Federal Medical Tort Reform Faces Uphill Climb

June 5, 2017

Despite a Republican Congress and White House, experts are skeptical about federal medical tort reform bills becoming law.

Around 15 years ago, U.S. state capitals were regularly besieged by large numbers of physicians demanding legislatures do something about skyrocketing medical malpractice insurance rates.

Before one such rally in Connecticut in 2003, Henry Jacobs, an obstetrician and head of the Hartford County Medical Association, told the Associated Press: "People have finally reached the breaking point. They're panicked."

This wave allowed physician groups to have considerable success in getting legislation passed in many states. However, in other areas of the country they have run into constitutional bans on such laws. Moreover, they have repeatedly failed to get the U.S. Congress to pass federal malpractice insurance reforms to cap noneconomic damages in lawsuits. Over the years, several bills have passed in the Republican-controlled House of Representatives, only to fail to get the 60 votes needed to overcome a filibuster in the U.S. Senate.

Flash-forward to 2017. Malpractice insurance rates, although still high, have stabilized. And yet the desire to get Congress to pass a law capping noneconomic damages at $250,000 remains from many physician advocacy groups. After Donald Trump was elected president and the Republicans retained control of the U.S. House and Senate, there was renewed optimism from these advocacy groups that this session of Congress might be different. For one thing, Tom Price, the new secretary of the Department of Health and Human Services, is an orthopedic surgeon who has made liability reform a top priority throughout his career. A bill he introduced in each session of the House since 2009, the Empowering Patients First Act, would set a $250,000 cap on noneconomic damages, impose a 3-year statute of limitations for filing malpractice lawsuits, and create administrative healthcare tribunals to review lawsuits before they go to court. This potential legislation died in committee.

Is there enough momentum to propel federal legislation over the goal line this session? Physicians Practice asked malpractice experts to weigh in.

Potential Legislation

Mike Stinson, vice president of government relations at the Physician Insurers Association of America (PIAA), said there are several advantages to having uniform malpractice laws across the states. One, it puts all doctors and patients on a level playing field, so you don’t have to worry about different injuries being treated differently just because they happen in a different state. "As we look at the expanded use of telemedicine, having uniformity across the country would help maintain a level playing field for patients and doctors who are in different states and may not be fully aware of what the liability laws are in each state," he said.

PIAA is the insurance trade association representing medical professional liability insurance companies, some of which are physician-owned.

Katie Orrico, director of the Washington, D.C., office of the American Association of Neurological Surgeons, also serves as the vice chair of the Health Coalition on Liability and Access, an advocacy coalition that works to enact medical liability reform at the national level. An advocate of federal malpractice reform, Orrico is encouraged that the House Judiciary Committee recently passed a bill, the "Protecting Access to Care Act," PACA, H.R. 1215, introduced by Rep. Steve King (R-Iowa) and modeled after successful reforms in California.

This bill would limit noneconomic damages to $250,000. The statute of limitations would be three years after the injury or one year after the claimant discovers the injury, whichever occurs first. The bill sets limits on attorney contingency fees.

Another House member, Rep, Richard Hudson (R-N.C.), has introduced the ACCESS (Accessible Care by Curbing Excessive lawSuitS) Act, H.R. 1704. In addition to many of the same elements in the PACA bill, it also includes reforms, such as apology protections and a "cooling-off period" before lawsuits may be filed.

Similar legislation has passed in the House of Representatives over the past decade on numerous occasions. "Our biggest roadblock has always been the Senate and I think this year will be no different, unfortunately," Orrico said.  The rules regarding budget reconciliation that allow for bills to pass by a simple majority vote in the Senate would not likely apply to comprehensive medical liability reform, Orrico said, meaning the 60-vote threshold is going to be essential. "The numbers [needed for the legislation to pass] aren't there. People have sort of retreated into their respective corners and it is really hard to break through the old talking points." Democrats have argued that a hard cap of $250,000 doesn't allow for cases in which someone is severely injured due to negligence.

While the votes in Congress generally fall along partisan lines, some Republicans see it as a states‘ rights issue and are hesitant to support federal tort reform. "There are a few Republican senators we could not count on to be supportive, based on their past records on these issues, including Sen. Mike Crapo from Idaho and Sen. Lindsey Graham from South Carolina," she said, "so we have a heavy lift in the Senate."

Stinson said he is optimistic in one sense because at least the issue is being discussed again. "This has not been on the Congressional agenda for a few years," he said. "But being realistic about things, the Senate is always a challenging environment. This is always a controversial issue, which makes it more difficult to reach a consensus on, and I think the Senate is going to be as challenging as ever this year."

Orrico and Stinson did note that there is bipartisan support for some more narrowly focused liability reforms this session. For instance, the Good Samaritan Health Professionals Act (H.R. 1876/S. 781; authored by Rep. Marsha Blackburn [R-Tenn.]/Sen. Bill Cassidy [R-La.]) would protect healthcare professionals who volunteer during a federally declared disaster from liability exposure, and thereby help ensure that needed medical volunteers are not turned away due to confusion and uncertainty about the application of state Good Samaritan laws. 

Opposition from Various Groups

Experts say the odds of a federal tort reform bill passing are long. Jeffrey Segal, who was previously a practicing neurosurgeon, is the founder of a Greensboro, N.C.-based company called Medical Justice that specializes in protecting physicians‘ reputations and practices.  Segal follows malpractice reform efforts closely and said the possibility of federal tort reform bills passing is linked to the effort to repeal the Affordable Care Act. "That is going to take a lot of oxygen," said Segal. "That is already a heavy lift in terms of getting people mobilized. Unless substantive change occurs there, I think the likelihood of a follow-up tort reform bill making it through is pretty low."

Consumer groups have come down harshly on potential federal tort reform bills.  "Medical malpractice has always been the province of the states," said Remington Gregg, an attorney for Public Citizen, a consumer rights advocacy group. "What you are seeing now are mainly big insurance companies wanting to take a one-size-fits-all approach across the entire United States in an area of the law that has never been one-size-fits-all."

Gregg said Public Citizen's research shows that the number of malpractice payments made on behalf of doctors in 2015 was the lowest since the government began tracking the information a quarter century ago; the cumulative value of such payments was lower in 2015 than at the end of the Clinton administration and lower than during any year in the George W. Bush administration; and medical liability insurance premiums paid by doctors and hospitals have fallen for nine straight years.

"There is a reason this type of bill has never received 60 votes - because it is a harsh bill, a solution in search of a problem," Gregg said. "It doesn't solve anything. We believe that citizens have a right to have their grievances addressed, and to have a jury of their peers assess the merits of that."

Proponents of federal reform argue that it would mean physicians would practice less defensive medicine, order fewer tests, and would drive down the overall cost of care. So has that held true in states that have put caps on noneconomic damages, such as California and Texas?

Michelle Mello, a professor of law and health research and policy at Stanford University, said that with some state reforms you do see a modest effect on overall healthcare spending and utilization of particular services sensitive to liability pressure. "But it is not a huge effect," she added. "If I were going to give you my top 10 ideas for bending the healthcare cost curve, [this] would not be on the list."

Furthermore, Segal said questions about federal vs. state control are relevant. "Indeed, does the federal government even have standing? The idea is that to the extent that the person receives care in a facility that gets federal dollars, such as Medicare or Medicaid, or federal subsidies, they would have some reason to participate. That is arguable," he said. "Given that the states have traditionally dealt with things like tort, I don't think that is easy, clear or obvious. My guess is that it is the type of think that would and could be litigated."

Segal added that although tort reform makes it less likely that you will be sued for a large amount, it doesn't mean you won't be sued at all. "If you decrease awards, the incentives go down, but doctors don't care if they are sued for $1 or $1 million. It is such an onerous, arduous process that they will do anything to avoid having to experience it again," he said. "Unless we figure out a way to decrease the frequency of potential litigation, I don't think tort reform is going to be the answer. Tort reform clearly decreases the price of premiums that doctors pay, but that is just a drop in the bucket compared to the cost of defensive medicine."

Work on Reform Ideas

Experts say now is a good time for interested physicians to work on reform ideas. Mello says this is because malpractice premiums tend to cycle up and down and the industry is currently in a down cycle. Why? "Because people are not freaking out," she said. When things start to get very unpredictable in terms of what physicians are paying for their premiums, they get upset and reasonably so, she added. These are expenses they have not planned for, and some are not well-equipped to handle them. Even those that are able to handle them are not happy about a sudden drop in their net revenue.

"That is when you see people in white coats with angry signs outside state capitols," Mello said. "They pressure members of Congress and state legislatures to do something fast, and that is not an environment for cool-headed deliberation and weighing of different policy alternatives."

Currently, there is less premium price pressure, although she noted physicians never perceive it to be that way. "They see liability pressures as omnipresent, regardless of whether they are by objective measures or not. They think they are under siege from liability concerns all the time. But their worries reach a fever pitch when they see their bills go up. If we are going to attack it, now is a relatively good time."

PIAA's Stinson agreed that a period of stability might produce a better bill, but he added that a crisis period is usually what is required to get Congress to do anything at all.

Mello said the state level is where the reforms should take place. "There is a huge body of law already there at the state level, and some of the ideas I am interested in are new enough that you would want to roll them out and evaluate them on a small scale before you take them national," she said.  "The fact that we have 50 laboratories in the states is good. Before we write legislation that features fairly big departures from the way we traditionally handle malpractice, why don't we test it and see if it works and fine-tune those ideas?"