have changed the focus of their attack to say (a) things aren't bad in Tennessee yet but it will get bad if we don't change the law; and (b) people are being deprived access to health care because doctors no longer practice _______ (fill in specialty) in _________ (name of city, town or hamlet).

"The sky is falling argument" is quite easy to defeat because legislators hear that the sky is falling from every lobbyist every day.

The second argument is more of a challenge because legislators want access to health care - for themselves and for their folks back home. And when someone says "if you live in Lake County you have to drive 60 miles to find an OB" or "you can't find a doctor in Memphis to do ______________" that causes concern to those who accept it at face value.

It is also hard to respond to "polls" taken by doctor groups for doctor groups who know why they are being asked questions like "do you ever think about whether you will be sued if you do not order ___________ test" or "do you ever think about quitting the practice because of the cost of liability insurance?"

Well, here is a report by Public Citizen which shows we need to go on the attack on this front, too. The docs in DC made the argument that OBs were fleeing DC because of high malpractice insurance rates.

The reformers argued that there were "only" 151 OBs in DC. Public Citizen found 180. And look what else they found:

Continue Reading...

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Today's Washington Post has this article about another study of the medical malpractice insurance industry.

The study shows that insurer's overestimated their losses from 1986 until 1994 by almost 50%.

Continue Reading...

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