State on verge of real medical malpractice reform


Scott Shepard 
Published: April 12, 2004
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   How do you convince a roomful of trial lawyers to pass limits on malpractice awards?

   That's not a set-up for a joke, but a question to be answered next week in the Tennessee General Assembly. Sen. Mark Norris, R-Collierville, expects legislation to move that will nip around the edges of  malpractice reform by pulling most cases out of court.

The greater goal of a limit on non-economic damages will have to wait at least another year.

"Caps are all you ever hear about, but caps are just one type of reform on the table," Norris says. "I'm going to pursue some of the others."

One key move next week will be the introduction of a bill requiring a second physician to affirm that malpractice occurred, plus a separate bill that would place most cases in binding arbitration. This is the first time in three decades that significant malpractice reform bills haven't died in committee but have actually gotten onto the legislative calendar.

Both bills aim to defuse cases and lead to resolution before they get out of hand and wind up in court.

"The one bill says that a plaintiff must obtain an affidavit from another physician that genuine malpractice was committed, as a pre-condition of filing suit," Norris says. "Most providers confronted   with a sworn affidavit will work to resolve it. The current judicial system encourages the filing of suits, preliminary discovery and so on; it can take months and even years before a finding that no malpractice was committed."

His other bill will encourage providers and patients to commit to arbitration before care is provided.

Norris also has a bill that would make it easier for a defense attorney to gain access to some medical records. It would clean up a 2000 ruling by the Tennessee Supreme Court that created a new form of   physician-patient privacy.

"This has made it very difficult to analyze and resolve suits," Norris says. "Sometimes a lawyer just wants to call and ask a question, but he ends up having to do a formal deposition."

This batch of bills grew out of eight months of study before a legislative committee that identified a number of factors that are driving up the cost of malpractice insurance, and driving physicians to   move, retire or avoid riskier services such as obstetrics and trauma neurosurgery.

After nearly a decade of modest changes, malpractice insurance in Tennessee has shot up 60% in the last four years. Unlike other business liability insurance, recent hikes in malpractice are not due to poor investments: 90% of the state's doctors are covered by a single carrier, State Volunteer Mutual Insurance Co. It's a physician-owned company that only collects premiums and pays awards.

"We're trying to be proactive before we have a full-blown crisis in Tennessee," Norris says. "Trial lawyers should be very careful what they ask for. Without some safeguards, their clients may indeed be victims but have nothing to recover. We had testimony from a hospital in Savannah that dropped their insurance and are running bare."

Tennessee thus far has avoided the crisis levels that have taken place in Mississippi, Nevada and Pennsylvania. Russ Miller, spokesman for the Tennessee Medical Association, believes that is due in part to State Volunteer being energetic about fighting cases.

"They're very stable and can back up the insurance they write," Miller says. "We've seen Reciprocal and others go broke in the past few years. We have a strong insurance company, but we have all our eggs in one basket; as goes State Volunteer, so goes malpractice insurance in Tennessee."

Of nearly 13,000 doctors in Tennessee, 10,082 of them were covered by State Volunteer as of March 31. The company has about 6,000 other physicians in surrounding states, half of them in Arkansas.

State Volunteer CEO Steve Williams is grateful for the praise, but also says Tennessee law so far has helped prevent the most profligate abuses that were available in Mississippi. Until this year, plaintiffs in Mississippi could pick any venue in the state. In one extreme example a national class action lawsuit was filed against drug maker Warner-Lambert involving the drug Rezulin. The case was filed in tiny   Noxubee County, where the number of plaintiffs outnumbered the population.

Also, St. Paul Insurance abandoned the state. With the bankruptcy of Reciprocal, there was only one company left, Medical Assurance. It's also a physician-owned mutual but is limited by state law on how large it can grow.

"That situation has not happened in Tennessee," Williams says. "State Volunteer has a larger capital base and has never turned away any kind of large numbers of doctors in Tennessee."

The company underwrites individually, so each doc's rate is based on risk and claims history.

The company successfully defends 75%-80% of cases, which means State Volunteer doesn't make a settlement. Williams likes Norris' bills, which would speed the resolution of cases.

"If you go two-four years with a lot of wrangling with discovery, trial dates, postponements and so on, the meter is still running," he says.

Now is the time for reform, he says, as Tennessee's tradition of conservative settlements is beginning to crack. At the end of March there were 2,905 cases pending against 15,000 doctors, with a likelihood that 840 will become lawsuits. And the pace is accelerating: 249 new suits were filed in the first quarter of 2004.

"The notion that malpractice involves a handful of practitioners is bogus," he says. "When you have that many claims against that many doctors, it's an astounding percentage of doctors getting sued. Either one out of every six doctors is a problem physician, or these are just people being sued randomly."

Over 10 years, he says, every doctor in the state expects to be sued at least once.

A bill that is regularly killed in Nashville would allow unlimited economic damages but cap so-called pain and suffering to $250,000. Other versions raise that to $500,000. After months of testimony, Norris'   judiciary committee still couldn't find a connection between damage awards and rocketing insurance rates. But one bill likely to pass will mandate the collection of data this year to see if there is a cause and effect.