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Vol. 29, No. 6

Tort reform momentum slowed but not stopped

by Clifton Barnes

Momentum for major tort reform on both the state and national levels seemed unstoppable after the 2004 elections. While that momentum may not have shifted, it has slowed to a crawl as opponents and proponents have dug in their heels.

The movement for tort reform has been building for years, and after the re-election of President Bush, who identified tort reform as a major priority for his second term, and the election of judges who campaigned on tort reform platforms—most notably in an Illinois Supreme Court race—many proponents expected swift changes.

Voters did usher in many changes, including in Florida, where the state constitution was amended to limit attorney fees to costs plus 30 percent of the first $250,000 and 10 percent of any other rewards, and in Nevada, where a “Keep Our Doctors in Nevada” measure eliminated exceptions to capped awards and limited attorney fees.

But now, with President Bush focused on Social Security reform and other issues, and with opposition to tort reform galvanized in the U.S. Senate, the effort has stalled somewhat, especially on the national level.

Sen. Rick Santorum (R.-Pa.), lead sponsor of legislation that would impose a malpractice cap of $250,000 in damages for “pain and suffering,” acknowledged during a rally for tort reform in Washington, attended by hundreds of doctors, that he didn’t have the votes to pass the measure. He said things were at a standstill because most senators had already made up their minds on the issue and that the way to make a difference is to vote opponents to his bill out of office.

Proponents of medical malpractice tort reform blame the legal profession for frivolous lawsuits and high awards that drive insurance costs up and drive doctors away from practice. Opponents say that it’s poor investments by insurance companies and a down economy that drive insurance companies to raise premiums on doctors.

The U.S. Chamber of Commerce has spent millions on ad campaigns aimed at influencing public opinion on tort reform and helping to elect business-friendly state supreme court justices. Last year, the ABA criticized the chamber for using a “slanted opinion poll” that it commissioned to “undermine public confidence in American judges and the legal system,” which would result in undercutting public safety and security.

The Association of Trial Lawyers of America has spent millions and hired more lobbyists to combat medical malpractice reform. The ATLA has put together an online guide outlining the issue, including the cost of medical errors and the claim that the number of doctors has actually risen in every state for each of the last three years. The guide goes on to report that in five states that recently passed new malpractice caps—Mississippi, Nevada, Ohio, Oklahoma and Texas—“premiums still rose at nearly double the rate of states that did not pass a damage cap.”

ABA President Robert J. Grey Jr. says competing forces need to come together and get away from the allegations that lawyers are the problem or that insurance companies are the problem. “We need to help lower the temperature of the emotions surrounding the debate and be a voice of reason,” Grey says. “Some people are looking to figure out the best way to improve the process, while others very much have their heels dug in.”

ATLA officials say they’d like to meet with the American Medical Association. “ATLA leadership has asked AMA leadership at least six times—orally and/or in writing—since 2001 to meet to discuss patient safety and reducing medical malpractice insurance rates,” says Carl Carlton, ATLA spokesman. “We have been rejected each time.”

Measures that have passed

However, there hasn’t exactly been a deadlock in federal and state legislatures when it comes to some tort reform legislation.

In February, a class action bill overwhelmingly passed the U.S. Senate—by a 72-26 vote—which is aimed at settlements that provide little to claimants but large fees to attorneys. The bill moves large, multistate class action lawsuits from state to federal court, which tends to be more business-friendly, and limits “forum shopping” by attorneys. The ABA neither supported nor opposed the legislation but cautions that the act may not adequately preserve legitimate state court interests.

A long-debated and long-awaited asbestos bill appears to have enough bipartisan support to pass this year. The bill creates a $140 billion trust fund for compensating victims of asbestos-related diseases, replacing asbestos litigation and thus protecting companies and insurers from legal liability. In the latest form of the bill, defendant companies would pay $90 billion into the fund and their insurers would pay another $46 billion, with the other $4 billion coming from existing asbestos compensation trust funds.

Competing interests each have some concerns about the bill. For example, the ATLA says the amount of money in the fund isn’t enough, and some insurers balk at how the fund is structured. The ABA has not adopted policy on the trust fund legislation.

At the state level, the New Jersey State Bar Association is currently challenging the constitutionality of a bill, known as the New Jersey Medical Care Access and Responsibility and Patients First Act, approved by the state Legislature last year. The legislation—which calls for a $75 assessment on attorneys and some medical personnel to help reduce medical malpractice premiums and pay off student loans for those in high-risk specialties—sparked some dissent among the state’s lawyers. Many of the state’s trial lawyers supported the assessment, as a way to at least avoid caps on pain and suffering, but the New Jersey State Bar Association adamantly opposed it.

Valerie Brown, legislative counsel for the NJSBA, says members were outraged by the assessment and supportive of the bar’s efforts to fight it. “We engaged our grassroots members through direct mail and e-mail blasts, urging them to contact local legislators,” she says.

Even though the legislation has passed, the bar’s work isn’t done. Brown says the NJSBA also has published articles about the legislation in its publications and informed members by direct mail about the voting record of every member of the Legislature on the assessment. In addition, officials met with editors of newspapers to discuss the topic.

The State Bar of Arizona, a mandatory bar, has stayed out of its state’s debate about caps and other tort reforms but has closely monitored related legislation in that state. The Arizona Trial Lawyers Association, on the other hand, has been deeply involved in negotiations in the legislature.

Any tort reform would require a change in Arizona’s constitution, which states that no law can be enacted that limits the amount of damages recovered for causing death or injury. Perhaps as a result, three of the four bills in question appear to be dead.

“There was a concern about allowing the legislature to cap damages—neither the lawyers nor the doctors liked it,” says Matthew Silverman, the State Bar of Arizona’s director of communications. Among those who wanted a cap, he adds, there was disagreement regarding the amount.

However, the governor of Arizona recently signed into law changes to medical malpractice statutes, most notably allowing doctors to express “apology, compassion or condolence” without having it used as evidence of liability or any admission in court. “I predict that this simple law change will lead to some patients ultimately choosing not to file malpractice lawsuits in response to an adverse outcome,” Gov. Janet Napolitano wrote in a letter to the Legislature.

In Georgia, a similar bill allowing doctors to apologize with impunity passed the Legislature easily. This bill, however, also set a cap of $350,000 on noneconomic damages for one defendant and $1.05 million for multiple defendants. Also included in the bill was a higher standard of proof for medical malpractice during emergency department care. In addition, juries will decide if a lawsuit is frivolous. This was the first bill signed in this year’s Georgia legislative session.

Rob Reinhardt, then-president of the State Bar of Georgia, a mandatory bar, spoke against the bill before the state’s Senate Judiciary Committee. “Two provisions raise grave concerns—caps on noneconomic damages and immunities,” Reinhardt told the committee, adding that these provisions “deny our citizens their constitutionally guaranteed rights of access to the courts of Georgia.”

Reinhardt is disappointed that the political climate was hostile to the bar’s positions and that the legislation passed. “But the science of law is a moving target—a marathon and not a sprint—and I am confident that corrections will be made,” he says.

‘Judicial hellholes’

Some on the opposite side of the issue, such as the American Tort Reform Association, say they’re calling for reform only in specific places, and not the entire country.

“We don’t cast a wide net over all judges or say that all plaintiff lawyers are bad,” says Sherman Joyce, president of the ATRA. “We are very focused on the jurisdictions that have been identified as having fundamental problems, not simply a place where someone had a bad outcome.”

Joyce says his group—a coalition of more than 300 businesses, corporations, municipalities, associations, and professional firms—does research throughout the year and comes up with an annual report of “judicial hellholes.” This year, there were nine judicial hellholes and three dishonorable mentions. “I don’t know how many counties there are in the United States, but that report is very focused,” he says.

Joyce says “judicial hellholes” are places where the law is not applied evenly to all litigants. He notes that personal injury lawyers seek out these jurisdictions because “they know that they will produce a positive outcome—an excessive verdict or settlement, a favorable precedent, or both.”

The top two “hellholes” publicized in December of last year are Madison and St. Clair counties in Illinois, where the ATRA says 161 physicians were forced to leave during 2004 because of “a lawsuit-driven health care crisis.” The report indicates that St. Clair County saw the number of class action lawsuits filed rise by 1,100 percent in the past two years. Madison County was judged to be the worst jurisdiction in the 2003 report as well.

“Lawyers in Madison County cheered for being No. 1,” Joyce says. “As long as we know that the report reaches the plaintiff’s bar, that’s good.”

Politics at play

David Anderson, assistant executive director of the Illinois State Bar Association, says that the ATRA, the U.S. Chamber of Commerce, and other business and insurance groups targeted Illinois with an all-out campaign last fall before the elections.

He says they ran ads about Madison, St. Clair, and Cook counties, using the “hellhole” moniker and that he had reports from lawyers that patients in those counties were given pamphlets that backed the Illinois State Medical Society’s legislative agenda. In addition, he says that some children, including lawyers’ children, were coming home from school wearing wristbands etched with such slogans as “Save Our Doctors.”

“All of this was occurring in the context of a hotly contested race for Supreme Court justice in the fifth district, which includes Madison and St. Clair,” Anderson says. “Somewhere between $8 million and $10 million was spent on the two candidates [by their own campaigns and by third-party advertisers].”

Republican candidate Judge Lloyd Karmeier, backed by business and medical interests, defeated Democrat District Judge Gordon Maag, backed by trial lawyers.

“For too long, the plaintiff’s bar had the field to itself as far as judicial selections,” Joyce says. “Now, business interests and tort reform groups have come together to get engaged in the political arena and worked to inform the public about judicial selections. The Illinois Supreme Court election was as political as a run for the U.S. Senate.”

Earlier in 2004, Illinois doctors, lawyers, and insurers met several times trying, to no avail, to find common ground. “Capping noneconomic damages is a major sticking point,” Anderson says, “especially since the Illinois Supreme Court has ruled caps unconstitutional—twice.”

Getting the word out

The ISBA has commissioned a study of its own, expected to be released soon, regarding medical malpractice in its state.

“Our goal is to bring some much-needed facts to the debate over whether rights of injured parties should be curbed in return for potential, but not guaranteed, reduction in malpractice premiums,” Anderson says.

“Getting the facts out there” was the goal of a contingent of ABA leaders and lawyers from around the country when they spent a day recently talking with legislators in Washington about various ABA priorities, including tort reform.

“It’s important that people have a fair and accurate assessment of this issue,” says ABA President Grey. “There is a lot of misinformation about tort reform. Americans have been misinformed about this and it has created a lot of confusion.”

Grey says he can’t claim there are no problems with the system as it stands. But he adds, “In the aggregate, the system works very well, so it doesn’t make sense to throw out the baby with the bath water.”

There should be no confusion, Grey says, over the fact that if some tort reform groups get their way, severely injured parties will receive very limited awards—awards so fixed that it will lead to “a breakdown of a solid, sound system of recovery.”

—By Clifton Barnes


Recent studies

Those who oppose caps on medical malpractice awards often point to studies that show that lower awards will not necessarily mean lower insurance premiums. Here are three recent studies:

| A study in Florida, released in April, was conducted by two Duke University professors who used extensive malpractice claims data in that state from 1990 through 2003. It shows no evidence of claims causing the crisis.

| A study in Texas, conducted by researchers from Columbia University, the University of Illinois, and the University of Texas, and released earlier this year, found the same result. “The rapid changes in insurance premiums that sparked the crisis appear to reflect market dynamics, largely disconnected from claim outcomes,” the report says. Average awards on medical malpractice lawsuits, adjusted for inflation, declined from 1988 to 2002, yet malpractice insurance rates in Texas more than doubled from 1999 to 2003 alone, the study says.

| A national study by Public Citizen, a nonprofit public interest group, concurs with the other two studies. It notes that the number of malpractice payments has fallen by more than 13 percent over the last three years and that the value of malpractice payments, adjusted for inflation, has been flat since 1991.