Tennessee Takes Steps Toward Tort Reform

by Cindy Sanders for Memphis Medical News
May 10, 2004

Publisher's Note: The interview with Senator Mark Norris was conducted in mid-April. Movement on specific pieces of legislation was expected to happen within weeks. For an update on the status of any of the bills mentioned in this article, go online to www.legislature.state.tn.us and click on "Legislation."

The Tennessee State Legislature is taking steps, albeit baby ones, toward tort reform in an effort to better quantify and qualify malpractice insurance lawsuits.

While the likelihood of caps being placed on non-economic damages is slim to none at this point (emphasis on the "none"), Senator Mark Norris (R-Collierville) is quick to point out other relief measures have a better shot at passing both chambers.

Norris, who sat on the Joint Tort Reform Subcommittee and introduced legislation to enact non-economic caps, said, "Throughout the proceedings I would admonish the committee frequently not to only focus on caps, but I think caps became a synonym for reform."

In the end, however, Norris along with several other committee members have introduced legislation that would tweak current laws and improve the information-gathering process related to the depth and breadth of malpractice suits in Tennessee.

In the final analysis, the Joint Tort Reform Subcommittee, which was chaired by Senator David Fowler (R-Signal Mountain) and Representative Rob Briley (D-Nashville), concluded in its majority report that there simply wasn't enough concrete information available to recommend instituting caps.

"The joint study committee was to determine whether there are problems in the market and to make general recommendations on what, if anything, should be done," said Norris. "The joint committee found there is a problem with escalating premiums and that escalation is beginning to adversely affect physicians in their practices, particularly in the rural portions of the state, but no definitive conclusions were reached yet as to causation."

Norris went on to say that the committee determined more information gathering is necessary. Although some may feel this is nothing more than a stall tactic by the legislators, a look at the way information is gathered and reported does reveal large gaps in knowledge.

"We need to do our due diligence," said Norris.

SB3252/HB3252 was introduced by the committee's two co-chairs and is known as the "Information Gathering Bill." At press time, the legislation had already passed through the Senate Commerce Committee but had to also gain approval in the Finance Committee due to a fiscal note. The projection is that the legislation will cost the state approximately $60,000 to implement. So far, action has been deferred in the House.

If passed, the legislation would require the Administrative Office of the Courts (AOC) to keep more specific information categorizing suits and awards and would also require insurers to submit more detailed accounts of suits and settlements.

"We saw that jury verdicts over $1 million increased in Tennessee over 800 percent over the last several years ... that's alarming, but there's nothing further to get behind that data to determine if they were malpractice (suits) or car wrecks," Norris explained.

"Similarly," he continued, "we were at a loss of reliable data by insurance companies to know how many malpractice claims they had resulting in settlements, what their legal fees were to defend frivolous claims, etc.

"We need to track those settlements to see if they're trending upward like premiums," Norris added. "Anecdotally, I'm confident that is the case, but empirically the case hasn't been made."

Norris went on to say that similar information gathering improvements in the realm of worker's compensation, which passed through the Legislature in the last decade, have created the basis for the reform legislation now being considered (see related story).

In the meantime, there are several other pieces of legislation on the table that directly speak to tort reform and are designed to bring some immediate relief.

SB601/HB1454 and SB1155/HB1437 both speak to the issue of vicarious liability and seek to overturn the 2002 Tennessee State Supreme Court decision in the case of Johnson v. LeBonheur Children's Hospital. The court decision deemed a medical facility could be held liable for the negligent actions of a state-employed medical resident simply by providing the venue in which the student committed the negligent act. Residents, interns and fellows at a state-run medical school such at the University of Tennessee are considered state employees.

"Before Johnson v. LeBonheur, historically those students and the faculty who taught them were immune, and the hospitals which facilitated the teaching ... provided the locations for them to learn ... were also immune," explained Norris, who added that this precedent was set by case law rather than by statute.

"What the Johnson case threatened to do was create liability for the hospital where there hadn't been any before simply by virtue of the fact that the hospital was making its facilities available to students," he continued.

The bipartisan bill, introduced by Senator Fowler and Senator Jim Kyle (D-Memphis), would relieve medical health science faculty members and teaching institutions (medical facilities) of guilt by association. However, it does not confer immunity or limit liability in cases where the faculty member or institution is guilty of their own acts or omissions. The bill has already passed the Senate Judiciary but has not yet come up for a full Senate vote.

Two other pieces of legislation submitted by Senator Norris are designed to encourage resolution outside of the court system, curtail the filing of frivolous lawsuits and to make the discovery process easier and less costly when defending a suit.

SB605 contains a stipulation that requires any binding arbitration provision in a contract for medical services be clearly identified. The thought process is that if patients are clearly made aware of a binding arbitration agreement and knowledgeably and freely enter into that agreement, then disputes over alleged negligence might be able to be negotiated outside of the court system.

"It's a way to encourage ADR, which is alternative dispute resolution," explained Norris.

"There have been several cases recently looking at whether binding arbitration provisions in healthcare contracts are enforceable," he continued. "In one case the court thought not; in another case, the court thought so provided certain conditions were met like full and fair disclosure to ensure that patients freely enter into these alternative arrangements."

Norris went on to say that his hope is that the legislation he proposes would codify those conditions to encourage alternatives to litigation.

Provisions in SB996 speak to pre-filing certification. Simply put, a case can't be brought against a physician without the alleged malpractice being reviewed by a qualified expert. If the independent expert (and "expert" is already defined in Tennessee code) believes the case has merit, then the expert would file an affidavit attesting to the malpractice. If the expert finds no evidence of malpractice, then a case could not be filed.

"A lot of these suits get filed without any basis, and immediately costs are incurred by physicians and hospitals even if it is frivolous," Norris said. "This is designed to cut down on frivolous claims and to facilitate speedier resolution of legitimate cases."

The same bill calls for a confidentiality waiver of the patient's medical records or medical condition to the extent that such condition or care is at issue in making a claim for personal injuries in a civil case. The purpose is to allow defense attorneys access to some information without having to do a formal deposition, which can take months to schedule.

Norris noted Tennessee actually took the lead in tort reform with amendments to its medical malpractice statutes in the late 1970s. He said some of the actions taken in Tennessee almost three decades ago are just now being instituted in other states. However, he added, with additional changes in liability laws happening all around Tennessee and growing premiums that are impacting physicians and the specialties they are willing to perform, Norris believes it is time to revisit the state's statutes.

"Tennessee took the lead in tort reform, and we're doing a reality check because it is not a static situation," he said. "Much has changed in surrounding states so we have to look at what change, if any, we need to adopt to remain competitive.

"We're ahead of the curve right now, but I'm trying to warn people we're on the cusp of a crisis ... and it's the kind of thing that when it begins to unravel will unravel very quickly," Norris concluded.